Allstate Launches Roadside Assistance With A Twist

Here's the story from the Wall Street Journal:

By ERIK HOLM

NEW YORK (Dow Jones)--Allstate Corp. unveiled a new roadside assistance program Thursday that will allow any U.S. driver--not just its own customers--to call the company for help when they're stuck on the side of the road.

The program won't require an annual fee, unlike other popular roadside assistance programs, and drivers don't have to sign up in advance--though Allstate is hoping some do. And it is hoping the people who call for help later think of the company, the second-largest home and auto insurer in the U.S. behind State Farm, when their insurance policies come up for renewal.

Stranded motorists will pay a flat rate of $75 for a tow or $50 if they lock their keys in their car or need other help. Allstate says the average person calls on their motor club for help once every three years, and could end up saving money by using Allstate's service instead of paying annual dues to a competitor.

But the company's primary targets are the 35 million U.S. households that it says don't have a roadside assistance provider. Allstate's research shows they're typically younger drivers. And if they get stranded and call for help, Allstate will take their name, dispatch a tow-truck, and hope their new customers remember which company helped them out of a jam.

"It's a great way to get more people associated with Allstate," said Mark LaNeve, Allstate's chief marketing officer. While the new plan has tested well with a broad age range, LaNeve said Allstate's research shows it is particularly appealing to customers under 40, who tend to own their vehicles longer and may be more likely to break down.

advertising campaign, featuring a character called Mayhem, has tested well with a younger audience as well, LaNeve said.

While its closest auto-insurance competitors, Progressive Corp. and Berkshire Hathaway's Geico Corp., have traditionally attracted younger drivers, Allstate has skewed older. The company has long said its policyholders buy more protection, have more to insure, and are less likely to defect to a rival. But for the last two years, it has been losing existing customers faster than it can sign up new ones.

Allstate has run a motor club offering assistance similar to AAA since 1961. Like AAA and the roadside assistance plans offered by other organizations, it charges an annual fee. In 2008, Allstate acquired a unit from General Electric Co. that acts as a back office--answering phones and dispatching tow-trucks--for other roadside assistance programs run by companies including AARP and BMW.

Between its own roadside assistance customers and the ones serviced by the newly acquired unit, Allstate answered 3 million calls last year. So the company has much of the infrastructure already in place for the new program, which it is calling Good Hands Roadside Assistance. LaNeve said the flat fees it will charge the new customers cover the company's costs and, "over a couple-year period, this becomes a profitable business in and of itself."

Drivers who anticipate they will call on Allstate when they're stranded can sign up in advance on the company's website. Allstate says this will "improve response time," but it also means the company can learn more about its potential future customers. And a motorist who cold-calls the company from the side of the road will have to provide the same information the company is collecting on the web.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com