Why Are There So Many Allstate Agencies for Sale Now?

FinanceGuy

New Member
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I am in the finance arena now and have been considering transitioning over to insurance. I sold insurance several years ago (straight out of school) and the company I was working for folded.

I have kept my eye out for the right agency in the right place and right now there are more Allstate agencies for sale than I have ever seen.

Did they change their structure, are they not as competitive anymore, or is there some other explanation for the mass exodus?

Thanks!
 
The neighborhood/storefront P&C shop model is crumbling. The direct writers like GEICO and Progressive are crushing them.

Why do I need to come down to someone's office to buy a commodity like auto insurance when I can do it from my computer with esurance twenty-four hours a day?

In addition, the costs for office, support staff, etc. really effect the ability to make a profit. The business model is doomed.

Are you in Good Hands?
 
I can understand that. But being in my line of work (mortgages) the number of homeowner's I see with someone other than Allstate, State Farm, or some type of local agency is less than 5 percent.

There seeems to be something going on with Allstate internally that is forcing agents out. Anyone know for sure?

Also, moonlight - let's say I did the insurance thing on the side. Who would you reccomend looking at as a GA or MGA in Georgia?
 
Danny Devito

"You know, at one time there must have been dozens of companies making buggy whips. And I'll bet the last company around was the one that made the best goddamn buggy whip you ever saw."

He'll be making that speech at the State Farm stock holders meeting in 5 more years.
 
Allstate, like many of the big name companies has gone through a period of time where they decided their "agents" were a expense rather than a asset to the company and thus began treating them as such.

The corporate model changes and you go from appreciated to tolerated.. grudgingly...

So now when the market and marketing methods are changing the desire to work for people who think you're shi te... just doesn't make you want to fight that battle much longer.

the internet and progressive aren't killing Allstate, Allstate is killing Allstate... kinda hard to continue to fight for a team that really doesn't want you.
 
the internet and progressive aren't killing Allstate, Allstate is killing Allstate...

How true.

I once worked for Allstate. Back in the late '90s I was shaving in some hotel one morning, and Tom Wilson (now Chairman of the Allstate Corp, succeeding Ed Liddy...yup - the AIG guy) who was President of Allstate Property & Casualty at the time, was being interviewed on Bloomburg TV.

He went on at great length about how the research showed that the internet would really never be a good distribution alternative for insurers...

Positively visionary.
 
The neighborhood/storefront P&C shop model is crumbling. The direct writers like GEICO and Progressive are crushing them.

If by 'neighborhood/storefront P&C shop model', you mean a direct agency force, this is probably not true. I'd like to see ANY numbers that support this. In fact, just the opposite has happened. Geico and Progressive have storefronts. They burn more money in advertising to get the traffic to the site.

The storefront itself is more for the agent to be seen as a credible insurance professional business person. Bankers don't cash your check in their home office, the grocery clerk doesn't sell the groceries from their own pantry, and the gas guy doesn't sell cans of gas out of his garage.

While I don't ever go into the bank, I know that there is a professional banker inside, supported by tellers, loan officers, etc, that can take care of my needs should something come up. Same is true with insurance. It's not about buying the coverage, it's about what happens when something 'comes up', and being seen as the professional that can take care of the 'something'.

This does not require a storefront. I know several agents who do well working out of various places. The successful P&C agents that do extremely well for themselves that I know all have storefronts. Not a requirement, but, there is a noticable trend.


To this day, business, workers comp, and several other types of P&C coverage require the intervention of an agent. Yeah, some online, but very, very little.

In fact, it's somewhat misleading. The fact that an agent has an office with a shingle hanging outfront, doesn't really mean he wants to deal with the person who needs to get liability coverage so they can go down and register the car and not make another payment till next year. In fact, agents prefer these individuals go to Geico, e-surance, The General, etc.

The issue with Allstate selling offices is several things hitting at once, some good, some not.

- Have you looked at the average age of captive P&C agents? Allstate has a retiring 'fleet' of agents. This is true with most carriers, they had a harder time recruiting agents during the '90s and early this decade. Many agents are well over 60, some over 70. They are looking to leave. (This is true with State Farm, Allstate, Farmers, and others).
- Allstate allows their agents to sell the business. Most captives don't. A lot of new people in the market, meaning its a reasonable time to sell.
- Ooops, Katrina hit. Southern California wildfires hit. Allstate insured a large part of these losses. Ed Liddy didn't believe in reinsurance. Ooops.... Reserves are depleted, causing Allstate to stop new sales in some areas (especially homeowners). This had many ripple effects.

Near as I can tell, Allstate is still a solid company, believes strongly in the agency force model, but has to deal with some setbacks. If I was looking at buying an agency, I would be a bit careful about the multiple on the business, looking closely at retention ratios. At least in California, they had some rate increases a while back that are working their way through the system. Once that has stabilized, they should be running pretty smooth again.

In the meantime, I've enjoyed adding a few Allstate clients to my book :)

Dan
 
"- Allstate allows their agents to sell the business."

Your buyer must be unilaterally approved by Allstate. Rumor has it that these approvals are occasionally withheld for rather political reasons...
 
"- Allstate allows their agents to sell the business."

Your buyer must be unilaterally approved by Allstate. Rumor has it that these approvals are occasionally withheld for rather political reasons...

Don't doubt that a bit..... It's even easy to see how this would happen, why this would happen.

As I understand it though, you can be approved prior to making a purchase decision. This helps avoid some of the politics, not all, since they are approving the buyer without knowing what book they might buy.

I don't know any Allstate agents anymore though, so I'm a bit out of touch with their internal workings.
 
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