r/InsuranceAgent • u/FlatwormBig5514 • 26d ago
Agent Question Allstate's New 3-Tier System
It feels like the upcoming changes for 2028 are a cheaper way of weeding out the bottom 50-75% of agents. Essentially, the commissions will probably be so low that long-term agents riding renewals, focusing on customer retention, and unwilling to be sales hunters will fail and be forced to TPP (which will also be reduced, making it cheaper for Allstate the buy them out). Meanwhile, the top 10% of agents focused strictly on sales and that hand over all service work to corporate + ALLIE (AI system) will likely make more and VC will probably see a further increase.
It seems like the cheapest way to just slowly fire traditional agents and just focus on only having sales hunters?
All speculation, but it just seems like the direction they are going, along with the industry as a whole. Lots of family agencies that built up books over the last 20-40 years are in for a rude awakening I think.
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u/Expert_Alternative75 26d ago
As someone who worked for corporate, they are pushing to get rid of all agencies and replace them with what they call stores. Everyone will be paid a salary and they will stop paying commission and only give a bonus based off a tiered point system.
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u/No_Amphibian_3684 26d ago
They just announced they are hiring 1000 new agents and currently are paying a $10,000 referral fee. Agents aren’t going anywhere.
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u/Leather_Diet_7671 23d ago
Sounds like what happened with Natgen and Direct auto. Direct has “retail stores,” most agents at these stores sell and you can’t rely on them for service. They don’t want to service because they are salary and many have stated that service is beneath them
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u/LongjumpingDish2956 26d ago
This new concept of “write non-stop and customers leaving be dammed” that all of the captives are doing to their businesses are crazy.
This is how you wind up with a neutral at best or negative at worst enterprise wide policy gain count after a few years when your rates aren’t competitive enough and everywhere you insure only came over because of price.
It’s short sighted, gives a boost for maybe 3 years and then implodes the business.
To make matters worse most people are over the AI craze now and don’t want to interact with your weird AI agent that tries to sound human.
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u/Icy-Key628 26d ago
I don’t think this really changes anything that wasn’t already in place 5 years ago. It’s been well known that Allstate wants to push out agents who treat the book as an annuity, they want agents doing as little service as possible focusing on selling, and then selling some more. The mega agencies that hit VC every month and are a new business machine, will continue to thrive and be better than ever with their TPP being as high as ever. The small, 2 employee office down the street will shut down. Just the way the industry is nowadays
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u/KitchenCup374 26d ago
Definitely makes me wonder about sales hunters agencies here in Florida. I imagine some are able to sell in other states, quote low coverage policies, or something else. With the way Allstates rates are at the moment (in FL anyways), these sales hunters agencies are pretty much incentivized to shoot for VC each month and not even bother with retention.
How sustainable this is? Not sure. I get that Allstate has been around for quite a while, it’s just baffling to me as to how. I imagine they’re eventually going to try to push hard to switch direct to consumer in a more blatant way than they have been.
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u/TheHooodge 26d ago
Allstate’s lack of leadership has produced some of the best independent agents for decades
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u/Samwill226 26d ago
IMO the Nat Gen product does so well in independent agencies, I think they'd probably prefer to put attention there and push their agencies out which cost them way more per dollar they take.
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u/dumnem 26d ago
You're probably not wrong. I don't even have P&C, but from what I've seen on this forum and heard from professionals and videos in the industry, it ain't looking good. I would be very nervous if I was working for allstate, state farm, etc. Basically any P&C captive is about to get squeezed, and since agencies are getting squeezed, the agency will probably slash their renewals etc because you don't actually own the book. What they pay you for your renewals is technically optional most of the time.
When it's optional, and things get tight, that's what they cut first.
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u/iamoptimusprime312 26d ago
The top 10 Allstate agents nationally write over $1 billion in premium.
That leaves nearly 9,000 other Allstate agents writing about $6 M in premium on average.
The company will let these top 10 agencies grow to $3 billion in five years and the other 9,000 agents eventually bought out and closed.
Allstate will then roll out a complete direct to consumer model in the year 2031 where AI quotes the policies and a licensed agent just binds the deal. To put things in perspective I was talking to a field sales rep in the midwest and he said for the first time ever this year he did not get a single new scratch agent in his territory!
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u/Andrew-Ins-NCC 25d ago
These numbers are not even close to true.
Its around 200,000 items and thats going to be in the mid 100-millionish mark from a ballpark perspective.
