NU Online News Service, Feb. 4, 2:45 p.m. EST

Allstate is denying a charge by an agent group that it has a goal of eliminating more than 3,000 agents in three-to-five years.

Jim Fish, executive director for the National Association of Professional Allstate Agents (NAPAA), said an internal company memo laying out the company's strategy to grow its business in the future calls for the elimination of up to 3,300 agents whose business has not grown to between $3 million and $4 million or more in premium volume.

The reasoning behind having agencies of this size is to improve customer access to the agency by increasing service availability and hours, he said. To achieve this, agencies will have to expand their support staff, something a smaller agency cannot do, he explained.

In order to reach this target, the company will need to consolidate agencies to achieve the benefits of scale, said Mr. Fish.

Allstate agents are supposed to be independent contractors, he said. Yet, the company is trying to exert an increasing amount of micro-management over the agencies, down to service hours and office design, and a number of agents are getting "fed-up" with the carriers interference.

A company spokeswoman said Allstate has not set any target for agency number or size.

"Our goal is to provide a consistently superior customer experience," the company said in a statement. "We intend to grow and succeed with Allstate agencies."

Allstate said in the statement that growing agencies is good for customers, the agencies and Allstate.

"We've seen that agency locations in the range of $3 million to $4 million in premiums (between 3,000 and 4,000 policies in force) have the scale to support the staff and other resources needed to provide superior levels of customer service."

The spokeswoman said the company is providing the tools to allow smaller agencies to grow to these levels the company believes will achieve this goal.

"Some agencies may choose not to take this journey with us, but for agency owners committed to providing consistently superior levels of service, the opportunities have never been better to grow their agencies," Allstate said.

Mr. Fish said alarm bells went off for agents after the company's chief executive gave a speech Dec.8.

In that talk at the Goldman Sachs Financial Services Conference, Tom Wilson, chairman, president and chief executive officer for the Northbrook, Ill.-based insurer, outlined the company's objectives.

During the speech he emphasized that the company is seeking to expand business by emphasizing customer service and addressed its exclusive agent channel.

Among the points of the strategy he outlined, he said, "Our goal is to have fewer, larger agencies that provide a more consistent experience for our customers. This will strengthen our agency force and ensure they remain a significant part of how we serve customers."

At one time Allstate exclusive agents were employees of the company, but that changed in 2000 when they were made independent contractors, losing pensions and benefits and creating a toxic atmosphere among some.

Agents sued the company, accusing it of age discrimination because many of the affected agents were 50 or older. Mr. Fish alluded to that practice, saying it seems like the company is trying to weed out older producers who have high retention rates and low loss ratios and are not selling a lot of new business.

Aiming to confront the possibility that the company will cut its number of agencies, NAPAA is planning to hold a job fair during its national conference in May in Washington, D.C., said Mr. Fish, "to get agents some solutions."