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DirectExpress Special

News and Views of interest to Allstate Agency Owners published by the National Association of Professional Allstate Agents, Inc. For more up to date information, become a NAPAA member today and receive

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November 15, 2010

Allstate's insurance customers defect to lower-priced rivals despite ad blitz

November 8, 2010, By Steve Daniels, Crain's ChicagoBusiness Try as he might, Allstate Corp. CEO Thomas Wilson can't keep auto insurance customers from bolting for lower-priced rivals. He tried ads appealing to their yearning for stability in turbulent economic times. He tried scaring consumers with ads warning of the "mayhem" they face with "cut-rate insurers." He even tried linking Allstate employee retirement plan contributions to customer satisfaction. Still, the Northbrook-based insurance giant's policy-renewal rate in the third quarter fell to its lowest level since the depths of the recession, and its policy count dropped for the 11th-straight quarter. Wall Street reacted swiftly to the resulting earnings shortfall, knocking Allstate stock down 7%. In a statement, Allstate says customer retention was hurt by rate hikes in some big states, including California and New York. Mr. Wilson called the quarter "a missed opportunity" and blamed inadequate customer retention for the decline in premiums and auto policies. "We need to move (customer loyalty) up, because if we move it up, retention will go up," he said in his third-quarter earnings call with analysts. "If retention goes up, growth will go up, and that'd be good for all of us." Since the end of 2007, Allstate's customer retention rate has hovered around 89%, down from about 90% for most of the decade. In the third quarter it dropped to 88.7%. That may not sound like a big change, but for a company that serves more than 17 million households, one percentage point is significant. In a statement, the company points to the 2.5% increase in auto policies from new customers in the third quarter, compared with the year earlier. But, demonstrating how important retention is, the increase of 13,000 policies from new customers was dwarfed by Allstate's overall decline in auto policies of 295,000 in the same period. Auto insurance customers are gravitating to low-priced competitors such as Chevy Chase, Md.-based Geico and Progressive Corp. of Mayfield Village, Ohio. Both are posting gains in customer numbers and premium revenue as Allstate loses ground. With car insurance, "we do see price playing a very strong role (in customer decisions) compared with other industries," says David VanAmburg, managing director at American Customer Satisfaction Index LLC, a San Francisco-based consumer survey firm. Still, Mr. Wilson has resisted across-the-board price cuts, preferring to emphasize service in an effort to preserve Allstate's industry-leading profit margins. Trouble is, Allstate's reputation for service still isn't all that

great. ACSI's customer satisfaction ratings for Allstate have risen substantially since the early 2000s, but they still trail the industry's other major players. In a 2009 J. D. Power & Associates study on auto insurance claims handling released last week, Allstate scored worse than virtually all its major rivals, including Progressive, Geico and Bloomington-based industry leader State Farm Insurance Cos. However, Allstate was the only one among the four to improve its claims ratings since last year, showing some payoff from the heavy emphasis on customer satisfaction. With customers defecting, Allstate says it boosted ad spending to keep up with Progressive and Geico. Its new "Mayhem" ads attempt to convince customers that it's worth it to pay more for car insurance from Allstate because, unlike "cut-rate insurers," Allstate will cover claimants when something bad happens. So far, the higher ad spending has only cut into profit margins. "Allstate's advertising campaign may show results at some point, but (the third quarter) had the costs without the benefits," Bijan Moazami, an analyst at FBR Capital Markets & Co. in Arlington, Va., wrote in an Oct. 28 note. Mr. Moazami had been one of Wall Street's most bullish analysts on Allstate, but he pulled the company from his firm's "Top Picks" list after the third quarter. He continues to rate it a "buy," mainly because it's trading below book value. In his third-quarter conference call, Mr. Wilson acknowledged that customer loyalty efforts in states where Allstate raised rates recently didn't prevent policyholders from jumping ship: "As price goes up, obviously people get unhappy, and you have to make them even more happy, and we just didn't accomplish that."

Romero v. Allstate update

November 11, 2010, NAPAA Headquarters The most recent development in the long-running case against Allstate for its implementation of the mass termination that cost more than 6,000 agents their employee status, came on Wednesday, November 10, 2010, when Judge Ronald Buckwalter, U.S. District Court for the Eastern District of Pennsylvania, rejected exCEO Edward Liddy's motion to dismiss two claims against him. The motion, filed on Aug 27, argued that Liddy could not be held personally liable for ERISA violations. Plaintiffs argued that Liddy was "crucial to both the creation and implementation of the mass termination program and the related release," and that Liddy had "personally made misrepresentations in order to promote the program." Ongoing information about this case, Romero et al. v. Allstate Insurance Co. et al., can be found at As of this writing, the website had not been updated with this latest event.


