A CALL TO ARMS - National Association of Professional Allstate ...

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state claims we don’t charge for NAFs,but agents know better. If someone has aNAF on their driving record or on theirLIS, we deny them a significant discountwhich, of course, costs us the sale. We arethe only company that does this, as well.After years of denial, local managementhas finally admitted openly that we arethe only company that charges more forsingles over 30 and for people with notat-faultaccidents.For ten years now we have also beencharging extra for young drivers on multicarpolicies. Charging a young driver rateon one car apparently isn’t enough, so weadd a surcharge on other cars on the policy.Then, if that isn’t enough, there is thehousehold composition that further addscharges for driver combinations that involveone or more young drivers.Allstate used to surcharge anyonewith substandard insurance when writinga line 10 auto. Then, sometimein the late 1990s it went away and theagents cheered. By then, nobody elsewas surcharging for prior nonstandard.However, our euphoria was short-livedbecause a few years later the surchargereared its ugly head once again with oneof the SRM upgrades. So once again, webecame uncompetitive for anyone withprior nonstandard. At the time, Progressivewas taking loads of business fromus, but we couldn’t write business fromthem because they were considered anonstandard carrier, unless the liabilitylimits were 100/300 or higher. So prospectshad to change their limits to buyAllstate, which apparently made thembetter risks.I bought a small but profitable book ofbusiness from a retiring agent. It was amature book with excellent retention anda low loss ratio. The loss ratio is still low,but most of the book is gone now becauseAllstate hammered it with rate increasesstarting in late 2001. Who did they hit?They went after the older drivers. Anyoneover 65 was getting hit with higherrates. The rates for drivers between 65and 70 weren’t too bad and we couldmanage those. The rates for the 71 to 75letters to NAPAALetters continued from page 10.drivers are higher than our competition.But the rates for anyone 76 years old ormore have really decimated older booksof business. Allstate has determined theydon’t want those people and the pricesreflect it. So as people bump into thesehigher brackets, we usually see them defectfrom us by the late 70s and almostall of the ones over 80. I certainly understandthat there is increased risk. But thepricing does not seem to reflect that atall. Certainly our competitors think morehighly of the older group than we do. Itis pretty well known in the older circlesNOT to call Allstate for quotes. It is awaste of time.Between late 2002 and mid-2004 Allstatetook four AIC rate increases andhit AP&C as well. But the rate increasesalong with all the other surcharges andhidden rates caused people to leave indroves. Agents saw their retention ratesplummet. If you were in the high 80s youwere among the best. There were agentswith retention rates in the 70s and rumorsof some that had dropped into the60s. Allstate saw its market share dropand it has never recovered here. In thelate 1980s we were poised to overtakeFarmers as the second place insurer inthe state. Now, some 20 years later, we’restill behind Farmers and, are about tolose our third place position to Geico,Progressive or Safeco. We are consistentlythe highest in auto throughout thestate. This makes it tough to maintainyour business, let alone try to grow it.For years Allstate was the company youcame to get good rates with home insurance.Not many companies could challengeus. This was a great way to get intothe household. Over time, we would usuallywrite the other lines of insurance inthe household, which gave us a chance to“switch the pitch” to life and financial. So,what happens next? Allstate upsets thisgreat entrée into other sales opportunitiesby raising homeowner rates multipletimes and introduces new homeownerpolicies. They told us repeatedly that thenew policy (out about 3 years now) wouldsolve all our problems. We noticed rightaway that it was not as good as the olderpolicies and it was more expensive. TypicalAllstate - raise rates and reduce coverage- wait awhile and do again.So that brings us to today. In the latestset of meetings, we have been informedthat we will soon take a huge propertyrate increase. We are going to see rateincreases up to 50% in homeowners,25% on PUPs, mobilehomes will increase35%, and LPP rates will go up asmuch as 35%. And all this on the heelsof a 17% homeowners increase last December.Customer defections are soaring.And when someone shops for the home,they also shop for the auto. We aren’tthe only company with muti-policy discountsout there and just about everyother company has a lower auto rate, sowe lose the whole household. My staffand I can usually keep people if we areonly $100 to $200 higher. We have donea very good job of keeping people happyand well-attended to over the years.The problem is that loyalty and serviceonly go so far. When clients save $300to $1,500 per year, they leave. Obviously,the company knows this because theyexpect to lose 6% of our home and autobusiness. What kind of strategy is that?Lose 6% and get a bonus?If there was some sort of market conditionthat would justify these increases,it might be easier to swallow. But therearen’t. At the beginning of the year wewere told by senior management that everythingwas in good order. Nothing haschanged here, but certainly things havechanged elsewhere. Allstate got slappeddown in California and has not gottenwhat it wants in Washington. Andhow much has Florida affected us? Alwaysthey say publicly that rates are setby state. Just last year when Californiawas told to decrease homeowner rates by17%, several of us knew that is was onlya matter of time before rates would increasehere. In December 2008, we sawa 17% increase in Indemnity HO andIdaho saw even greater increases at thesame time. This was coincidence?So why am I and so many agents con-58 — Exclusivefocus Fall 2009
