Have an $11M Allstate Agency. Should I Go IA?

[161]

I have been with Allstate for almost 20 years and feel that things are not headed in the right direction for us. However, I have a very large book (for a captive) and a lot to lose by going the independent route.

My earned premium is about $11M. I do very well within Allstate's system. I have been in the top 1% for many years and have always made good money. But, with all the rumors of 6/6 and cuts to our bonus, I just don't have the level of confidence that I used to. I am not sure whether to stick it out and see what happens, or to go ahead and start moving to the IA side now. I also do not know how easy it will be to get appointed and "roll" my business. Lots to think about.

Any advice or opinions?

Thanks

 

[CaptiveGuy]

It would be hard to leave with a $11M book but 6% commission?!?! What is Allstate thinking with that but if you have built up the agency to that size want not stick around for awhile or just sell your book and ride into the sunset.

You would probably need a few carriers to roll the entire book being how large it is. Either way you are good to go.

 

[xrac]

I have been with Allstate for almost 20 years and feel that things are not headed in the right direction for us. However, I have a very large book (for a captive) and a lot to lose by going the independent route.

My earned premium is about $11M. I do very well within Allstate's system. I have been in the top 1% for many years and have always made good money. But, with all the rumors of 6/6 and cuts to our bonus, I just don't have the level of confidence that I used to. I am not sure whether to stick it out and see what happens, or to go ahead and start moving to the IA side now. I also do not know how easy it will be to get appointed and "roll" my business. Lots to think about.

Any advice or opinions?

Thanks

Understand that I am not or have I ever been an Allstate agent. However, I think the question is what can you get for your book of business now and what will it be worth later. I understand that there are rumors that Allstate will cut the TPP (I think that is what you call it) from 1.5 to 1. There is a lot of negative stuff floating around about Allstate. I am sure you are familiar with the RunningClock newsletter and New Agent Center | National Association of Professional Allstate Agents, Inc.. As that information becomes more well known it will be harder for Allstate to find prospective agents. If you as one of the top 1% are thinking about bailing out what should prospective agents be thinking? As someone else said about State Farm my advice to anyone considering the Allstate opportunity would be to "run like your hair is on fire". There are two question you need to try to answer. First, what will it cost me if I leave and second, what will it cost me if I stay.

 

[1manshow]

Just the bonus you could negotiate for rolling that size book would probably be $250K+ then you get the better commissions on top of that. Probably would offset the clients who wouldn't move. 6/6 ? that's a joke...hope they're not that foolish

 

[Josh]

Have you looked at your contract?

Mother Allstate might have understandable concerns if you roll your business and with that much volume they would probably make every effort to enforce their contract.

If you really want out then you might want to consider selling the book outright and then starting a new shop in another city (or whatever the geographical limitations of your noncompete say). If you want to take clients form your Allstate book and move them over you're starting a war I don't think you'll have intended to and I'm even more sure you'll lose.

 

[djs]

I'm not in 'tune' with the Allstate rumors, but I've heard some of the grumblings.

I understand why you would be torn in this. It sounds like you have done pretty well with Allstate over the years. I'm not sure if you have grown that entire book, bought books, or what, but regardless, its a decent block of business to have.

Without reading the Allstate contract, I can pretty much assure you that you won't be able to sell your book and then roll the clients out of it in less than a year, perhaps longer. Yes, a few moving will be incidental, but anything significant and you can expect a few letters to start showing up in your mail. These letters will politely (probably not) remind you of your contract stipulations.

Allstate internal stuff aside, I would look at it this way:
- If your book is growing, it may be beneficial to stay.
- If your book is stagnate, its a tossup, but the stuff you mentioned would be a strong tipping point towards getting out.
- If your book is shrinking, I would get out now. Why go in reverse?

I had not heard about 6/6, though I believe that is only a rumor at this point. I'm sure there is some offset to this, some bonus or something. I think you'll see more carriers move to this model, especially if it works in health. Get rid of the low producing agents, reward the higher producing ones. It's harder in P&C than health, but I'm hearing more rumblings in the industry about this model.

Dan

 

[JCK818]

You show that volume to most carriers, they will be more than happy to work with you.

 

[Insurance-Guy]

As a EA you can't roll the business over. What does your contract say? I am a IA with Allstate and there is a EA that we tried to buy and Allstate wouldn't allow it either. They will not allow IA's to buy EA's is what we were told. So your buyers will be limited to Allstate approved buyers...and I could be wrong but I am sure that your contract is not going to allow any rollover of your book.

There was a nationwide agent...a good size one around me that got fed up with Nationwide and started a IA...contract cut! Business was sold by Nationwide and divided up. He did get a decent check from what I hear but his IA shop isn't doing all that great from what I understand. As mentioned unless your book is shrinking...I wouldn't consider selling now.

How large of staff do you have?

 

[houcoogster]

If you're going to have a hard time making it with a book that size how in the world does Allstate plan on attracting new agents?

In my eyes those are your customers. You might check out any cases in your state involving former Allstate agents and see which way the law viewed it.

 

[Norwayguy]

Have you looked at your contract?

Mother Allstate might have understandable concerns if you roll your business and with that much volume they would probably make every effort to enforce their contract.

If you really want out then you might want to consider selling the book outright and then starting a new shop in another city (or whatever the geographical limitations of your noncompete say). If you want to take clients form your Allstate book and move them over you're starting a war I don't think you'll have intended to and I'm even more sure you'll lose.

I second this post...You may think you own your book of business but you need to reread your contract...From what I have heard your potential buyers must be approved by Allstate and I am almost willing to bet my life you have a strong non-solicitation and a geographical non-compete.

I can understand the frustration that you have built this agency and now your only carrier is thinking about cutting comp on you, been there done that on Life & Health, but do not forget your contractual obligations.

Pull out your contract and re-read it...Then bring it to your attorney and have him review it and discuss exactly what it means....I did that on a previous contract, I read it and thought it meant one thing and took it to my attorney and he agreed it worked like I thought but he pointed out the wording in the contract actually worked ouot even better in my favor than I realized (Those commas and period can really make a difference in a contract).

Having said the above and even if your contract clearly said you could roll the book (which I doubt) I would expect if you tried to roll 11 Million in premium away from Allstate to quickly see cease and desist letters and then a lawsuit, they may not win but neither would you, they would tie up all your time with the lawsuit so no prospecting time they would hamper your growth buy tieing up all your funds defending a lawsuit and don't forget the lawsuit will probably take place according to their contract in their home state I don't know where you are located but factor that into your thinking.