Allstate rolls out "Internet Customer Shopping Program" countrywide

November 10, 2010 NAPAA Headquarters Aimed at reducing standard auto defection, Allstate has begun using data obtained from an Internet lead aggregator to identify Allstate customers who are shopping for auto insurance online. A countrywide rollout of the program was announced last week following a multiple state test. Allstate has contracted with Bolder Calls, a Colorado telemarketing vendor, to make the initial contact with the "at risk" customers. The intended outcome of these calls is for the vendor to schedule Customer Protection Reviews with the agent, who will be expected to save the account. Agents can expect to receive an email notification of any appointments scheduled by the vendor. If the customer indicates that they are not interested in a review, the company will then send an email instructing the agent to contact the customer again to review their policy information. In addition, agents are warned against disclosing any knowledge about the customer's online shopping activity. "Do not acknowledge the customer is shopping - ." Agent feedback this far: "Invasion of privacy" "If they spy on customers this way, what are they doing to agents?" "Unethical, Immoral, Despicable." "They emphasize ­ in RED ­ do not tell the customer ­ they know this is wrong." "What about the lead aggregator selling this info to Allstate, who are they and are they violating their own privacy policy?" This topic is sure to elicit many more comments and suggestions from agents. We look forward to your comments. We'll have more on this new program as it unfolds.

Follow up to the `Agency Refresh' article from DirectExpress August 4th

November 10, 2010 NAPAA Headquarters Allstate has nearly completed the inspections of agency locations that began on August 10, 2010. Many agents have questioned the company's motives and are troubled by the audacity of the company's approach. Of special concern is the company's disregard of the agents' personal business information, as evidenced by its demand for information regarding the ownership and/or lease terms of agent locations. What we do know ­ the background: Allstate introduced the Branded Retail Environment (BRE) package to the field in 2006 without much fanfare. Then about a year ago, NAPAA began hearing from agents around the country about new requirements that were being introduced and implemented. We discovered that two things are happening consistently across the country: 1. All new hires, whether starting a scratch agency or purchasing an existing agency, are required to remodel the location using one of the BRE packages. In some cases, the new agent is required to move to a new location if the selling agent's office is not acceptable to Allstate management. The agent who buys a book and is forced to move is still required to remodel the new location with a BRE package. 2. In addition, existing agents who request approval to relocate their offices are not being approved unless the new office is in a retail location and is redecorated with a BRE package. Based on these requirements, it is clear that the ultimate goal of the recent office inspections is to establish uniform agencies across the country. At this point, we do not know how or when the company plans to convert existing locations, but it seems inevitable.

Allstate Operating Income Declines 16%

October 29, 2010, By Arthur D. Postal, NU Online News Service

Allstate Insurance Corp. reported a 16 percent decline in operating earnings in the third quarter of 2010 compared to a year ago because of the costs associated with settling a class action lawsuit, the company said yesterday.

Results at its auto insurance operation, its larger unit, also declined, another factor in the lower operating results. Homeowners' insurance income, however, "remained a source of financial strength for the company," the company said, although the combined ratio rose 6.4 points to 104.7 due to a higher expense ratio and increased claim frequencies. The combined ratio for the overall company stands at 95.9, up 1.2 points, as the company experienced catastrophe losses totaling $386 million during the third quarter reflecting 29 events. Overall earnings were higher, however, due to a decline in investment losses compared to a year ago. Operating earnings were $452 million, or 83 cents a share, a drop of $86 million from the same period a year ago. Analysts surveyed by Thomson Reuters expected an operating profit of 98 cents a share.

Overall third quarter net income was $367 million, or 68 cents per diluted share. This compared to net income of $221 million, or 41 cents a share, for the same period last year. The lower operating earnings reflected $79 million set-aside to settle a class-action lawsuit.

The lawsuit dealt with claims that Allstate has not settled with general contractors who oversaw construction work on Allstate customers' damaged homes. According to a regulatory filing, the case has not been settled, but Allstate's settlement offer "appears acceptable to the plaintiffs."

Problems at the auto-insurance business also contributed to the decline in operating earnings, according Allstate. The company said that underwriting income in the auto unit dropped 9 percent to $281 million as a decrease in claims costs failed to offset a decline in premium revenue.

The company continued to lose auto policyholders, as new customers were outnumbered by those who dropped coverage for the 11th straight quarter.

Thomas Wilson, Allstate chairman, president, and chief executive officer said overall auto insurance declined, "but standard auto new issued applications improved as we implemented new marketing and growth initiatives."

He said that Allstate financial's net and operating income improved this quarter from a year ago, reflecting progress on its "strategic repositioning." He said that the company's overall book value per share rose 7 percent during the quarter to $35.48 as of Sept. 30 "reflecting profitability and strong investment results."

