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Letter to the Editor

Allstate's Chuck Paul Discusses the Sterling Acquisition at Annual CARSTAR Conference

OVERLAND PARK, Kan. -- Chuck Paul, vice president of Allstate Insurance Co.’s claims strategy group, told attendees at the 11th annual CARSTAR conference that Allstate’s recent acquisition of Sterling Collision Centers was "the most direct way to differentiate ourselves from the growing competition" and a strategy to "create the greatest amount of value" for Allstate customers. ,p> "Everybody has a DRP," Paul told attendees during the CARSTAR conference. "We began to evaluate how we could change the automobile restoration process. We had a vision for a new model beyond our Pro network. We wanted consistent, on-time, fast, efficient quality repairs backed by Allstate’s name and reputation. We wanted an offering that looks and feels different from all of the other offerings, but was consistent market by market. We decided an acquisition was the way to achieve that goal."

In his remarks, Paul outlined today's collision repair environment and discussed the factors that influence current activities and will shape future actions. "There is increasing competition and a focus on cost containment," Paul said. "We’ve seen a lack of top-line growth, the impact of industry globalization and deregulation, and numerous changes in consumer demographics and behavior.

"With more and more two adult working households and more stressful jobs, convenience has become a huge product in the United States," Paul added. "Allstate’s response is to give customers options and create a unique experience. We also wanted to create a superior repair offering and at the same time remove friction from the process."

According to Paul, Allstate conducted a three-month appraisal of the company’s Direct Repair Program and the collision repair industry to determine its response to the evolving marketplace. "We used the six guiding principles of Allstate’s Claim Strategic Framework with the intent to gain and sustain a significant competitive advantage," Paul said. "We wanted to eliminate non-valued steps in the process, leverage the scale of our network and our expertise in technology and data. We also wanted to increase our level of participation in vehicle restoration by helping consumers throughout the process, and not just give them a check. The Sterling acquisition created a unique opportunity for us to focus on our core competencies and create a differentiated consumer experience."

While Allstate’s Sterling acquisition gives the insurance giant a dedicated collision repair network, Paul said the company would continue relationships with other networks and repair facilities. "There will always be a need for us to utilize the services of other repair shops," Paul said. "To ensure a wide market reach and to deliver true convenience and service to our customers, we will always have relationships with other networks and shops."

Paul added that Allstate would continue its expansion and growth plans in the years ahead. "We’re planning to expand into new markets in 2002," Paul said. "We see huge opportunities for synergistic alliances with paint, materials, and parts vendors. We will continue to explore new repair techniques and new learnings that allow us to continue to offer convenience and product differentiation to our customers."

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