Exclusivefocus Spring 2013 - National Association of Professional ...

opinion
From Intangible Product
to Intangible Company
By Brian Spillman
Allstate Agents used to sell an intangible
product. We all understood
that fact and accepted it,
even though it was harder to sell than say,
a household appliance that people could
see and touch. But these days, Allstate
agents are selling an intangible company.
Not long ago, agents were proud to be
a part of Allstate. It was a great brand
name with very competitive products.
The company’s employees would go out
of their way to help an agent if a customer
was involved. In fact, one of the
company’s favorite catchphrases was
“Nothing happens until a sale is made.”
This meant that every employee in the
company basically owed their job to the
agents who sold Allstate’s intangible
products. Back then, the company did all
it could to support agents, and there was
mutual respect and appreciation for each
party’s role within this great company.
I’m not sure exactly when the respect
and appreciation part began to erode, but
the products started to erode when the
infamous Tropical Cyclone Deductible
(TCD) was introduced in coastal areas.
This immediately put Allstate agents at
a disadvantage with their competitors
because we were the only major player
with the requirement. Although some
companies followed suit with their own
hurricane deductible, they are nowhere
near as severe as ours.
Thus began the company’s profiteering:
to the detriment of the consumer
and at the expense of agent integrity. I
remember feeling pangs of guilt whenever
somebody switched their homeowner
policy from State Farm to Allstate.
While I was careful to explain Allstate’s
TCD, I’m sure there was a great deal of
misunderstanding and indifference on
“
Changing
such an ingrained,
authoritarian culture
would take a
Herculean effort and
require sea change in
the attitudes of those
at the top.
“
the part of the insured at the point of
sale – after all, what were the chances of
an East Coast hurricane making landfall
anywhere but Florida or the Carolinas
Then came the outsourcing. The
company put its toe in the water with
commercial, a product line in which
Allstate was never a big player. More
than a decade ago, Allstate figured out
that it would never really be any good
at commercial, so they decided to let
agents write the risks they didn’t want
through certain brokers, such as Northeast
Agencies.
Allstate agents from the 60s and 70s
used to say that the only things Allstate
wanted to insure were “riskless risks.” In
recent years, they took this philosophy a
step further when they started allowing
agents to broker commercial. Essentially,
the company gets money for doing nothing.
You see, this was when the company
began to shift its focus from supporting
agents to preying on them. We all know
that agents earn a measly 8% commission
on these brokered commercial policies.
When independent agents write
the same policy through the same carrier,
they earn between 12 and 20 percent.
So, if you’re an Allstate agent you
might wonder, “What happens to the
commission in excess of 8% Why, Allstate
pockets it, of course. If you think
about it, they have no claims to pay or
advertising expense, so it is pure profit –
earned on the backs of agents, who are
struggling to eke out a living. Then, instead
of looking for brokers with great
products for agents to sell, the company’s
focus always seems to be on brokers who
are profitable for the company – not the
agency force.
Once commercial brokering took hold
and the company saw how easy it was to
make money without risk, they created
many other Expanded Market opportunities,
especially in coastal states. These
included Couch Braunsdorf to broker
home insurance in “no write” zones,
and a slew of other commercial brokers
like Butwin, Northwest Agencies, etc. I
would be remiss if I failed to mention
Florida, the mother of all property brokerage
states. The ability of Florida Allstate
agents to broker property policies
was born after Hurricane Andrew devastated
many parts of the state in 1992.
Allstate was overexposed and has been
trimming back its market share there
ever since.
Next, the company started outsourcing
claims and all internal support functions’
such as tech support, customer
service, billing support, etc. This is
when the mutual respect part started
to disappear. Before then, when agents
tried to resolve customer problems, they
always had adequate help. All of a sudden,
agents found themselves wasting
hours on the phone trying to decipher
42 — Exclusivefocus Spring 2013