Tom Wilson on the future of his company and the auto insurance industry.

Allstate CEO: We needed to reinvent our entire business

Leadership

Allstate CEO: We needed to reinvent our entire business


tom Thank you so much for joining us to talk about all the changes going on at your company. Allstate. I'd like to begin by talking about the shelter in place payback program. As you know, it's exactly a year now since also announced this program where you would give rebates to customers on their car insurance premiums because they were driving less because of the covid pandemic. And as a result they were filing fewer claims. You ended up paying back $1 billion dollars to policyholders now a year later. How do you feel about that? Would you do that again? Susan. Nice to see you again. As always, the answer is yes, we would do it again. Um What happened was it was in March, of course, Middlemarch, we all started shutting things down, governments were shutting down, offices were shutting down and we know that we saw that the number of accidents in cars were going way down because people weren't driving the office anymore. We said, you know, even though we've already collected the money from people, let's give it back to him. Uh, and so we did that. We did it without being forced without regulators happen. And then we did a second time then, because after about three months we said still happening. So yes, we would do it again. Uh, it's the right thing to do. We we realized that the customer satisfaction we had of course went way up because we were doing what was right, well, you know, the pandemic is winding down and we'd like to think it is, but people will still be working from home um, and may still not be driving much. What is the impact of all of this on all state business in the auto insurance? Because we're talking about now, it has a pretty substantial impact and we think we'll continue to have an impact about a third of driving is to and from work. Uh And so of course when the pandemic came all that one away, fewer actions, we don't think people are going to go back to work the way they didn't pass our company is not, we don't think other people will. So that commuting time will still go, we'll go down. So we think they will be permanently fewer accidents. So we've been reducing our prices for auto insurance already in anticipation of the bag that this will continue for a while. So it means customers will continue to get cheaper auto insurance because they're not driving to and from work. And are you getting new customers because of these new rates? Yes. Yeah. We're finding so auto insurance pretty price competitive. Uh And to the extent you take some risk and get out ahead of it. We do find we're getting our close rates, what we call we offer people and how many of them take it that's going out as a result of that. Uh, talk us through some of the other changes that are going on at all statement. There's a lot of them, you've gotten out of the life insurance business, You made a big acquisition that's extending your car insurance business. It looks like you're reinventing the company. Tell us about that. Well, it is a reinvention of the company and when we look at our business between what consumers needs and how they're changing, how fast technology is going or new competitors coming up, we decided we need to really reinvent our entire business and we have two or three ways we're doing it. One you mentioned get out of the life insurance business to get better in the independent asian business and three were really transforming the whole Allstate agent business quite dramatically. Looking at the car insurance part of it are these changes allowing you to move in on your big competitors like Geico and Progressive. We'd like to think we're going to come and and take share away from them. Our goal is to take market share in personal profit liability. Uh, and we're doing that in a couple of ways. First, we're making the Allstate agents even more effective, you know, so lowering the cost, but by having a better price, they'll sell more and keep more of their customers. We're also expanding our direct business that goes right at Geico and Progressive and the independent agent business we acquired, we bought National General last year for $4 billion. That's to go right at progressive in the independent agent channels. So our plan is to really go aggressively at those companies in many different ways. And what about the, on the marketing side of all of this? It's been amazing of how many uh tv commercials we're seeing about car insurance, uh, all those ones from Progressive and Geico and Allstate has also been running a whole bunch of new T. V commercials with the kicker slogan. You're in better hands with all states. Are these commercials making a difference? It is a very aggressive market. So between Progressive Geico State Farm, Allstate were the big four competitors here. We spend a ton of money. I think we're trying to be a little more hip. Hopefully you've seen our money ad with pet shop boys is quite hot out there so it is quite aggressive, but we're finding our, our new branding is really working for us. And speaking of the slogan of the new brand, you're in better hands of all that, we always knew you're in good hands. What's the message you're putting out and what do you want people to think when they think we want us to think that this is the place to be. This is a company that cares for you as a customer does positive things like shelter in place. Payback doesn't wait to be told what to do is a company that's very responsible. So we spend a lot of time on social responsibility and trust and includes diversity and equity because we think that will get people to come to us. Well, I'd like to pick up on what you just said about diversity. Um, you have been very committed to diversity and inclusion issues and uh, all state board of directors reflects that because you have a good balance of men and women and people of color and who also made news recently. Um, we're only hiring thank owned by minorities to handle all states, big bond, um, sale. This was the first, what kind of feedback did you get for doing that? And do you expect others to follow your, We've got great feedback and I hope others follow our lead. We have a very diverse workforce. Yet after the George Floyd murder this year, we said, you know, we need to reflect like what are the things we can do more? We were, I describe it as we were not the slowest antelope in the herd. Uh, but the herd wasn't moving fast enough, so we had to move faster. And one of the things we went afterwards, Minority bond issuance. So typically when you sell bonds, you get a syndicate together and there's a bunch of different firms in it. Uh, and um, the, and it's mostly the big firms like Goldman Sachs morgan Stanley. And then the minority firms get some small portion. So we said, you know what, let's just break the mold on this one. Let's have and do the whole thing. They did a great job. We've got great pricing, great aftermarket support. And before we did it, I called around to about 15 of the top financial services ceo. So I happen to know because I've been hanging around a while and said you should be thinking about doing this to do you think those big Wall Street firms will be making changes? What was your take on with it? You know, they, everybody, I talked to his receptive ahead of every major bank said yes, we should do something. Yes. This is different. Well, and so they all, they all have different programs. And I think if we just all do it our own way will make a difference. There needs to be more minority representation on Wall Street period and stop. Well, you've also joined a group of top ceos um to train hire and promote one million jobs for black Americans over the next decade. How do you plan to go about it? What is your strategy and have you placed any jobs already or is it two things to say that? Well, if the effort just as getting started, but it's about changing how you hire people. Like if if you don't need a college degree for a job, you should take it off the list because 70 five of black Americans don't have college degrees. And so we're all coming together is 33 companies were going to put our learning together our economic buying power and we're going to bring these people into the workforce. You know, tom so many business leaders have been promising to build diverse workplaces and hiring women and people of color for leadership wolf. But it has been so slow. What kind of commitment and leadership would you like to see from the CEO to our running Fortune 500 companies? What more should they do? And can they do set high goals for yourself? Like we started setting our goals were not bad were either at or above average. And we're like, we want to be the top portals or where the industry where the population is, which is higher than the industry is. And so we're like set high goals and then go get it. It's not that hard when you deal with the percentages, people get confused. It said, look, I'm talking about 100 people. Tell me you can't find 100 executives that have diverse backgrounds in America. We get over 300 million people America. You can go get it