Up to 3,300 existing Allstate agents may be eliminated within the next three years, as the carrier reviews and acts on those agents not meeting specified premium quotas, according to the Chicago Tribune.
Jim Fish, executive director with the National Association of Professional Allstate Agents, (NAPAA) a nonprofit organization that serves Allstate’s agent base, told Insurance Networking News, "we believe Allstate is planning to eliminate between 3,200 and 3,300 agents by 2013. When agencies are eliminated so is the agency staff, many of whom are also licensed. Therefore, the total number of existing jobs lost could top 9,000, depending on how many working spouses and staff members are affected."
With 14,700 exclusive agencies and financial representatives, Allstate wrote premiums of $26.6 billion, or $1.8 million an agency in 2008. That was down 2% from 2007, a trend Allstate blamed on declining new car sales, a weak housing market and tough competition, reports the Tribune.
Allstate's new agency targets include generating annual premiums of at least $4 million per location, having one licensed employee for every 1,000 policies, and reaching certain loyalty goals, Fish told the paper.
"The company wants to get rid of agents who aren't actively producing new business," he said. "The ones taking care of customers and servicing the book—they're not interested in keeping those agents because they think they can service those policies at a call center."
Many agents on the target list are "older agents—50 to 60 years old—who might be servicing their book of business and maintaining high retention and loss ratios, but that isn't enough for Allstate," the Tribune quoted Fish as saying.
In clarifying this statement with NAPAA, Fish told INN, "It’s clearly an “out with the old, in with the new” program, which seems to have age discrimination written all over it."
Like many insurers, Allstate is not unfamiliar with such claims. Just before Christmas, a federal judge approved a $4.5 million settlement between the Equal Employment Opportunity Commission and Allstate Corp. to officially end allegations of age discrimination. A class of 90 older former employees of Allstate will share the award. Its lawsuit, filed five years ago, alleged Allstate Insurance Co. violated the Age Discrimination in Employment Act (BestWire, Dec. 22, 2009). Allstate said it chose to agree to the settlement to avoid further litigation costs, but continued to believe its position was correct and that it would have prevailed in court, reports A.M. Best.
In a statement, however, Allstate said the opportunities have never been better for agencies "committed to providing outstanding service" and is actively recruiting new agents.
"We're providing incentives and tools for Allstate agencies to consistently provide a superior customer experience," said Maryellen Thielen, a company spokeswoman. As reported by A.M. Best, the company "has not set targets for agency numbers or size."
Meanwhile, the NAPAA has issued its first annual job fair, “Preparing for Life after Allstate,” May 5-8 in Washington, D.C. This event, which costs $149, will give agents information on independent agency options and other insurance-related opportunities.
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