who is the redheaded stepchild of allstate's Distribution system?

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Letters to NAPAA An agent friend of mine asked me why Allstate wants agents to be S Corporations. As a CPA, I believe I can shed some light on the reason why. If you are an S Corp, Allstate is contracting with a corporation, not an individual. This is a pretty fuzzy line, but apparently they think they can sidestep the independent contractor issue this way. If you were an LLC, which is much more popular at the present time, you can elect to be taxed as an individual, partnership or a corporation, giving you much more flexibility. I faithfully keep up with the news regarding Allstate and NAPAA. I’m very excited that agents are hanging on in anticipation of NAPAA winning the war. I have to tell you this true, but unbelievable story. During a break at a CE class I was attending, I approached a couple of Allstate agents that I knew very well and asked them how they were weathering the storm at Allstate. One of the ladies looked me dead in the eyes and asked, “What storm are you talking about” I relied, “You know, the 20% commission change, the 90-day termination letters that are being sent to your 20-to 30-year agent friends and all the other changes the company is implementing.” She responded by saying, “I don’t get involved in Allstate’s business; I try to keep a low profile so they won’t bother me. And I never read any of the negative news about Allstate, because nine times out of ten the stories are grossly overstated.” I couldn’t believe what I was hearing. She was in complete denial. She has a book of about 1,500 customers, so she’s not a small agent by any means. The other friend just listened, but finally said, “I really don’t want to get involved in any conversation regarding Allstate because it truly is not safe or wise to do so.” They seemed so jittery and truly frightened to talk about Allstate. I was awestruck at how much they had changed since last year, when I left the company. I really felt sorry for them. For economic reasons, I am contemplating resigning from the large independent agency network I signed up with last year after I left Allstate. Can you tell me how this will affect the relationships I have established with the companies they set me up with Will they stop paying me for the renewals Right now I can’t see the point in paying the independent agency network a percentage of my commissions or renewals. I want to keep it all! Besides, this agency network has done very little else for me. Editor’s response: I suspect that the relationships the network helped you establish will end, but it is possible that some of the carriers may offer you a contract. The problem will be trying to write enough business to meet the minimum production commitment you’ll have to agree to when you sign a contract with them. It is not likely that you could satisfy the commitments of all the carriers you represent. In fact, you may have trouble meeting the commitment of even a single carrier. As an example, Allstate’s minimum premium commitment for independent agents is $700,000, and they’re just one carrier. $700,000 in premium would be impossible to achieve for almost any agent, unless they are able to roll business over from another company. That is why smaller agents, who want to represent top-tier companies like Travelers, Zurich, etc., are usually better off going with a cluster network until they establish a book of business that’s large enough to satisfy the commitments of the carriers they want to represent. The benefit of a cluster group is that you generally don’t have to worry about satisfying premium commitments or quotas. The cluster/ network you are with currently may not be the right group for you, but there are many others to choose from. However, if you think you can get along without the companies that the network provided, you can try flying solo with the companies you’ve picked up on your own. But as for the business you’ve written with the network, I suggest that you refer to your contract as it should include a provision for ownership of the policies you have written. Years ago, prior to starting with Allstate, I worked as a Regional Manager for a division of Cadbury Schweppes. They purchased a company that was then merged into the division where I worked. The person who hired me and later promoted me wound up losing his job. Shortly thereafter, everyone, including myself, was phased out under a management reorganization program. While I certainly didn’t agree with their actions, I understood that they legally were within their rights. The difference between the way they treated us and the way Allstate treats the agents they terminate is night and day. They gave us a six-month severance package, paid our health care for six months, paid to have us go to Princeton University for a one-on-one counseling session – including airfare, hotel and a per diem – on how to transition into a new position. We received other benefits, as well, which they gave us because they were focused on their employees overall and wanted the rest of them feeling that they are working for a good and caring company. Thank you so much for providing me with a smile on Oct 31st, my last day at Allstate. Your call was so totally appreciated! In the weeks leading up my final day, more and more people told me they prefer smaller hometown agencies like mine because they have personal connections and don’t have to drive outside their community to visit their insurance agent. I know the world is changing, but there are some things that cannot be replaced. I had a good run and I was able to raise my son in the same community where we lived, worshipped and worked. Thanks again Nancy for your kind words and all that you are doing for the 12 — Exclusivefocus Winter 2011/2012