letters to NAPAAcerned? We are sitting on a time bomb.We know we are uncompetitive in autoand will soon be even worse in property.Allstate is going to give our clients evenmore reasons to shop and they are notgoing to like what they see. We will bebombarded with calls from irate clients,many of whom will leave and never comeback. In the past year, a major concern bythe region was the loss of new and neweragents because of the uncompetitivesituation here. But with these enormousrate increases, I’m worried that long termagents could be put out of business too.I am not the only one concerned. I havetalked to several agents locally as well asseveral out of the area and they’re all veryconcerned. Many agents are planningexit strategies now.The problem is trying to figure whento leave. If we go soon, we can get morefor our books of business. If we wait, thebook sale value will be greatly diminishedand so will the TPP. Selling rightnow won’t be easy either. There just aren’tmany qualified buyers and those that are,are not touching a book right now. In mycase, I have spoken to three prospectivebuyers in the past year and none of themlooks promising. There are a few big hitters,but they are scaling back and givingthought to cutting staff.And as I started out, we are gettingmixed signals. Amid all this turmoil andrate activity Allstate wants and expectsus to GROW! I think Home Office hasbeen infiltrated and is being influencedby Washington politicians. Only a politiciancould say they cut a program’s fundingand claim fiscal responsibility – andget away with it. What usually takes placeis that they vote for a smaller increasethan the one that’s proposed, and theycan claim credit for cutting funding.Allstate seems to be in this double talkmode now as well. For an RFG “meets”requirement we need to ONLY lose6% of our home and auto business thisyear. Yet Allstate says it wants to grow.Hmmm… I think what they really meanis that they expect to lose 15%, but hopeagents can reduce that loss to 6%. So insteadof a projected PIF loss of 15,000,they only lose 9,000. Sure, it’s still a negativenumber, but it’s less negative thanpredicted. Welcome to the world of Allstatedouble speak.So what do we tell people about theupcoming rate increases? In the past wecould look to a CAT loss or some otherevent of events to blame, but not now.What do you say to people who are lookingat 25% to 50% rate increases? In thepast we could look at national trends forincreases. But these are generally 5% to10% increases, not the kind of increaseswe’re facing. We could even look at hurricanes,which don’t directly impact us,except for the reinsurance premiums. Wecould look to weather changes here, butthere haven’t been any. We have seen rateincreases due to jumps in building costs,but building costs have been stable overthe past year. We have seen increases intheft claims, but those only go so far anddon’t really affect the LPPs or the PUPs.So what can we truthfully say to our clientsabout these exorbitant increases?Looking back over the past 6 years Ihave seen Allstate develop and releasethree different auto policies, all of whichhave differences, not only in the insurancescores, but also in their assumptions. Wenow have three different HO policies,two different LPPs, two different boatpolicies, two PUPs, and two RPPs. Tosave clients we have had to rewrite policiesover and over again. We have savedpeople but have lost premium doing so.The alternative is to lose them altogetherand never get them back.Currently, we are rewriting fire policiesto LPPs because the fire policies aregoing away. In most cases, the LPP hasbeen cheaper for the customer. But that’sabout to change as soon as the latest LPPrate increase takes effect. All of the newprograms are the ones that are seeingthe biggest increases in rates. What doesthat say? They don’t know anything moretoday than they did when they designedthese policies. We are being run by abunch of clueless individuals at HomeOffice and we are paying the price.Contract Terminated?If you have been terminated by the company for failureto meet Expected Results, NAPAA wants to help.We will post your agency for sale on our Website at nocharge. Just fax or email a copy of your termination letterto 866-627-2232, or hq@napaausa.org.After forwarding your termination letter to us, go to theSell Agency Listing page at www.napaausa.org and fill outthe information you want included in your ad.Important:Be sure to click“NAPAA Member – No Charge” before sending.We will post your listing for free.Fall 2009 Exclusivefocus — 59
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ExclusivefocusFall 2009An Official
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A CALL TO ARMS - National Association of Professional Allstate ...

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