NU Online News Service, Dec. 22, 2:15 p.m. EST

In what may amount to a little holiday reprieve for Allstate agents, the company says it will not cut base commissions as deeply as it originally announced, but the head of an agents' group says the rank and file is still not pleased with the company's move.

In a letter to Allstate agents obtained by NU Online News Service, Mark LaNeve, senior executive vice president, agency operations and chief marketing officer, says the company will not cut base commissions to 8 percent, but only one percentage point to 9 percent beginning in 2013.

The current commission of 10 percent on new and renewal policies remains in place next year as the company begins its “transition to the variable component” to better allow agents to adjust over “the next several years” and develop a long-term strategy for the future.

LaNeve says in the letter that the new compensation schedule aims to incentivize agents to meet performance goals that could ultimately reward them with a total compensation package of 15 percent in 2013, up from the current 14.2 percent.

In a statement from Allstate, the company confirms the commission schedule change, saying it has worked with more than 300 agency owners on the compensation structure.

“Our success as a company has been—and will continue to be—built on the strength of our local-agency owners and we will continue to work closely with them to ensure the success of the company and our Allstate agency business,” the company says.

In the same statement, Allstate quotesJimTowns, co-chair of Allstate's Agency Executive Council and an agency owner, as saying, “Agents have open access to senior leadership and we've been working together on a compensation plan that makes sense. The compensation structure rewards performers who deliver policy growth as well as a high level of customer service. The change to the compensation structure gives agency owners time to transition their business strategy and the agency owner can plan into the future now that we know the commission structure for the next three years.”

Jim Fish, executive director of the National Association of Professional Allstate Agents, which he says represents between 10 to 12 percent of Allstate agents, says the change in commission schedule comes after the company learned through a survey of the agents' overwhelming displeasure in the cut to 8 percent that amounted to a 20 percent cut in actual commission dollars.

He calls it “a victory of sorts; but agents are still losing 10 percent commission.”

There is also unhappiness that agents are “forced to jump through hoops” to get the additional compensation. This means spending additional time on company-education programs that are not part of their continuing-education requirements. They will also need to spend additional money on office décor and personnel to fulfill the requirements the company is setting out for additional compensation.

For its part, Allstate says it plans to intensify its marketing campaign to attract more customers.

He says agents are also concerned with what happens after 2014, as the company's language appears to indicate that additional changes are in the works.

In its statement, Allstate says the base will move to 9 percent for 2013 and 2014, as the company begins a “phased introduction of variable compensation.”

Fish says if the company wants to earn agents' trust it needs to spell out what will happen to their compensation after 2014.

“If Allstate is sincere, it needs to make apparent what its [long-term] plans are and they need to tell agents that,” says Fish.

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