Allstate Corp. (NYSE: ALL), the nation’s largest personal property insurance company, announced yesterday that it plans to cut back its call centers and non-sales staffs and replace some of those functions with direct-response call centers and the Internet.
Allstate will invest in new agent and claim technology, as well as new online marketing and advertising efforts. The company’s current Web site features descriptions of Allstate’s various products, insurance buying tips, safety tips, rate calculators and other tools, but no direct policy sales.
Adding e-commerce will put the company on equal footing with auto insurance brokers who have taken the leap into selling policies online. Larger, multi-policy companies such as Allstate, Prudential and State Farm have been slower to embrace the e-commerce world, largely due to the belief that consumers who are making decisions about life and health insurance want more personal hand-holding than a computer screen can provide.
Like many other established companies that add an online element, Allstate is counting on the power of its well-known brand to drive “substantial market penetration” in the Internet and direct marketing sectors. The company plans to begin implementing its new plan next May and hopes to reach more than 40 percent of the U.S. population by the end of next year.
“Allstate is a company that has always delivered products and service to our customers when and where they wanted,” Chairman Edward Liddy said. “Now, many of our customers and potential customers are telling us they want our products to be easier to buy, easier to service and more competitively priced.”
Allstate plans to reduce current expenses by $600 million (US$) per year to help fund its direct access and Internet investments. The company’s spending cutbacks will come from the elimination of 4,000 non-agent jobs by the end of next year, reducing the company’s overall non-agent workforce by about 10 percent.
Allstate will also close one field support center and four regional offices to redirect some of its funds to the online business. Allstate expects the new plan to require about $300 million in capital expenditures over the next two years.
The company will spend another $700 million on systems development, implementation and advertising.