Allstate Sees Expenses Rise in Q3

October 29, 2010, Reuters Allstate Corp. on Wednesday reported that quarterly operating income fell 16 percent, missing analysts' forecasts, as the largest publicly traded U.S. home and auto insurer lost existing customers and ramped up spending to try to attract new ones. Allstate's chief executive said the company had missed opportunities to improve its relative position against competitors and had work to do to improve growth in its autos business and profits in the homeowners' segment. Allstate said retention, a measure of how many existing customers it keeps, dipped in both automotive and homeowners insurance, in part on rate increases in some states. Measures of customer loyalty also declined. "The challenge for us in growth this quarter was on the retention side,'' Allstate Chairman and Chief Executive Tom Wilson said in a phone interview. Allstate reported a net profit of $367 million, or 68 cents per share, compared with a year-earlier profit of $221 million or 41 cents per share. But operating earnings, excluding investment gains and losses, fell to $452 million, or 83 cents per share, from $538 million a year ago. Analysts polled by Thomson Reuters I/B/E/S expected 98 cents per share on that basis. Wilson said Allstate's declines in customer loyalty were in line with others in the industry, but he was not satisfied with the result. "I see it as a missed opportunity to improve our relative position,'' he said. "When you look at our customer service levels, they've held steady but they haven't gone up and they need to go up.'' Marketing spending rose in the quarter, as Allstate moved to attract younger customers in the period. Wilson said the company also wanted to diversify its message, as people could tire of its ads, which have run for years, featuring actor Dennis Haysbert. The insurer reported a 95.9 combined ratio for the quarter, compared to 94.7 for the same period last year. Allstate said property and liability premiums written declined 0.6 percent in the third quarter of 2010 compared to the prior year quarter. Allstate brand growth of 0.2 percent was more than offset by a 16.7 percent decline in the Encompass brand, which the company said reflected "actions to improve profitability." The insurer said its homeowners premiums written for the third quarter of 2010 increased 2.4 percent compared to the same period a year ago, as a 7.2 percent increase in average premium was partly offset by a 4.1 percent decline in policies in force. The company said it had homeowners rate increases averaging 4.2 percent approved in 15 states during the third quarter. The homeowners combined ratio was 104.7 in the third quarter of 2010 compared to 98.3 in the third quarter a year ago.]

Allstate shares slide on weak 3Q results

October 28, 2010, Associated Press Shares of life insurer Allstate Corp. slid 6 percent Thursday after the company reported third-quarter earnings that fell short of Wall Street expectations. Several investment firms maintained their generally positive ratings and outlooks on the company, but investors were apparently spooked by the company's decline in earnings, a drop that FBR Capital Markets analyst Bijan Moazami said cannot completely be explained by an increase in bodily injuries and property damage that Allstate was obliged to cover. The company's net income declined to $452 million, or 83 cents per share, from $538 million, or 99 cents per share, at the same time last year. Analysts, on average, had expected higher earnings of 98 cents per share, according to a Thomson Reuters poll. Moazami ultimately concluded that Allstate's brand recognition and stock price, which he says is "too cheap to have much downside," make it a relatively safe investment nonetheless. "The company may not be the best managed or predictable, but it has continued to generate solid cash flow each year since 1992," he said. Oppenheimer analyst Raymond Iardella maintained his "Perform" rating on the stock, noting that although the company's earnings fell short of estimates it cut its catastrophic losses by $20 million. With the exception of a $70 million settlement in a class-action lawsuit, Iardella said "overall results were in line with our estimates." Shares fell $2.09 to $30.39 in morning trading.

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Romero v. Allstate update

New developments from October 22, 2010 Yesterday Judge Buckwalter issued an opinion and order on plaintiffs' motion to compel. As described in our update of September 14, 2010, several months ago we served a series of requests to produce documents, Allstate refused to produce documents in response to most of the requests, and we asked Judge Buckwalter to order Allstate to produce the documents (a "motion to compel"). As his opinion makes clear, Judge Buckwalter agreed with us on almost every issue. He ordered Allstate to produce all of the requested documents and to cooperate with us in agreeing on the parameters to be used in searching for relevant documents maintained electronically, such as emails. Also as described in our update of September 28, Allstate has refused to answer most of our written questions, called interrogatories. In response to our motion to compel responses to those interrogatories, Allstate filed a motion to stay briefing until after a decision had been issued on the motion to compel production of documents. In a brief order, Judge Buckwalter agreed that Allstate did not need to respond to our motion to compel responses to interrogatories until after the motion to stay was decided. We are hopeful, however, that his decision on the motion to compel production of documents will lead to a resolution of the dispute over the responses to our interrogatories.

News from NAPAA Shake up or Shakedown at Allstate?

