The All Aboard Newsletter

Today’s edition is an important one, especially if you’re an Allstate Agent. With the 2024 Comp Changes coming, I’m laying out my plan for the coming year. I’ll quickly cover growth, and then dive into the strategies.

As a favor, if you get value out of this newsletter, please consider sharing it. Whether its an agent, an office manager, or someone in the industry, I’d very much appreciate it.

Lets take a ride!

Growth Update!

We got off to a slow start in July, but ended strong. And while we wrote 900 or so items, our expectations for growth had been tempered.

For several months, we had been growing by $500k+, but in June, growth finally slowed down. We attributed the slow-down to the rate increase finally completing the full renewal cycle.

But apparently, the huge growth months weren’t a thing of the past. July’s growth was huge!

From a premium perspective, we grew by $654,696!

The bump in growth could be attributed to the 2nd month in a row our retention improved, it could be to seasonality, or maybe to put it simply, we go lucky.

Whatever it was, we’ll take it (But we we’re digging into data to figure out why the growth number is so different).

Retention improved a full 1% in June, and another 0.50% or so in July.

If we want to have any shot at “outrunning” our loss-ratio need as much growth month over month as possible.

The good news?

We have reason to believe that our growth will continue to be strong for the next twelve months.

We were told we have a 12.5% rate increase coming on our homeowners product. With a $10million+ home book, thats going to drive a solid amount of growth.

We expect retention to drop about 3%, giving us a net increase of 9% across the entire home book.

We’ve also been told to expect another auto rate before the end of the year, which will further drive premiums up.

New business will face some challenges in the back part of the year due to the increasing rates and tightening RMPS. However, because we’ve gathered so much data in the last year through diligent tracking, we’ll be adjusting our targeting for leads and mail well before the changes even take place.

We’re able to ascertain that roughly 25% of our quotes fall into a market segment that will be affected by RMP changes. Thats not small amount, however we feel confident we can expand our marketing efforts in the remaining segments to keep our momentum.

And while we expect the new business item production to slow at first, our premium should hold, and then ultimately go up as we adjust to the changes.

The best news of all however, is that our loss ratio finally made some slight improvements.

We’re happy to say that the Loss Ratio on our 12mm went down roughly 2%.

The more that our rate continues to bake in, and the more that we continue to write and grow our auto book month over month, the better shot we have.

The bonus is expected to be about $1,300,000 and right now, we’re technically on pace for $0.

So we have some work to do.

We have 5 months left, and thats still a TON of time.

2024 Strategy

In an effort to keep this section concise, which is a tall order for me, I’m going to try and be direct, and to the point.

I will certainly be talking about these strategies more in the coming months as we work to execute on them. I imagine these strategies will change and evolve throughout the next several months as we get feedback, learnings, and make adjustments.

This math is largely performed with ball-park figures in mind. Aka, they’re not fully 100% accurate, but they’re close enough for initial planning.

Lets do it.

1.) At least 1 Full-Time Monoline Salesperson

With the reduction in commission on Monoline homes from 9% → 7%, there is now extra motivation to work these policies and convert them to bundled business.

I have roughly a 70% multi-category rate, but because the book of business is large, I’m left with 2,756 Monoline clients.

The goal here is twofold:

• Reduce your paycut from the commission changes as much as possible

• Generate high-quality, high commission new business with minimal marketing spend.

The quick way to figure out your paycut is:

• (Monoline Home Count x Average Premium) x 2%

For me, that number looks like this:

• (1,551 Homes x $1,600 Average Home premium) x 2% = $49,632

That $49k doesn’t even include the reinsurance costs that have been passed through to us. But considering there is nothing we can do about that, its neither here nor there.

I have been debating having a full-time salesperson work the book for most of the year. Currently, we have one person who works the book for a few hours a day.

The results have been great, but given this person’s other responsibilities, we took what we could get in terms of time.

But with the change, the stakes are higher, and the benefits to a specialist more clear.

Here is what the math looks like for my book with a full-time salesperson working the book.

As you can see, the numbers look extremely hittable.

Based on a producer making $5,000 per month, I would only need 13 autos written on current monoline home clients to breakeven.

Even better, I only need 8 home policies to breakeven on that producer’s pay.

The reality is, that if a producer was calling all day, every day, we have a strong belief that a producer could write 25-30 items from this source with ease.

The best part is we’re only looking at auto/home, and not even counting what we might pick up in terms of life, pup, and toys.

Its important to note though, that we’re choosing to have a producer (or two) on this full-time.

We could use a caller to drill into the book, which we’ve done in the past. We could also try to get our CS team to work monoline renewals and cross-sell.

However, we’re choosing to do it this way for two reasons.

First, if we use a caller, we need to ensure there are several people available to take transfers. We want our producers to be focused and specialized. The person working current clients will need to understand how to do a review, process endorsements, and more. We want our NB acquisition people to run as fast as possible. This is a different skill-set.

Second, we will be doing many pro-active renewal conversations with our CS team, and they’ll be consistently asking for cross-sells anyways. By taking monoline renewals off their plate, we believe we can actually call every single renewal we have each month with our caller team.

