Allstate Says Bigger Is Better; Agents Say It's Just Easier to Fire Them

The nation's largest publicly-held home insurance company, Allstate, has been battling with its own agents since 2000 when former CEO Ed Liddy kicked them out of the house and made them independent contractors - except for a few clauses that still tied them to the insurer.

Now Allstate has added a new wrinkle: agencies have to expand and earn between $3 million to $4 million in premium business each year. According to executive director Jim Fish, of the National Association of Professional Allstate Agents, the days of the small Norman Rockwell office with a single kindly old agent are doomed - as are about 3,300 agents.

According to the National Underwriter, an Allstate spokeswoman denies the part about axing the agents, but does admit that the insurer wants to enlarge the size of its agencies to make them more efficient. Allstate CEO Tom Wilson said this at a Goldman Sachs conference in December.

And Allstate isn't alone. Troubled American car companies are also seeking economies of scale, shutting down small dealerships and focusing on keeping just one major dealer in each area; a practice followed successfully - at least until recently - by Japanese carmakers.

This would allow the property casualty insurer, which like its competitors is suffering from the recession and the decline in premium revenue, to keep offices open longer and, more importantly, get more mileage out of each customer by selling them more products when they walk through the door.

But NAPAA sees this as a way to ease out older agents who've already gotten a book of business, while retaining their clients. NAPAA's website features a Job Fair for soon-to-be-forcibly-retired agents at NAPAA's national conference in May.

"There are countless stories of ... Allstate agents who made the transition to the real world where intimidation of workers is not the cornerstone of success," says NAPAA's 68-year-old President Bob Isacsen.