October 14, 2010 Agents across the country are justifiably curious about last week's surprising changes at the top of Allstate management. NAPAA is wondering as well. And while we have our own theories about the departure of Joe Richardson and the return of Vince Fusco as FVP in the New York Region, we cannot confirm or refute any of the rampant rumors that are swirling around within the ranks of the agency force. In our opinion, it appears there is very little change - merely a cosmetic change in the position title. The MOC Vice President, for example, is now called "Field President." The other change is that instead of two Field Presidents, there are now three, so one additional position was created. Most significantly, it appears that Tom Wilson is promoting fewer long-term Allstate employees to senior-level management positions, especially those with sales backgrounds. Bringing in the right outsiders could actually be beneficial to the staid culture at Allstate, where there is a dearth of new ideas and an archaic management structure. But it remains to be seen if this new management approach will be either agent-friendly or sales-friendly - we think not. It is entirely possible that the announced organizational changes are simply a diversion tactic. Tossed out in advance of the company's earnings announcement conference call next week, it is likely that Tom Wilson and Joe Lacher will use the new organizational changes as a smokescreen to mask the still sagging PIF and premium numbers. This tactic would be similar the one used last quarter, when shortly before the quarterly results were released, the company announced it would overtake State Farm in ten years. We believe one of the wildcards the company expected to announce in its conference call next week was the Claim Satisfaction Guarantee, which now appears to have been scuttled, possibly because state insurance departments considered it a form of rebating. More to come? Such changes are designed to help the company achieve its goals, so we'll be watching closely for any improvement. But with Tom Wilson leading the charge, we may be in for another disappointing quarter.

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LaNeve Takes on More Duties in Allstate Shakeup

October 21, 2010, By Becky Yerak, Chicago Tribune Less than a year after taking the chief marketing job at Allstate Corp., Mark LaNeve is taking on a greater role at the Northbrook-based home and auto insurer. As part of a leadership shakeup, the former General Motors Corp. sales executive will also oversee Allstate's agency sales operations, in addition to his current role in marketing. The combined marketing and sale unit will report to both Chief Executive Tom Wilson and to Joe Lacher, president of Allstate Protection. "This change leverages LaNeve's strong background in sales and further expands his insurance expertise," Allstate said in a memo obtained by the Tribune. Also, 33-year Allstate veteran Joe Richardson, senior vice president of product distribution, has left Allstate. The restructuring also affects Catherine Brune, Allstate's high profile chief information officer. She joins Allstate's protection unit as field president for the south regions, which include Florida and Texas. She'll continue to lead Allstate's technology operations until her successor is named. A search is under way for "someone with deep expertise in technology trends, such as mobility and connectivity," Allstate said in its memo. An Allstate spokeswoman declined to comment on whether the restructuring, which also includes other leadership changes and aims to result in a "flatter" structure with more accountability, will lead to additional job cuts.

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Allstate's Use Of Colossus Cleared, But Changes To Be Made

Oct. 18, 2010, By Chad Hemenway, NU Online News Service Allstate Corp. said it has reached a $10 million multi-state agreement to create what it calls an "education fund" for regulators. The settlement was the result of an 18-month National Association of Insurance Commissioners (NAIC) market conduct examination led by four states into the insurer's use of claims-handling software, Colossus. The program was a "black box to regulators," Steve Nachman, deputy superintendent for frauds and consumer services at the New York State Insurance Department, told NU Online News Service. Once the box was opened, regulators found some irregularities in the use of the Colossus software, but no "systemic or institutional underpayment of claims," said Mr. Nachman. The examination found some breakdowns when it came to management and oversight of the software program regarding the payment of bodily-injury claims, Mr. Nachman added. Specifically, Allstate's use of Colossus did not always "account for regional discrepancies" and did not reflect recently-settled claims, he said. Mr. Nachman said Allstate agreed to notify claimants when Colossus may be used, enhance oversight of the program, strengthen internal auditing of Colossus and make it clear to adjusters that they do not have to settle claims based solely on what Colossus recommends. "As a concept, there is nothing wrong with using this software. You just have to do it right," Mr. Nachman said. New York's share of the $10 million will be $1.2 million. Allstate will also pay the state and the three other lead states in the examination--Florida, Iowa and Illinois--$50,000 each for expenses related to the examination. Forty-one other states have signed on to share the $10 million education fund, which will be distributed based on market share. If states can earmark the funds for a specific purpose, it will be used for education. Otherwise it will go into the insurance department's general fund. It remains unclear whether New York can earmark the money, said Jared Wilner, assistant counsel. Allstate said the agreement states insurance department personnel need better training about claims-handling technology and its uses.