The math makes sense, and we’ve never really drilled into the book, so the timing is perfect.

If you want to run this math yourself, I’ll put the link at the bottom of this newsletter in the links section.

2.) Customer Service as a strategic unit to preserve commissions

I wrote a few issues back about how we’re working to change the identity of our customer service team.

In short, we realized that roughly 17% of salary cost from the team were covered by the production they generated.

We’ve set a long-term goal of 50% of their salaries being covered by production, with a short term goal of reaching 35% by the end of December.

While were initially going to spread the production across a variety of areas, we’ll be putting extra focus, and extra emphasis around cross-selling a third line of business.

After our last rate increase, we noticed that roughly 40% of the people who would terminate their auto policy, wouldn’t move the home policy. So, to avoid this scenario from turning a multi-line into a single-line, adding that third category will be absolutely key.

There will continue to be focus on adding platinum/enhanced, upselling liability and coverages, and asking for referrals.

In the short run though, there will be a lot of training on writing those “Extra items” and cross-selling property, auto, and commercial to the sales team.

The math you see above is the way we’re expecting to get to 50%, and doesn’t include the team getting referrals or life insurance which will certainly put the number even higher.

This plan will now likely adjust slightly, but the main goal remains - 50% coverage, and extra production through writing extras + cross selling to the sales team to get additional lines and insulate the bundle

3.) ALR + Benefits as a revenue source

Everyone seems to dread life.

I used to feel the same way. It was just one more thing, one more hurdle in the way to qualify for our bonus.

Are these products hard to sell?

You betcha

Do our LSPs get nervous talking about them?

Double You betcha

But lately, my mindset around life and benefits has completely changed.

They represent an incredible opportunity to supplement revenue inside your agency that is completely separate from the P/C book of business.

With our new product offerings, and the new pay scales, the commission opportunities look pretty good.

But in truth, because there is no renewal on life products, it gets very hard to run a profitable life program inside the agency.

However, there is way to do it if you have a few people who want to work together.

It has recently come to my attention that LSPs can be shared between multiple agents.

The plan?

Combine forces with a couple other agents in my state, and share the cost of that LSP who focuses on life.

I will manage them, and in return, I get to split the cost of someone who might make $3k-$4k a month in a base salary.

Its incredibly hard to breakeven on a life LSP if you have to pay for them yourself. Its significantly easier if you split the cost with 2-3 other people.

So as we look to build out our life program, we’re going to attack ALR in three different ways.

• We will be teaching our salespeople to sell the simplified life policy at the point of sale.

• Our customer service team will exclusively send life and retirement referrals to our EFS partners.

• An internal (shared) LSP will write life policies and get live transfers from our SDR team that will call the book of business.

Three different strategies, three different types of customer for each.

The plan is ambitious, and we’ve laid out what we think we can do once we get the program up to full strength.

These numbers seem daunting, but I think they’re actually pretty reasonable given our team size.

We have 20 LSPs on the sales side now (and are growing) - That means less than 1 life app per person, per month.

Our service team has 10 LSPs on it, and if they each send 3 customers per month, 10 issued apps isn’t that wild to think about. While the average of $2,000 may seem high, there will be annuities, UITs, and managed money there to drive the average up.

And then with the internal life LSP, they may only need 2-3 conversations per day to get these types of sales if we target the book right.

So are these life/retirement numbers ambitious?

At first, they probably are, but over the long-run, I don’t think they are.

And while this might seem like a lot of work for an extra $9k or so per month, if we’re doing it right, we shouldn’t have to spend a ton of money in marketing to pull this off.

Then once we’re rolling, we can start adding referrals and yearly reviews into the mix. The results can compound if done properly.

These numbers don’t even include Allstate Workplace Benefits.

Benefits are something that I’m incredibly interested in figuring out.

Mainly, because benefits pays about 70% on NB and 30% on renewal. How you split it is up to you and your benefits specialist, but thats a lot of juice to squeeze.

Here is what some numbers would look like at 6 cases per year, from local businesses with 30-50 employees.

When Allstate acquired National General, they acquired the Health Insurance business as well.

As a result, when we introduce a benefits specialist to a business, they can now do both Major Medical AND Supplemental insurance.

The best part is - We get paid on both.

Its up to you to negotiate the split in commissions between the benefits specialist and the agency, but if you feel confident as an enroller, you can just do it yourself and keep it all.

We spend so much time working on Auto and Home policies that come in around 27% commission and renew at around 8%.

But we completely ignore the product that pays around 70% on NB and 30% on renewal.

Why?

Because its hard.

But because its hard, 95% of the people out there won’t even bother.

Thats good for you. Do what others don’t.

In that vein, I’ll be targeting companies between 25 and 50 employees. These are growing companies that are largely ignored by the bigger benefits providers, and are at a point where they may be looking to add new benefits for their growing team.

If (and its a big if) we can hit these ambitious goals, we’ll add about $235,000 of revenue to the agency just through life and retirement.

And if what the company says is true, that a life policy increases retention (I’m still looking for hard data on this), then the lift will be even higher.

Life is something so many people hate to deal with, but its significantly more stable than p/c in terms of rates and gives you an immediate diversification in revenue for your agency.

