Allstate is reducing agent commissions from 10% to 8% over the next 2 years. That’s a 20% reduction for all its agents, which are classified as independent contractors. They will supposedly take that money and pay it to the top performing agents as a performance bonus.

Allstate is also brokering loans so that larger agencies can buy up the books of smaller agents. in a clear attempt to reduce it’s agent force and motivate larger agencies. Of course, Allstate will have the final say if a smaller broker can sell it’s book to a larger agency. Allstate wants to focus on larger volume agencies because they have been losing market share in both home and auto insurance markets.

The larger agencies have proved adapt at vertical integration – selling more insurance products and services to it’s existing customers.

Allstate agents only average about $1.9 million in premiums per year, compared to State Farm agents who gross around $2.9 million in premium per year.

Many agents are obviously not happy with Allstate’s plans to reduce their pay. The National Association of Professional Allstate Agents (NAPAA) in August voted to join the the Office and Professional Employees International Union, because of the commission decrease. The top performing agencies are supportive of the increase, since it will benefit their bottom line in the future.

Up and coming Allstate Agents that are trying to grow their agencies will be have a tougher time since 20% of their pay is being taken away. But the company should see some savings as many smaller agents leave Allstate. Many may take their policy holders with them depending on the no compete clause they signed and if the clients are considered Allstate property.

Filed under: Allstate

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