"Frank's Take"

----An Independent Viewpoint of Current Issues---October 27, 2010, by Frank DeMayo

Colossus Confusion

The dream team in Northbrook has done it again. After an 18 month investigation by the National Association of Commissioners, Allstate agreed to pay $10 million to an educational fund which will go to aid 40 states' insurance departments in training personnel about claims handling technology and its uses. This is ridiculous. Most states cannot use the money for "education" unless it is specifically earmarked by them, otherwise it goes into the general fund. Although the investigation found Allstate not guilty of "any systemic or institutional underpayment of claims," the process lasted for over a year and a half, and involved Steve Nachman, deputy superintendent for frauds and consumer services at the New York Insurance Department. Senior management at Allstate is always testing the limits of its power. If it can unilaterally cancel Agents contracts, force new terms and conditions on agreements which were previously negotiated, or encourage procedures and systems that work against its agents or its agency system, then it will do it. If the injured bring a legal action against the company, and it is forced to retreat or pay a fine, so be it. Only then are limits of Allstate's power defined, and only then will they make whatever adjustments are necessary. They do not manage, they rule. Their decisions are not participatory, they are exclusionary. This time the "adjustment" was the institution of an "educational fund," which is a pathetic rationalization. Allstate has no good reason to educate regulators on the use of its claims handling technology as it will only serve to make them smarter for the next review. The cat and the mouse never exchange secrets. Allstate will do anything to hide its corporate intentions, actions, or malfeasance. Company management seems incapable of honesty. Their mentality is to seek, acquire and establish an absolute power that only serves to feather their financial nest whenever actions are taken. We all know through painful experience that pundits of Home Office goings-on have always had a problem with the truth. Now we know that they have the same trouble with lies.

F. J. DeMayo has been in the insurance business for 48 yrs. He has held positions as an underwriter, Executive Manager, Director, Broker, and Consultant. Frank has been employed by the Travelers, American Intl. Undw., Chubb, Resolute Reinsurance, and the R.J. Isacsen Agency. He resides in East Northport, N.Y. with his wife. If you have a comment for the author, please email him at [email protected]

Allstate Announces Quarterly Dividend and $1 Billion Share Repurchase Program

11/09/2010 - NORTHBROOK, Ill. Press Release The Allstate Corporation (NYSE: ALL) today announced that its board of directors has approved a quarterly dividend of 20 cents per share and a $1 billion share repurchase program. "Allstate is exceptionally well-capitalized, with an estimated $15.1 billion of statutory capital at the insurance companies and $3.5 billion of investments at the holding company as of September 30, 2010," said Thomas J. Wilson, chairman, president and chief executive officer of The Allstate Corporation. "Our capital levels result from proactive management over the last three years. These actions include sustained auto profitability, reduction of hurricane exposure, as well as a repositioned Allstate Financial. We also aggressively managed Allstate's $100 billion investment portfolio. This negated the need to raise capital despite the severe downturn in financial markets and the economy. As a result, we can resume providing additional cash returns to shareholders. Since 1995, we have returned more than $28 billion to shareholders through dividends and share repurchases," concluded Wilson. The $1 billion share repurchase program will be made through open market purchases and completed by March 31, 2012. The board also approved a quarterly dividend of 20 cents on each outstanding share of the corporation's common stock, payable in cash on January 3, 2011 to stockholders of record at the close of business on November 30, 2010.

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Allstate Announces Plans to Allow Shareholders to Call a Special Meeting

11/09/2010 - NORTHBROOK, Ill. Company Press Release The Allstate Corporation board of directors today announced plans to grant the right to call a special meeting to shareholders who hold at least 20% of the company's outstanding common stock. Resulting amendments to the company's certificate of incorporation will require shareholder approval at the 2011 annual meeting. "A similar proposal was approved by a majority of shareholders in an advisory vote at last May's annual meeting. Our board has listened and responded," said Thomas J. Wilson, chairman, president and chief executive officer. "Our board also responded to shareholder sentiments when it terminated the rights plan in 2003, adopted a majority vote standard in the election of directors in 2006, and eliminated the supermajority vote provisions from our governance documents in 2007. We took these actions after a very thorough review of each issue in light of what's in the best interest of our shareholders. We are committed to shareowner accountability and strong corporate governance standards." At last May's annual meeting, shareholders also cast advisory votes on a proposal to allow shareholders the right to act by written consent of a majority of shares outstanding in lieu of a meeting. The purpose of this proposal is similar to that of the special meeting proposal - both sought to give shareholders an opportunity to vote on important matters outside the normal annual meeting cycle. As a result of the decision to grant the right to stockholders to call special meetings, the board does not plan to take further action on written consent. The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurer. Widely known through the "You're In Good Hands With Allstate®" slogan, Allstate is reinventing protection and retirement to help more than 17 million households insure what they have today and better prepare for tomorrow. Consumers access Allstate insurance products (auto, home, life and retirement) and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives in the U.S. and Canada, as well as via and 1-800 Allstate®.


