Allstate is introducing channel of bind as a rating variable
According to state filings, Allstate is introducing channel of bind as a rating variable, instituting a 7% discount for those who buy car insurance online or over the phone rather than through an agent.
“There is a lower commission structure associated with direct-bound policies. Direct-bound customers are assigned to an agent, and the agent receives a commission for servicing the policy. Currently, the total commission (base plus variable) that agents earn on new direct-bound policies on or after 8/1/2019 compared to the total commission that agents earn on agency-bound policies is expected to average 20% less for new business and expected to average 5% less for renewal business. The channel of bind rating factor was selected in order to target a 7% premium reduction to reflect these differences in incurred expenses between agency-bound business and direct-bound business.” – Allstate’s Michigan state filing from June 19th.
Filings were made in several states such as Pennsylvania, Connecticut, Iowa, Michigan, Vermont, Louisiana, Idaho, Indiana, Oregon, Oklahoma, Nevada, Wyoming, Montana, Maine, Texas, Mississippi, Kentucky, West Virginia, and Rhode Island.
Last week Allstate made the news regarding massive layoffs, which will result in thousands of job cuts.
This recent move is similar to Liberty Mutual, which entices shoppers with a 12% discount if they get their quotes online.
Bottom Line: agents are surrounded by conflicted partners.