An Interview with Doug Herberger

Recently, AE Magazine sat down with Allstate Dealer Services' (ADS) President, Doug Herberger, to find out more about what the company has been doing, and where it's going in the future. The long-time automotive executive came into ADS with a mission to increase the business - and he's done just that, with no end in sight. Read below to hear, in his own words, what ADS has achieved since he joined the company, and where he plans to take it next.

Can you tell me a little bit about Allstate Dealer Services and where you see its place in the industry?

Allstate Dealer Services (ADS) is a business unit within Allstate’s Emerging Businesses (EB). EB was created in 2007 and consists of business units which sell products that complement the company’s core auto and home products.

ADS consists of one insurance entity - First Colonial Insurance Company (FCIC) - as well as two non-insurance entities - American Heritage Insurance Services (AHIS) and Pablo Creek Services Inc. (PCSI) - which both provide full B2B administration services.

ADS’ products and services are provided nationwide to over 10,000 auto dealerships, credit unions and financial institutions. We have three distribution channels – our Independent Agent channel, our Third Party Administrator (TPA) channel and our OEM channel.

We have two locations. Jacksonville is our headquarters, and in Miami we have a claims processing team for GAP and some ancillary products.

Through the financial strength, stability and underwriting expertise of our parent company, Allstate, our vision is to be the number one or number two provider of F&I products and services to the automotive industry.

Can you give us a bit more about your own history in the auto industry, and how you ended up at Allstate Dealer Services?

I have 35 years of experience in the Automotive Industry, spending most of that time in leadership positions with General Motors (GM) in North America and overseas. I was appointed GM Vice President, and General Manager of GM Service and Parts Operations (SPO) in 2002. Prior to that, I had responsibility for all vehicle sales, service and marketing in GM’s Western Region from 1998 to 2002. Before retiring in 2009, our team at SPO achieved seven consecutive years of record profits and had the highest customer satisfaction scores in the industry.

I re-entered the world of work as a favor to one of my GM colleagues who had assumed a senior level position with Allstate. Allstate was looking for someone to head up its Dealer Services business in Jacksonville so they asked me give it some thought. After a “Look See” trip to Chicago, they made me an offer and I started at ADS in February 2011. Among the reasons I was most attracted to Allstate were (1) the strength of the Allstate brand and the potential to bring the power of that brand to its F&I business and (2) the Jacksonville office was 1,017 miles away from Chicago.

Allstate Dealer Services is one of the fastest growing divisions of Allstate – can you give us a few of the key reasons on how you’re achieving that impressive growth?

The initial plan about three months into the new job at ADS was to profitably double the business in 1,000 days. We promised our agents a broader portfolio of Allstate branded F&I products, improved back office processes and getting more of the right people on the bus. Over the past two and a half years we have made a lot of improvements to our value proposition, especially in the areas of product & brand, back office processes and people. But that journey continues.

We also have benefited from an active and engaged Agent Advisory Council which we formed back in 2011. With their help and a robust subcommittee process, we have focused on improvements in four key areas of our business - product, technology, operations and reinsurance. We would not be where we are today without the help of our agents. That process will continue, and with a little luck we should be able to achieve the growth challenge we set out to achieve some 900 days ago.

We are now looking at 2014 and beyond for innovative ways to sustain the momentum we have built since mid-July 2011. We want to maintain and grow the relationships we have with our current distribution partners. Some of our distribution partners are asking us to explore opportunities with new products in distribution channels we have yet to enter. We’ll work closely with our partners to take advantage of those opportunities where we can effectively manage risk and grow profitably.

What do you see as the biggest issues facing the industry today? Why?

In my view the single biggest challenge our industry faces is the myriad of external factors that can affect the performance of the companies that compete in the F&I space.

Things like credit availability, residual values, vehicle quality (both real and perceived) and the regulatory environment can have a dramatic impact on an F&I company’s performance. However for most factors, we have little or no control over them.

That said, I am very proud of our team’s ability to sense and respond to changes brought about by many of these external factors. For example, we closely track used car values, credit availability and other factors that could affect our GAP losses. We are constantly assessing changes to these factors and making adjustments accordingly.

We are also closely following the actions of the Consumer Financial Protection Bureau (CFPB) and, in turn, working with our industry trade organizations to benefit from their guidance.

Do you have any new products or programs planned for the next 12 – 18 months? What can agents and dealers look forward to from Allstate?

We’re always looking for ways to broaden our product portfolio and improve the benefits and features of existing products. Since July of 2011 we have introduced eight new products and have had seven product refreshes. Over that 27 month period we launched something new or refreshed every eight weeks on average. That’s incredible progress. And when you consider the need to obtain approvals from states, lenders and others for each separate launch - well to say the least, we’ve been busy.

Looking ahead, we will continue to work with all of our partners and our Agent Advisory Council to ensure we have a product portfolio that allows them to offer dealers a full range of Allstate branded or Allstate backed F&I products. We are finding that dealers and their customers are willing to shake hands faster when they’re in the “Good Hands” of Allstate. And with that handshake you get 30 years of expertise, a wealth of auto industry experience and a name you can trust. Our parent company has been around for over 80 years. We believe it’s important for our agents, our dealers and their customers to know and trust the name that’s on their F&I contracts. That is what you get with Allstate and we hope to be around for at least another 80 years.

Is there anything else you would like to add?

I appreciate the opportunity to share a small part of our story and I would like to personally thank all the men and women at ADS for all the hard work they have put in the past two and a half years. Also, we are looking forward to attending the Agent Summit Meeting in March 2014.