"Frank's Take"

----An Independent Viewpoint of Current Issues---October 20, 2010, by Frank DeMayo

Pick-up Sticks

Before the world was affected with the electronic madness of computer games, there were simpler times when games of diversion were more straightforward and maybe even a little corny. In those days of economic depression and world wars, simple pleasures were treated with a premium and sitting around the kitchen table playing games was considered entertainment. One game was called "Pick-up Sticks." It consisted of a couple dozen multicolored sticks which were placed in your fist, perpendicular to a table and than let go, causing a random pile of interlocking colors. The object of the game was to remove one stick from the pile at a time without moving any other stick. As the game progressed, this task became harder and harder. The game also provided a very important life lesson: It's extremely difficult to make decisions in your life that only affect you. Case in point: Allstate management's dream team has decided that many agents are too old or inefficient and should be eliminated in favor of younger, more tech-savvy workers in order to achieve the company's lofty growth goals. This random surgery to the agency system takes place at a time when the U.S. Government has revised its second quarter gross domestic product to 1.6 percent, down from an earlier expectation of 2.4 percent. This, in turn, has prompted analysts to predict that property and casualty insurers will have bleak future earnings. Therefore, maybe this is not the best time to throw out veteran agents, along with the inevitable loss of their time-tested clients, just for the sake of instituting a new unproven game plan. In the fickle world of economic "pick-up sticks," every action has a direct and opposite reaction, causing participants to wander into the minefield of unintended consequences. For example, if one is going to institute a program of premium reduction, some thought ought to be given as to how this premium is to be replaced. Surgery is not beneficial unless the result makes the patient better than he was before. Any insurance executive should be able to realize that a robust economy is needed to sustain economic growth and financial stability. The ability just to pick up one stick and not disturb anything else is not an option in the insurance market. Everything is interconnected and either we rise together in our fortunes or we fall. F J DEMAYO

F. J. DeMayo has been in the insurance business for 48 yrs. He has held positions as an underwriter, Executive Manager, Director, Broker, and Consultant. Frank has been employed by the Travelers, American Intl. Undw., Chubb, Resolute Reinsurance, and the R.J. Isacsen Agency. He resides in East Northport, N.Y. with his wife. If you have a comment for the author, please email him at [email protected]

Allstate NJ Policyholder KO's Attempt to Non-Renew Policy

November 10, 2010, NAPAA Headquarters Last week, CBS affiliate KYW-TV in Philadelphia aired a story that is all too familiar with Allstate New Jersey agents, many of its customers and, apparently, New Jersey Insurance Commissioner, Tim Considine.

KYW consumer reporter Jim Donovan's exposé last Wednesday brought the company's hardline business tactics and lack of loyalty to its own customers into question. Donovan's segment began with a short interview with Lori Tavana, an Allstate customer who was dropped for allegedly not returning a renewal questionnaire sent to her by Allstate. Tavana protested, arguing that she had completed and returned the questionnaire, but the company was unwilling to believe her and refused to budge. Luckily for Tavana, she had saved a copy of the completed questionnaire and presented it to Donovan, whom she contacted with the problem.

Donovan's next stop would be the New Jersey Department of Banking and Insurance where he learned that Tavana's case regarding the renewal questionnaires was not an isolated incident ­ in fact, far from it. In a statement sure to cast doubt in the minds of KYW-TV viewers about the sincerity of the company's Good Hands pledge, Commissioner Tom Considine declared, "We've had 179 complaints here at the department, which in all candor, is the only reason it would rise to my level."

Thanks to Donovan's reporting, Tavana's policy was ultimately reinstated, but the story goes deeper than that. Most Allstate agents have witnessed similar examples of poor treatment at the hands of corporate employees. Could such callous disregard of policyholders be the primary reason Allstate lost 1.8 million policies since Tom Wilson took over? If the company really cared about preserving customers, why would it not send the renewal questionnaire to customers in a separate mailing marked "Urgent," instead of concealing it in a pile of renewal documents and endorsements that few customers notice? And when a customer fails to respond by a certain date, why isn't a reminder questionnaire then sent out? And if there is still no response, why is there no telephone unit contacting the customer to obtain the needed information? And what thought has the company given to those legal immigrants who pay their taxes and insurance premiums, obey the law and drive carefully, but who do not have a good command of the English language?

In a missive sent out to the field last Thursday, Sheila Breeding, Stakeholder Relations Division Manager, did little more than report that the broadcast had taken place. The nondescript memo offered only sketchy details about the newscast, opting instead to cite the following "key messages," or talking points, which Ms. Breeding asserts she intends to "continue to use with the media," presumably to stay on message: 1. "Renewal questionnaires allow us to deliver on our commitment to provide a superior insurance product that is affordable and available." 2. "The purpose of the questionnaire is to collect the most updated customer information to ensure that individual customer prices are accurate." 3. "In 2010, Allstate New Jersey expects to offer renewal to more than 98.5% of our auto insurance customers."

