Allstate Revises Agent Compensation Plan

Allstate’s captive agents have been spared part of a planned cut in their commissions as the insurer has revised its compensation strategy.

The insurer said it would cut its base commission to its agents to 9 percent of the auto and home premiums they write, down from the current 10 percent, beginning in 2013. It previously said it would cut the base to 8 percent and restructure compensation to reward its larger and the most successful agencies. The 9 percent will not start until 2013 and will be paid until 2014. Allstate didn’t say what will happen after 2014. The plan doesn’t affect independent agents who represent Allstate and who are paid more.

Also, the revised pay program, which was announced late last month, provides ways for agents to earn an additional 6 percent in bonuses on top of the 9 percent base. Thus top earners could see total commissions as high as 15 percent of their annual premiums. Now they can earn a high of 14.2 percent.

Those higher commissions come with strings attached, however. The plan aims to reward agency owners who meet what Allstate calls “agency success factors” that include education requirements, upgrades to office facilities, a minimum staffing requirement, and meeting a quota for sales of Allstate Financial policies.

The previous 8 percent plan was pushed by Joseph Lacher, who was brought in as president of the Allstate Protective personal lines unit in 2009. But Lacher left the company last July before the commission plan was put into effect. Mark LaNeve, senior executive vice president, now manages the agent compensation program.

Some Allstate agents were unhappy about the planned cut to 8 percent and a push by the insurer to encourage larger agencies. That discontent fueled a vote last August, by a group representing 10 percent of Allstate agents to form a guild and affiliate with a union. Members of that group, the National Association of Professional Allstate Agents (NAPAA), claim the insurer is manipulating independent contractor rules, terminating long-time agents and driving down agent morale- claims that Allstate denies.

NAPAA agents aren’t happy with the 9 percent commission either. Jim Fish, the group’s director, said members have “drawn a line in the sand” at 10 percent. He said his members are irked because of the difference between what Allstate’s captive agents will get and the 15 percent he said that Allstate pays independent agents. Fish said a captive Allstate agent with a $1 million book of business will realize $90,000 in base revenues at 9 percent, while an independent agent holding an Allstate contract earns$150,000. “How fair is that?” Fish asked.