EF Fall 07.indd - National Association of Professional Allstate ...

y individual producers, but are availablefor cross sale opportunities. The only rewardfor servicing these policies appearsto be in the quarterly bonus calculationdescribed in the preceding paragraph. It isbelieved that the company may disregardthe relationships established by the originalagent of record and assign the policiesto the most convenient location for thecustomer. “It’s probably for the best sincewe won’t have an ownership interest in theaccount anymore,” said one agent.If there is a silver lining, it is the company’soffer to provide a base salary fortwo years beginning September 1, 2007.The salary is based on each agent’s 2006average earnings. As we understand it,agents can earn more than the base salaryonce their monthly new businessproduction exceeds the guarantee. Accordingto one agent, however, there isa caveat; “In order to qualify for the salary,you have to produce 70% of the unitaverage.” That means that if the unit’saverage P&C premium is $50,000 permonth per agent, an agent would haveto produce $35,000 in P&C premiumseach month in order to receive the guaranteedsalary. As of this writing, we donot know if the salary would be proratedif the 70% requirement is not met.Once the two year time period expires,the guarantee disappears and the agentwill only be compensated for new businessproduction plus any shared bonusesthe office team achieves.The agent population in Canadanumbers less than 500. If Allstate everwanted to test market a totally new concept,Canada is the place to try it out.The downside is minimal, but the upsidecould have a huge affect on Allstate’sbusiness model here in the U.S.It’s no secret that the company continuesto re-evaluate its distributionchannels. A successful launch in Canadacould cause the company to try the sameor a similar model here. Should the Canadianmodel ever come to pass in theU.S., there would be no market for agentsto sell their books, so the company wouldlikely buy back agents’ books of businessfor TPP (Termination Payment Provision).The company is currently paying1.5X for TPP eligible policies. Thisamount is guaranteed in agent contractssigned before November of 1999. Insubsequent contracts, the TPP languagewas removed from the contract and isnow part of the “Supplement.” Anyonewho signed an agent agreement afterNovember 1999 should be concernedbecause the TPP can be changed at willor, worse yet, eliminated altogether.Let’s say the company did changethe TPP formula from 1.5X to 1X, whatwould that mean on a million dollar bookof TPP eligible policies? Under the currentformula of 1.5X, the company would paythe agent $150,000. Under the 1X formula,however, the agent would only receive$100,000. That’s a pretty big difference.While it is unlikely that the companywill introduce the Canadian model here inthe U.S. anytime soon or totally eliminatethe TPP, these possibilities do exist. Likeother companies, Allstate will explore allpossibilities that can add to its bottomline. That is the nature of business. Theagent distribution channel is simply anoption on a table full of options. Whenthe company finally figures out a betterand cheaper way to deliver products andservices to its customers—and it will—therole of the agent will diminish. It is thenthat the company will lower commissionsand/or change contracts.We don’t know how the Canadianexperiment will play out, but we believethe change has already caused significantangst and stress for agents there. In additionto the psychological trauma, there isa good possibility that they could sustainsubstantial economic losses, once the salaryguarantee runs its course.NAPAA supports Allstate agentswherever they are. We will follow thesituation in Canada as it unfolds in thecoming months. Meanwhile, we ask thatAllstate agents everywhere join us in extendingour empathy and best wishes toour Canadian brethren.Specializing in serving Insurance Agenciesand Small Businesses nationwideWe offer many solutions that allow you to save money on yourtelecomm bill. By working with us, many small agency ownershave increased their bottom line profits by simply reducing theirmonthly telecomm expenses.On average, our customers have seen a savings of 8-15% on their monthly phone bills,depending on their current plan and features.• One Allstate agency owner has received a savings of over $1,200 + annually!The Best Part About Our Program is there is no change whatsoever in your service withyour current provider, no downtime and you KEEP ALL your phone numbers. A seamlesstransition - nothing for you to do - to make this happenWe Can and Will Save you Money for the following services:Voice (including Local, Toll free and Long Distance)Wireless (voice and data)Internet / Data Circuits (DSL, Cable, T1)For a free consultation, please e-mail or call Jeff Kaplan at732-668-8676, jeff.kaplan@btagllc.comAsk us about our referral program.Fall 2007 Exclusivefocus — 31