agency force. Many blessings to you, your family and the invaluable work you do each day. My Name is Dave Achenbach. I sold my book in July and was lucky enough to buy a brokerage in August of this year. I just wanted to let the Allstate gang know that this was the best decision I have ever made. My Dad was an Allstate manager for over 30 years and I was an agent for 24, so needless to say we were true-blue Allstaters to the core. We now have over 30 carriers and not one of them has ever imposed a “quota” or a production requirement of any kind. So if your manager tells you the independent brokers have quotas, you can tell him otherwise. The agency I purchased has been in business for 20 years, which is helpful. But what I’ve noticed more than anything else is that I am now treated more like a respected professional, not like the leveraged employee I was while with Allstate, where I felt like I was an employee without benefits in spite of being called an ‘independent contractor’. The best advice I ever got from Allstate is that change is a good thing. However, it was mostly only a good thing for them. Think about it; comp changes, burdensome new processes, production requirement modifications – you name it and they changed it. But then, sometimes change is really a good thing, like when I decided to become an independent broker – it has been a dream come true. The only day-to-day difference between being a broker and being an Allstate agent is that now I have a bit more paperwork to do, but it only takes 30 minutes more each day… When I was planning my departure, I would see the Allstate commercials on TV and think to myself, “Wow, when I am no longer an Allstate agent and I see one of these commercials, will I kick myself for leaving such a great company and a great job” Now when I see one, I get a smartass grin on my face. If you’re planning to leave, I can assure you there is life after Allstate! David Achenbach dave1282@att.net I left Allstate after 37 years. Though my departure was not voluntarily, when I think about it, Allstate probably did me a favor. I am not a fan of Tom Wilson. He is arrogant and ill-equipped to run a sales organization like Allstate. My hope is that the company can survive him and his board of directors; if their actions are not criminal, then they should be. Please change my physical address and e-mail address. I want to keep up with the goings-on at Allstate; maybe just so I can read one day soon that the whole bunch got fired... Thank you for all you guys do, keep it up! I had a deal to sell my book to my office partner, but he had to decline because the company made too many additional demands on him. There was only one other approved agent who was interested and I approached him. He had lower management’s approval to buy my book and another agency, but he could really only afford to buy one. He chose the other agency. I probably would have made the same choice because more than 50% were monoline customers, giving him a better chance to grow. The other agent was leaving the insurance business and had not developed a good rapport with his customer base. My book is 37% monoline business with very little room for cross-selling, plus I have an extremely good relationship with most clients, and am staying in the insurance business – buying an independent agency. So buying my book was less appealing to him. Because of the delays and denials from the company, I had to extend my departure date another 30 days to complete the transaction. This has caused me to sell back to the company, which will be worse for the company, because once my 12 month non-compete is up, I’ll be able to solicit my old book. It is an unfortunate situation for them, but I tried to play by the rules. If you’ll remember in my Down on the Farm article in the last issue of Exclusivefocus, I addressed the issue of inept lower management as being a reason for Allstate’s poor retention when compared to State Farm. In the last few paragraphs, I cited the problems I was having on my auto claim due to their failure to total out my car. I’d been begging and pleading for two years and all I got in return was crap and references to complicated rules that prevented them from totaling it out. Then I sent them a copy of the article. I promised them if they didn’t pay off my claim, my next article would name names, give details and I would also collaborate on an article with my ‘good friend, Russ Wiles, the financial editor of the Arizona Republic. Guess what They couldn’t settle fast enough... and for a couple of thousand more than I expected. Back in March I received a letter that is the prelude to the 90-day letter. After some thought, I decided that staying just wasn’t worth it anymore. I’ve been an agent for 39 years and I’m 64 years old. I enjoyed my job and my staff, but just didn’t think it was worth the trouble to fight to stay on only to face more threatening letters down the road. I sold my book and will continue to work for my buyer at least through the end of the year to help him through the transition. I’ve known my buyer for nearly four decades, so the sale was amicable. If I was a younger man with more financial obligations, I might have tried harder to reach my Expected Results, but the thought of putting up with woople, ALI, SRM, my work items, and the rest of the garbage that they throw at us, made my decision easy. In June, I received the 90 day letter, which I fully expected, even though management had known for months that I was in the process of selling my book. I received a call from my MSL stating he had to meet with me to go over a check- Winter 2011/2012 Exclusivefocus — 13
Page 1 and 2: New Facebook Changes Creating Celeb
Page 3 and 4: $ We lend it to Allstate agents. It
Page 6 and 7: president’s letter NAPAA/OPEIU Gu
Page 8 and 9: NAPAA Board of Directors 2011-2012
Page 10 and 11: feature The Redheaded Stepchild How
Page 14 and 15: list of things and hand me a letter
Page 16 and 17: feature Looking a Gift Horse in the
Page 18 and 19: feature A Brief History of the Alls
Page 20 and 21: sales and marketing How to Create C
Page 22 and 23: SAVE THESE DATES... March 2‐4, 20
Page 24 and 25: to pay our employees to watch it. T
Page 26 and 27: feature One Heckuva Job, Mr. Wilson
Page 28 and 29: Adage Capital Management, L.P. had
Page 30 and 31: careers Figuring out Clusters and N
Page 32 and 33: feature Is the “Reign of Terror
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Page 36 and 37: feature Gestapo-like Tactics in Ups
Page 38 and 39: feature We, the Allstate Agency Own
Page 40 and 41: social media What You Need To Know
Page 42 and 43: usiness planning Know your Exit Str
Page 44 and 45: careers paths Where are Your Client
Page 46 and 47: feature A Field Adjuster’s Perspe
Page 48 and 49: opinion A Silver Lining Shines Thro
Page 50 and 51: investing Avoiding the Biggest Inve
Page 52 and 53: NAPAA leadership series Renegade or
Page 54 and 55: without resistance. By making an ex
Page 56 and 57: Affiliation with OPEIU It Pays to B
Page 58 and 59: Letters to NAPAA Continued from pag
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the NAPAA market place Agencies for
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