Allstate Insurance and
The Home Depot are partnering to save the insurer as much as $50
million a year in home-repair expenses by encouraging contractors to
buy building supplies from the hardware superstore.
The agreement allows Allstate adjusters
to refer policyholders with property damage claims to one of Home
Depot's 977 United States stores to buy floor covering, building
products, and installation services. Under this program, Allstate bases
claim payouts on the cost of using contractors affiliated with Home
Depot and the price it pays for the materials. Checks are sent directly
to the policyholders.
Allstate policyholders are not required
to use Home Depot materials to replace their losses, according to
Allstate spokesperson Justin Schmitt, but the insurer expects it will
send a "significant" amount of business to the Atlanta-based retail
chain.
"Holding on to the customer is everything." |
The deal stands to provide a number of benefits to both companies.
Headquartered in Northbrook, Ill., Allstate pays out nearly $2.8
billion in property claims annually and estimates it could save between
$30 million and $50 million this year if customers hire contractors who
buy low-cost replacement goods at Home Depot. Although the superstore
won't get every Allstate customer, it will benefit by having an ongoing
source of home-repair referrals from the second-largest U.S. home
insurer.
When many companies sell similar products,
excellent customer service is the primary way a competitor can
distinguish itself, thereby gaining an "edge," according to Daniel
Hoppes, Home Depot's director of national insurance programs.
This edge is the force driving an
increasing number of new business alliances between insurers and
merchandisers. For instance, Sears, Roebuck and Co. has teamed with The
Hartford to offer its more than 60 million Sears customers and
employees the chance to purchase auto, home, personal umbrella, and
personal watercraft insurance from the Sears Auto & Home Insurance
Program.
"Holding on to the customer is
everything," Hoppes says, especially in the field of insurance where
new business is not profitable until several years into the
relationship between the insurer and the policyholder.
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