Analyst warns about agent dissatisfaction at Allstate (Mary S.)

By Becky Yerak Tribune staff reporter

6:52 a.m. CST, February 10, 2012

 
Allstate Corp.‘s insurance premiums could be at “considerable risk” in 2012 if in fact agents are as unhappy as a new survey suggests and if their ranks have dropped as much as estimated, an analyst said Thursday.

On Wednesday,  the National Association of Professional Allstate Agents Inc., which is often critical of the Northbrook-based home and auto insurer, released a study showing that nearly 73 percent of agents were “not very” or “not at all”  satisfied with their relationship with the company. Also, when asked if they’d be willing to refer a friend or relative to become an Allstate agent, 85 percent responded either “not likely” or “would recommend against it.”

Meyer Shields, an analyst with Baltimore-based investment bank Stifel Nicolaus & Co., on Thursday said he was troubled by the NAPAA survey, even while stipulating that the group’s dissatisfaction with Allstate is  well known.

“To the extent that the survey accurately reflects wider agency sentiment, premium growth appears to be at considerable risk,” he said in a report.

Allstate says it has more than 10,000 agency owners, but NAPAA said it believes that number is down by about 10 percent. To conduct its survey, NAPAA said it sent e-mails to nearly 8,800 Allstate agency owners and received more than 1,800 responses, of which fewer than a third were from NAPAA members.

Shields said he was also alarmed, if NAPAA is correct, by the declining number of Allstate agents.

Allstate reported better-than-expected financial results in the fourth quarter, Shields said, but he remains “cautious on the name because of our concern over

deteriorating agency morale and declining agency counts, which we think will lead to disappointing” premium results in 2012.

In the fourth quarter, Allstate-brand standard auto net premium written declined 0.8 percent, as fewer policies on the books  were only partially offset by an increase in average premiums.  Policies on the book declined 1.5 percent from year-end 2010, primarily due to Allstate trying to reduce costs in New York and Florida.  In the rest of the country, the number of policies remained flat.

Applications for coverage, however, fell 14.3 percent.

Allstate brand homeowners net premium written grew 2.8 percent in the fourth quarter of 2011, due to an increase in average premium of 7.1 percent, partially offset by fewer policies on the books. During the fourth quarter, rate increases averaging 7.8 percent in 17 states were approved as Allstate continued to try to make its homeowners’ book of business more profitable.

“Longer term, worsening agency sentiment could lead to a senior management change,” or it could trigger additional investor unrest that will spur shareholder-friendly corporate governance changes, Shields said.

 

Nonetheless, Shields kept his “hold” rating on Allstate’s stock on Thursday. And the company’s shares have been unchanged since the survey’s release.

 

Jim Towns, who owns an Allstate agency and who is co-chair of Allstate’s Agency Executive Council, said NAPAA  members “seem to be disgruntled agents and former agents, and their survey does not reflect the relationship Allstate has with their agency owners.”

He said Allstate has been “working closely with agency owners to understand the challenges and opportunities of the agency force.”

“Agents understand that we have open access to senior leadership, and while we may not always agree, we are working together toward solutions that will benefit the customer, the company and the agency force,” he said in a statement.

Allstate’s Agency Executive Council includes about 20 agency owners who serve as a sounding board for Allstate’s senior management.

Last month, in an internal company survey obtained by the Tribune, satisfaction among Allstate’s exclusive insurance agents nationwide was 49 percent in 2011, down from 60 percent last year.

In the company’s own survey, overall satisfaction was higher among exclusive financial specialists for Allstate, which also sells such financial products as life insurance and retirement and savings products. Their satisfaction dipped by 4 percentage points to 61 percent.

Allstate has long had strained relations with its agents. These days, the company is trying to make a bigger push into selling insurance on the Internet and is overhauling its agency compensation structure.

 
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About internalmarket

This blog and its accompanying Twitter account have been established as social media learning tools for the Internal Communications and Employee Engagement class at Columbia College Chicago. Through this blog, we will share our observations about current events, change management and employee communications theory, and the application of social media in shaping employee engagement.
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