Insurance 101...better underwriting can lower the
loss ratio. Allstate pays their claims. The problem
with Allstate is their prima donna management. A bunch
of specialists who know nothing about the business.
They just spew consultant talk. Most can talk it but
very few can walk it! Most RVPS could not manage in a
real organisation where you are accountable for
expenses ratios, NPW, RI, and insurance profit. Northbrook
dictates and the pretty boys and girls bullshit the agents
and employees enough to come close to their targets.
Then it is off to the desert to talk consultant talk
again. You become an AVP with Allstate and are in the
fraternity for life. Then it is upward from there regardless
of your business and leadership skills. They are
weak and they know it. You want to hear about the
Simple logic. Claims take around $.60 of every
premium dollar. Production expenses take about 20%
commissions to agents, marketing, etc. Rest is left for
profit and overhead (these are pretty generic figures).
Now, isn't it easier to try to find a penny here or a
penny there in claims payments, rather than in
production expenses or overhead?
A long time ago, in
a galaxy far, far away, reducing loss expenses was
the province of wizards known in the local tongue as
"underwriters". They would strive to reduce the losses paid by
careful selection of their customers.
most companies think that of course it is easier to
find that penny in agent's compensation, employee
compensation (can you say DOWNSIZING?) or in expenses like
employee benefits. Oh, pardon me, MOST employees'
benefits. If you are on the executive floor, your salary
and stock options are doubled. The acknowledged
brilliance of senior insurance executives must not be
ALL is currently 1.8 X book value; only 11 X
earnings.....Soon the word will get out and when it does, the longs
reap the rewards. For goodness sake, forget the
stadium and just look at the numbers! I'm done ...so
I've used all online firms. Etrade,discount
brokerage,schwab,DLJ direct,jb oxford. The best and the cheapest is
Brown &co. You can use telephone,broker assist and
internet computer. This three way trading helps when
market goes crazy. Brown gives confirmation almost
instantly. I use their phone system more because booting the
PC to get to the internet takes to long when you see
a stock is moving. Good luck.
Here's something interesting from Kiplinger's
Personal Finance Magazine for June '99 (page 72) which
gives rise to a question about Allstate:
[insurance] industry as a whole is rewarding shareholders
with higher returns, but in many cases it's because
they're paying out less on claims. "It's been my
experience that whena company's profits zoom up, usually the
claims payments zoom down," says Clinton Miller, who has
testified in about 400 bad-faith cases and is the author of
"How Insurance Companies Settle Cases," as textbook
for plaintiffs' lawyers. "If you're a stockholder of
an insurance company that's making phenomenal
profits, you may want to buy your insurance from another
A 1998 Legg Mason report on Allstate, for example,
shows how profitable it can be to put the squeeze on
claims, which typically account for three-fourths of an
insurance company's expenses. If Allstate could cut its
loss ratio (the amount paid out in auto and homeowners
claims as a percentage of premiums) by just one
percentage point, the report says, it would save $186
million and add 28 cents to its after-tax earnings per
share. Between 1995 and 1997, Allstate did in fact
manage to cut its loss ratio from 78% to
end of Kiplingers report ----------
question is this: Although it might not be a good idea to
Insure with Allstate, given their low loss-ratio, that
means sky-high profits -- so why is the stock tanking?
Seems to me that is the worst of both worlds. If the
policyholders aren't being paid, all that extra cash should be
going to the shareholders. What gives?
I agree, they have an uncanny ability to take
forever to fll a market order when the price is going up,
but when you want to cancel that order... BAM in it
goes! and you're stuck. Happened to me three times,
third time I pulled out and went to E-trade. More
expensive, but quick response, no mistakes and better
I'm not hearing anything similar to the
activities mentioned in your post. And I'm certain something
like this would quickly come to my attention.
Certainly, a large number of agents exist who are so
frustrated and angry that taking legal action is high on
their wish list. Although true that individual agents
are filing lawsuits on their own, as indeed are other
company employee, a number of which show up in the
Federal Ligitation section, there is no strategy by the
agent association such as you have described. In fact,
association by-laws prohibit the association from litigating.
As to why someone doesn't wake up and address agent
issues is, I believe, due to arrogance, deep pockets,
and a confidence that the legal arena gives them a
home court advantage. This is not to say that lawsuits
will not be filed, rather that no such strategy of
starting multiple fires exists.