Part of that strategy involves the acquisition of Esurance, the online carrier, making Allstate “the only company serving all segments of the customer proposition.”

Joe Lacher, president of Allstate Protection, the company’s property and casualty business, laid out how the new distribution model will help the company.

On the business side, Allstate has seen the greatest impact to its earnings from rate inadequacy on its homeowners insurance business. He says the company plans to take rate on homeowners to reflect loss inflation. Along with taking rate, the company will tighten underwriting standards in an effort to avoid unwarranted claims.

The aim, says Lacher, is to achieve a combined ratio in the low 60s, excluding catastrophes, by 2013.

On the auto side, the company is concentrating on claims activity to cut down on losses, primarily concentrating on New York and Florida, which account for 20 percent of the carrier’s business, says Lacher.

On the distribution side, Lacher says Allstate’s exclusive agents will be compensated differently than in the past in an effort to boost existing customer loyalty and grow revenues. The company’s variable compensation to agents will be increased from 10 percent to 25 percent commission, based on improvements in the agency’s business, which will mean more cross-selling and building the scale of the firm. However, compensation on the sale of policies will be dropped from 10 percent to 8 percent on new and renewal business.

Lacher says there will be more emphasis placed on the consolidation of agencies, feeling that bigger agencies can deliver more services and be there when the customer needs them.

The shift, which Lacher says will involve a two-year transition, will cause some disruption but will strengthen the company in the future, he says.

Encompass, the independent agency distribution company, has suffered from a five-year decline in business that was “self-inflicted,” says Lacher. He notes that Allstate recognizes that it tried to treat Encompass as a direct writer system and ignored the “unique” environment of the independent agency system. He says the company is repairing that model, but does not provide much in the way of specifics.

While the direct agents and Encompass will provide the services for those looking for an agent, Allstate’s acquisition of Esurance and independent agency Answer Financial will be there for those seeking to make their purchases from the Internet.

Lacher says Esurance will be in a position to pull on the expertise and claims-adjusting capabilities of Allstate, while the online insurer can provide cross-selling and other marketing possibilities.

He says more details about the company’s plans will be released after the deal is complete, adding that both Allstate and Esurance are “excited” about the possibilities the transaction brings.