Allstate to Cut Staff, Begin Online Sales

Allstate Corp., the largest publicly traded U.S. auto and home insurer, said Wednesday that in a move to revive its profit growth, it will cut about 4,000 jobs, or 10% of its non-agent staff, and start selling over the Internet.

The job cuts, expected to be completed by 2001, are part of an overhaul in which Allstate will also start using toll-free phone numbers and other direct-to-consumer methods to sell its policies.

The 68-year-old insurance company joins brokerage Merrill Lynch & Co. and other financial service providers that are turning to the Net to supplement sales agents’ or brokers’ efforts. Allstate has heretofore used direct-sales methods only in foreign markets, maintaining that most of its U.S. customers preferred buying with agents’ help.

Competitors including Progressive Corp. and Geico Corp. have boosted their shares of the $117-billion auto insurance market with lower prices and more convenience.

“A very large and profitable segment” of the market for personal insurance craves the “more responsive service” that can be offered through call centers and the Internet, Allstate Chairman and Chief Executive Edward Liddy said.

Allstate’s 15,200 agents will not be directly affected by the job cuts.

Sales by Internet and other direct means will be allocated to the agents, who will receive commissions of 2% to 3.5% on those transactions, Liddy said.

The job cuts and other measures are expected to yield annual savings of $600 million.

Allstate rose 63 cents to close at $30.50 on the New York Stock Exchange.