ANJ agents, on the other hand, call Breeding's talking points "untruthful" and an attempt by the company to cover up its true objective, which is to rid itself of policyholders insured by the Allstate New Jersey Insurance Company (ANJIC) who are otherwise protected by a state-mandated renewal "guarantee," which allows non-renewals or cancellations only under certain circumstances, such as drunken driving. ANJ's other company, Allstate New Jersey Property and Casualty (ANJPC), has no such renewal protections. As one agent put it, "They just want to depopulate the ANJIC book of business any way they can. How do you spell Allstate? U-N-E-T-H-I-C-A-L."

From the outside looking in, it appears to this writer that the company is deliberately trying to rid itself of certain customers. If it's not true, then ANJ badly needs a refresher course on how to treat its customers with TLC. Following is a related story posted by former ANJ policyholder Cathy Fee on the KYW-TV website after Donovan's story aired:

"The same thing happened to me. I guess I should have called Jim, [sic] because I am now paying $600 more a year. I was with Allstate for almost 15 years and NEVER had a ticket or an accident. I talked to at least 5 different supervisors and even a regional director and was told they NEVER have lost a piece of mail and I was lying.

Just to add to the above, I am a single mother and the only driver in my household. I have a new vehicle and just started my new insurance today (Allstate lasted until Nov.3). Wish Jim had done this last week." Editor's note: The "Jim" the writer is referring to is Jim Donovan of KYW-TV.

Analysts Ratings: Argus Downgrades Allstate (NYSE: ALL) to "Hold"

November 1, 2010, Equities research analysts at Argus downgraded shares at Allstate (NYSE: ALL) from a "buy" rating to a "hold" rating in a research note to investors on Friday on a valuation call. Shares of ALL traded down 0.30% during mid-day trading on Friday, hitting $30.34.

Pennsylvania agents undercut by Allstate?

October 26, 2010, NAPAA Headquarters NAPAA has learned that consumers seeking local telephone numbers of Allstate locations in Pennsylvania are being misdirected to Allstate's Call Centers instead. As this breaking story unfolds, Pennsylvania agents are wondering if this latest predicament is a result of mismanagement at AT&T or is a deliberate attempt by Allstate to bypass the agents. In response to this news, NAPAA immediately began testing AT&T's 411 nationwide directory assistance in other states, but has yet to find any problems. In Pennsylvania, however, NAPAA made several 411 calls requesting agent locations in various cities and was given Allstate's toll-free call center number each time. We are not going to cast blame on Allstate at this time because we don't know the full story. However, we can assure you that NAPAA will continue to investigate this matter and keep you informed as the story develops. All agent communications from NAPAA, such as Exclusivefocus magazine and DirectExpress enewsletter, from which this Agent Informer was extracted, are made possible by the generous support of our dues-paying members. Membership in NAPAA is strictly confidential, and costs less than $1 per day. Now more than ever, isn't it time for you to join NAPAA today?

Join NAPAA Now!

[N.Y.] State Releases 2010 Car Insurance Complaint Rankings

October 26, 2010, Associated Press If you want to see how your car insurance company stacks up when it comes to consumer complaints, the state Insurance Department has the info on its website. The agency has released its 2010 annual ranking of automobile insurance companies showing how 167 insurers performed last year. It's based on the number of consumer complaints the department upheld, in relation to the volume of business. Nationwide Mutual Insurance Company ranks best while Long Island Insurance Company ranks worst among insurers writing $1 million or more in premiums. Nationwide was the largest of 51 companies without a single upheld complaint. Long Island Insurance had 265 upheld complaints. The two largest insurers in the state are Allstate and GEICO. Allstate wrote $1.26 billion in premiums and had 180 upheld complaints; GEICO wrote $1.22 billion in premiums and had 15 upheld complaints.

[Idaho] Allstate Announces Plan to Build $22 Million Center Here, Hire More than 500 People

October 22, 2010, By John Bulger, Idaho State Journal A well-kept secret was unveiled in the bright sunshine Thursday morning in the parking lot near Home Depot. The weedy field directly south of the business is to be home to a 75,000-square-foot Allstate Insurance Co. customer information center. The $22 million investment in the Pocatello-Chubbuck area will open in September and is expected to employ 500 to 600 persons. With the planned construction site as a backdrop, Gov. C.L. "Butch" Otter teased the crowd of several hundred for several minutes before revealing the real identity of the business that had previously been known only as "Domus" during hush-hush negotiations. "It's a great day," Otter said, and spoke to the nine-month courtship that resulted in the agreement to bring Allstate to Southeast Idaho, beating out 80 other cities. "It was a real trial," the governor said. "I will tell you that my wife didn't take this long to say `yes.'" "Well, `Domus,' or I guess it's Allstate," Otter said, as aides uncovered two signs with the Allstate logo. "This state just shines because of the relationship we build with folks that want to come to Idaho and all of the things we do to make sure they know not only that we want to get 'em here, but we want to keep 'em here and we want to grow with them."

