Andrew Simpson, in an article for Insurance Journal reported that Allstate is lowering captive agent’s commissions, but not as low as they had planned.  Beginning in 2013, the commission will be lowered from 10% to 9% on auto and homeowner’s premiums.  The original plan was to reduce it to 8%, but Allstate drew back from that plan.

Interestingly, the plan will be in effect through 2014, but no word was given as to what would happen beyond that.

The new commission structure “seems to” benefit large, growing agents.  There will be ways for agents to earn an additional 6% in bonuses, thus raising the total commission to 15%.  The current maximum commission is 14.2%.

We say “seems to” because the commissions are not just based on increasing sales.  Allstate is also requiring some education upgrades, office facility upgrades, minimum staff requirements, as well as attaining required sales of Allstate Financial products.

The revised structure will not affect their independent agents, only the captive ones.  They will continue to pay 15% to independents on both new policies and renewals.

The threatened move to cut commissions to 8% brought about a move by about 10% of Allstate agents to form a union; the National Association of Professional Allstate Agents (NAPAA.)  These agents are no happier with the 9% level.   Jim Fish, the group’s executive director, said his members have “drawn a line in the sand” at 10 percent. “Any less will send good agents to greener pastures – the price they must pay to satisfy the whims of Allstate just won’t be worth it anymore,” he said.

The increasing difference in compensation between captives and independents is becoming a stronger issue of contention.  Independents will now be paid 2/3 more than captives. 
Allstate says they have been working with agents on these changes and think that good agents who grow and manage a strong insurance facility will benefit.