Note → These commission rates are estimates. I need to go research the exact numbers, forgive me if they’re slightly off. The main goal is to illustrate the framework.

4.) Loss Ratio → Motor Club + Zip Code Analysis

I’ve been talking about Loss Ratio on this newsletter since the very first issue.

I have a vested interest in figuring out how to make a dent in it beyond “writing more business”

We’ve implemented some changes in the agency such as:

• Looking at Loss Ratio by producer and reviewing all their NB if it was out of pattern.

• Encouraging clients to get an estimate from a Good Hands Repair network before filing a claim (if the car is drive-able).

• Tracking all NB where there are more cars than drivers.

These examples don’t encompass all our strategies and tactics, but just a few that we’re hoping will make a big impact.

While we’re still getting very little direction from the company on what we can do in the short-run to reduce our loss ratio, we’re taking two additional steps in the coming weeks that will continue through 2024.

We believe strongly that Loss Ratio will remain a qualifier for Year End Bonus in 2024, and potentially beyond. This sentiment is based on verbal accounts from people in corporate roles, the AS earnings calls, and our own opinion on the changes.

So moving forward we’ll be including the following strategies:

• Offering Motor Club to everyone who puts in a towing and labor claim

• Identifying and eliminating the high loss ratio zip codes from our marketing mix.

We’ve noticed that when someone uses their towing and labor coverage and submits a claim, its usually followed by several more claims over the coming weeks and month.

Upon analyzing our claims, a policy was found that had submitted 60 T/L claims in under 2 years. Thats insane! Thats a claim every other week!

We even heard from one of our friends that they had a client who was using their towing and labor coverage to put gas in their tank. Its tough out there folks!

When a claim is submitted through Motor Club, the claims don’t hit your L10 Loss Ratio, and therefore can reduce the total claim payout.

Look at your towing and labor claims. They’re small, but they add up quickly.

As for loss-ratio by zip code, we don’t know for sure that this will be a winning strategy. We must balance where we’re competitive .vs. where the highest losses are occurring.

We’ve been able to identify several zip codes that are well over 100% loss ratio and don’t include any maxed out claims. Frequency is in my opinion, a better overall predictor than previous payouts.

Look at both loss-ratio by zip code AND frequency by zip code. This means that you should see (payout vs premium) AND (# of policies .vs. claims submitted.

Our biggest concern remains the paradox about loss ratio that we’ve been hearing.

We’re being told:

• The best way to lower your loss ratio is to write as much as you can.

• NB has a much higher loss-ratio than long-term business.

These two contradicting ideas give us doubt, so we’ll continue to use short term tactics like encouraging estimates and combine those with long-term strategy by attacking the root cause of the loss ratio challenges.

5.) Write as much as possible through the end of the year

This is the final part of the plan.

Get it while its good.

Has 2023 been a tough year with a hard market?

Yep, and I don’t expect 2024 to be easier.

So before it gets harder, get everything you can possibly get. Take advantage of the competitiveness, the rates, and the opportunities you have right now.

I’m seeing agents post record months all over the country, from all companies, in spite of the challenges.

Stay on the gas, and keep going until it doesn’t make sense to keep investing.

On my mind this week:

Do you talk about whats in it for you, or whats in it for them?

One of the first lessons we all learn in sales is to talk about What’s in it for Them (WIIFT).

And it also happens to be the lesson we all seem to forget.

This is something that I’m guilty of as well. Its easy to think about what WE want, or WE need, or what would be good for US.

The problem with focusing on what is in it for us, is that its anti-persuasive. Its an approach based on leverage or power in a relationship.

Whether its recruiting, selling a product, or leading your team. If you’re not talking about what is in it for them, you’re going to fall on deaf ears.

Your salespeople probably don’t care that you could earn a big bonus at the end of the year. But they do care about that bonus if they share in it, or if you’re going to use that money to invest in better/more marketing or some help for the team.

Your recruit doesn’t care about what you’re looking for in a candidate. They want to know what they get paid, the benefits they can expect, and the growth you can provide.

If you want your team to collect data and leave great notes, don’t talk about the reasons you need the data to avoid E/Os or to lower your marketing spend. Instead talk about how it prevents the agency from losing the ability to write new business or how you’re using that data to improve the quality of their leads.

This principle applies everywhere in business and in life.

If you start focusing on whats in it for the other person, rather than whats in it for yourself, you’re going to find that people are a lot more agreeable.

It starts with being a giver, not a taker.

The world gives to the givers, and takes from the takers.

Give more than you take.

Pay favors forward.

When people know that you focus on giving, the amount of trust you earn is inconceivable.

Andrew’s Picks

Here are the links to the models to help run your own calculations on Monoline, Life, and Benefits: Link

Jeb Blount is one of my favorite authors and content creators in the sales world. Here is a quick video on Objections: Link

Ever heard of mental models? They’re frameworks to make decisions quicker and more easily. I reread this article every few months: Link

Have a question you want me to answer in the next newsletter? Submit a question here: Link

What did you think of this week’s newsletter - Shoot me a reply with a comment, question, feedback, or something else!

I’d love to hear from you!