Allstate Chargebacks?

[Love2Golf12]

I am a licensed sales producer with an allstate agency. I am being told that to avoid an auto chargeback my customer has to 1)buy the policy and keep it for 6 months, 2) renew and keep it for another 6 months, 3) renew again. Is this how it works with allstate or is this an issue with the principal agent? I just had a customer do full pay for $1,300 on 2 autos. So, Allstate has their money. Why am I still on the hook, worrying if I'm going to keep my commission? Realistically, this guy could be in month 11, having paid well over $2,200 in premium, and if he switches I don't get a damn dime. Allstate = $2,200, me = $0. I could see if he left within 6 months, but to keep it a full year and renew twice to pay commission seems a bit ridiculous.

 

[NY Agent]

The agent is just covering his rear-end in case you write a policy and the customer cancels within the first policy period. In a hypothetical situation, a 6 month auto policy has a $1,000 premium and a 12 month home policy has a $1,000 premium. The agent earns 10% commission on both (some less, some more, etc.). You earn 5% commission or whatever the agent is paying you.

On the auto policy, the agent earns $100 and pays you $50. If the customer cancels within the policy period, the agent is charged back the unearned premium. If the customer cancelled within the first month, the agent would lose his $100 and would therefore charge you back for the $50 he paid you.

Most likely - this will never happen.. Having a chargeback system is to prevent you from writing a policy with a huge commission and getting paid on it only to have the policy cancel within the first year. Imagine you wrote a policy and received $10,000 in commission for it. The customer decided he didn't need the coverage and cancelled the policy. He received his money back and the agent was charged back. Do you think you deserve the $10 grand?? If someone cancelled in month 11 I'm sure the agent would not make you return any money or he would prorate it based on the earned and unearned premium.

 

[VolAgent]

Taking the OPs post at face value, something is messed up. The person has to renew the policy two times to avoid a chargeback? Are we talking full chargeback or just a portion? I can understand a chargeback on any unearned commission due to the premium be returned, but having to keep the client on the books for 18 months to avoid a chargeback all the way to month 1 is extreme.

 

[bobson]

Taking the OPs post at face value, something is messed up. The person has to renew the policy two times to avoid a chargeback? Are we talking full chargeback or just a portion? I can understand a chargeback on any unearned commission due to the premium be returned, but having to keep the client on the books for 18 months to avoid a chargeback all the way to month 1 is extreme.

The agent can set up whatever system he wants. I don't think it is extreme. It will certainly help him avoid having to rewrite a bunch of non-standard crap.

 

[VolAgent]

The agent can set up whatever system he wants. I don't think it is extreme. It will certainly help him avoid having to rewrite a bunch of non-standard crap.

I never said he couldn't. But we will have to disagree. Two renewals to keep your FYC is extreme in my opinion. Too many agents and companies that won't do that. Unless everything about this position is very attractive, I would be looking for other employment.

 

[insurance1822]

OP is probably not fully understanding the setup b/c that's absurd. I never heard of such a thing. Charging back for unearned premium on the 1st 6 months make sense but after that is ridiculous. Are you getting paid additional "new business" commissions if they add a car or take a rate increase in that period of time? Of course not.

 

[Love2Golf12]

OP is probably not fully understanding the setup b/c that's absurd. I never heard of such a thing. Charging back for unearned premium on the 1st 6 months make sense but after that is ridiculous. Are you getting paid additional "new business" commissions if they add a car or take a rate increase in that period of time? Of course not.

There is definitely a charge back for the first year on auto. I've heard this several times in the agency from various LSPs. However, no one mentioned if it was pro-rated. That part might be true, so I will check on that.

 

[RicFlairII]

You are being ripped off.

Allstate is strictly 6 months on auto. The agent is graded and paid based
on 6 month policies.

He is doing this because Allstate is also on him about renewal ratio, and
this will allow him a better chance at people staying on the books at least
a year.