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Allstate Eyes Agency Growth in Ohio

October 15, 2010, Columbus Business First Insurance giant Allstate Corp. is looking to add dozens of new agency offices in Ohio over the next year, with one-third of its planned growth eyed for Central Ohio. The Northbrook, Ill.-based parent of Allstate Insurance Co. said it set a recruitment goal of 45 new agency owners by the end of 2011, with 15 eyed for Central Ohio. The company has 460 agents in the state and said existing and new agencies could hire up to 350 sales workers through the end of 2011. Allstate (NYSE:ALL), which employs about 36,000 nationwide, says average startup costs for an agency office run about $50,000. Ahead of its growth push, Allstate stands as the fourth-largest auto insurer in the state, with about 750,000 cars and trucks insured throughout Ohio. It's the state's second-largest property insurer with more than 350,000 residences covered.

Allstate Eyes Indiana Expansion

October 13, 2010, Insurer Allstate says it plans to recruit 40 new agency owners in Indiana by the end of next year. Allstate currently has 215 agents in Indiana. In addition, new and existing Allstate agencies in the state are projected to hire more than 150 sales professionals. The company is targeting 18 new agencies for Indianapolis and Central Indiana, 15 in Northern Indiana and seven in Southern Indiana.


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Allstate Plans Metro Detroit Hiring Spree

Oct. 21, 2010, By Jay Greene, Crain's Detroit Business [Excerpt] Allstate Insurance Co. in Michigan has announced plans to hire 40 new agency owners and another 200 employees -- including 20 agents and about 80 other employees in Southeast Michigan -- to expand its automobile, boats and recreational vehicle insurance lines by the end of next year. Farmington Hills-based Allstate currently has 360 agents in Michigan. "This is really a great time for us to attract people who are self-motivated, are goal- and success-oriented and who want to own their own business representing Allstate," said Chris Markey, Allstate sales leader for Michigan, in a statement. "Here in Michigan, we've had a lot of success recruiting agency owners from the auto dealership industry," Markey said. The 200 employees are primarily licensed sales professionals that conduct marketing and new customer recruiting. Allstate will offer training programs. The 40 agency owners include replacements for agents who have retired or resigned, said Jeff Ormond, an Allstate spokesman. Besides the 20 in metro Detroit, 10 will be recruited in western Michigan and 10 in central Michigan, he said. Markey said agents are required to have $50,000 in liquid capital to open an agency. Allstate is currently the sixth-largest auto insurer in Michigan with 389,586 cars and trucks insured in the state. Karen Spica, Allstate's media relations manager in Michigan, said Allstate decided to expand in Michigan and in several other states because it sees opportunities for growth with its products. While Allstate is growing, AAA Michigan last year laid off more than 220 in Southeast Michigan and closed 14 branch offices in Michigan because of the economic downturn. Half of those laid off workers were in the travel division. AAA, the second largest auto insurer in Michigan, operates 35 full-service branches in Michigan, including 18 in Southeast Michigan.

Allstate looking for agents, sales professionals in Maryland

November 15, 2010, by Gary Haber, Baltimore Business Journal If the idea of running your own business sounds appealing, the folks at Allstate Insurance Co. want to talk to you. The Northbrook, Ill., insurance giant is recruiting as many as 30 new agents to open new Allstate offices in Maryland. Candidates need to have at least $50,000 to invest in their agency. Allstate (NYSE: ALL) already has 254 agents in Maryland. The company said it is also hiring at least 160 licensed sales professionals and personal financial representatives in Maryland, Virginia, Delaware, West Virginia and Washington, D.C. The positions involve selling life insurance, annuities, mutual funds and other financial services products. About 60 of those positions will in be in Maryland, said Jim Jennings, a company spokesman. If you are interested in any of the positions visit the company at or call (877) 711-1006.

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Stay informed on issues that affect you and your business. Join NAPAA online, or call 877-627-2248 ­ we'll sign you up on the phone.

Note on letters: The opinions expressed in letters are not necessarily those of NAPAA. Letters should be brief and are subject to editing. We will publish letters anonymously; however, we will not accept letters sent anonymously. The views expressed by NAPAA, or any of its positions relative to its activities and those of its members' actions on behalf of this organization, are expressly those of NAPAA, and do not reflect the views or opinions of Allstate Insurance Company, or any of its affiliates. This newsletter may not be redistributed or reproduced in any form, including electronically, without prior written permission from NAPAA.

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National Association of Professional Allstate Agents, Inc. (NAPAA) P.O. Box 7666, Gulfport, MS 39506-7666 Toll free Phone: 877/627-2248 Toll free Fax: 866/627-2232 E-mail: [email protected] Web Site:


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