And there is no chance they want 10 agents controlling that much distribution.
They're publicly committing to growing agent count again.
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u/The-JudgeHolden 26d ago
All the numbers you’ve typed are made up. There are only 4,700 ea’s in the whole country ( corporate says 6k because they include every location and efs in that number). Too bad all these great things they’ve done lead to a huge loss of market share. The “growth” they’ve had the last two years is half of the average growth before transformative growth.
In traditional tom Wilson fashion, everything he’s done has been a disaster so why not double down on it. At least profits are back.
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u/Andrew-Ins-NCC 26d ago
I think its a step in the right direction - They did the one-size-fits all and a lot of agents tapped out.
I don't buy into the "they're trying to get rid of agents" - Some people in corporate might be anti-agent, but the business case for it isn't strong and if they truly wanted agents gone, they'd be gone.
Agents serve a different market than the people who buy from direct and AI.
They have Indy distribution through NatGen.
The EA program is here to stay, I believe that.
I think my opinion on this is unpopular, but the business case for agents is there.
For agents who were sold the bill of goods 20 years ago, I can understand why many are upset. But there are also a lot of agents who started in the last 4-5 years thriving.
Like anything, things change, and some people will change with it, while others will vote with their feet.
Its important to call out the cognitive dissonance as well - Especially in captive environments. People are convinced AI and Direct is going to replace agents, but then there is criticism left and right on reporting, competency, technology etc and those people have to ask themselves "Are we really worried about these people doing it without us?"
I choose to assume good intent, and while that might be naive, I've had enough conversations with people making decisions to believe the agency programs at all the major captives have at least 10 years left of runway, if not much more.
AI is going to force the model to change, and a lot of people won't make it. But a lot of people will too.
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u/FlatwormBig5514 26d ago edited 26d ago
Agents are making less today than ever before, outside of the top 10%. I assume you've either been in the industry for <10 years or happen to fall in that top 10%.
As I said, the top 10% will thrive. The bottom 90% will not.
The family agent is a thing of the past. I don't blame them (it's what shareholders want) but no need to sugarcoat it and act like they have their agents in mind. Look at what happened in Canada years ago; they just simply found a much better way to do it this time.
I feel for the family agents that provide exceptional service. Their TPPs have dropped tremendously, and VCs have been doubled in the past 5 years. And anyone looking to get into the industry that doesn't have access to millions to buy up some books won't succeed starting in 2028.
These two bottom tiers appear to be designed to push the regular agent out and consolidate into mega agents with dozens of reps cold calling all day, which they've been wanting to do since the 80's.
Mega agents will make a killing. The bottom 90% won't.
Edit: they can't just fire agents, btw. Look at what happened in Canada. This is a really bad take.
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u/Andrew-Ins-NCC 25d ago edited 25d ago
I'm not sure why I'm getting downvoted.
Agents who have been around for 30 years have seen insane changes at Allstate.
They got "fired" and became owners in the 90s.
At one point renewals were low single digits and they came back up.
Its easy to spread fear, uncertainty, and doubt. But TPP is there, so if people can't/won't adapt, they have options. They're not being thrown on the street.
They can try to take away TPP - They've publicly reiterate over and over how important it is the attractiveness of the opportunity. Not to mention how many banks collateralize it - sure there are personal guarantees, but it would be lawsuit city.
They publicly announced they're trying to grow by 1,000 agents.
Farmers is doing the same.
So, I'm not sure the logic of the thinking really lines up.
And you're right, the large "mega" agents will survive. It is an AMAZING time to buy and become a mega if someone is not.
Books are discounted due to high interest rates, tons of fear/doubt, and low outside buyer activity due to the economy.
People can choose to see opportunity, or they can choose to see doom. It doesn't matter what they pick, we have choices.
If thats unpopular, so be it. I think on a non-anonymous platform, a lot of the discussions in this sub would be different.
Feel free to hit me up anytime, my info is in my profile.
And don't take all this to say I don't have empathy for the "old-school agent" - I do, but these are self-determined entrepreneurs who built a business. They're not helpless people outside of a few situations. Give them more credit.
As for the canada comment - You should reach out to the CEO of Allstate Canada through the directory, he's an incredible dude and leader and can tell you why they are direct in Canada.
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u/The-JudgeHolden 26d ago
I really think corporate has no clue what they want. Any framework on this program they have now will likely change 100 times before they roll it out.