[LTPC-discussions] sometimes agents feel wronged
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Sun, 29 Jun 2003 10:07:11 EDT
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A. M. Best
Allstate Agents Sue Company for Alleged Breach of Contract
=A0 =20
CANTON, Mich. 11/14/2001 (BestWire)-A group representing agents of Allstate=20
Insurance Co. has filed a federal lawsuit against the company, claiming that=
=20
the nation's second-largest automobile and homeowners insurer has breached i=
ts=20
agreement with its independent contract agents by unilaterally changing the=20
terms of the contract.
The Canton, Mich.-based National Association of Professional Allstate Agents=
,=20
which filed the lawsuit in U.S. District Court in Tampa, Fla., has asked the=
=20
court to determine that Allstate's actions are in conflict with the agreemen=
t.
Earlier this month, the National Association of State Farm Agents took=20
similar action against State Farm, filing a breach-of-contract lawsuit again=
st the=20
company in U.S. District Court in Baltimore on Nov. 2.
As part of a major reorganization announced in November 1999, Allstate let g=
o=20
its 6,200 employee-agents and allowed them to return as independent=20
contractors, a move aimed at consolidating agents under one contract. Under=20=
the new=20
business plan, about 60% of the employee-agents chose to convert to=20
independent-contractor status and remain with the company, Allstate said at=20=
that time.
Many employee agents chose to become independent contractors because the=20
company "promised them a greater financial interest in the business," said R=
on=20
Mathison, a former Allstate agent and currently director of agent affairs fo=
r the=20
Allstate agents' group, in a statement. "Since then, the company has created=
=20
new rules, regulations and mandates that, in reality, do just the opposite."
Mathison said that agents are very concerned about how Allstate is=20
continually increasing sales requirements. "For some agents, the sales goals=
have=20
increased by more than 200% over the past year," he said. "While NAPAA membe=
rs=20
understand the company's desire to raise the bar for performance, they are=20
concerned about the ethical and moral obligation of agents to sell toward an=
arbitrary=20
goal rather than a customer's needs."
The agents don't want to see Allstate "put sales before customers, but when=20
sales goals are unrealistically increased, that is the end result," he said.
The suit also charges that, contrary to its contract, Allstate has changed=20
requirements for the sale of an agent's business as well as commission rates=
on=20
certain policies.
Attempts to reach Allstate for comment weren't successful.
In the litigation against State Farm, the nation's leading auto and=20
homeowners insurer, the National Association of State Farm Agents is seeking=
temporary=20
and injunctive relief from company practices, which they say encroach upon=20
agents' businesses, and to "protect State Farm Agents from State Farm's=20
unilateral efforts to marginalize its Agents, to reduce their incomes and to=
=20
unilaterally drive them out of business in violation of the contractual and=20=
statutory=20
rights."
State Farm declined to comment, saying it hadn't yet seen a copy of the=20
lawsuit.
The suit lists a litany of alleged violations that agents say started=20
cropping up about three years ago. These include attempts to impose a "partn=
ering"=20
program on agents, which requires agents to affiliate with other agents who=20=
are=20
qualified to sell noninsurance products and to share policyholder names and=20
information with those agents. "As a result of this program, those agents wi=
th=20
whom State Farm Agents are required to 'partner,' are allowed to raid their=20
business and take their customers, thereby breaching State Farm's contractua=
l=20
obligation to maintain the primacy of the agent...." the suit states.
The lawsuit also attacks State Farm's mandatory ethics program; the company'=
s=20
requirement that agents pay to use the customer response center, and the=20
selling of insurance over the Internet, which agents claim violates their ri=
ghts=20
to be free from encroachment.
The court action follows the company's introduction of its Partner Agent=20
Program.
No timetable for an injunction hearing or trial has been set, the agents=20
group said.
A.M. Best Co. rates Allstate Insurance Group as A+ (Superior) and State Farm=
=20
Group as A++ (Superior).
(By Barbara Bowers, senior associate editor, Best's Review: <A HREF=3D"mailt=
o:Barbara.Bowers@ambest.com)">
Barbara.Bowers@ambest.com)
</A>=A0
=A0
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st<BR>
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FAMILY=3D"SANSSERIF" FACE=3D"arial" LANG=3D"0"><B>Allstate Agents Sue Compa=
ny for Alleged Breach of Contract</FONT><FONT COLOR=3D"#000000" style=3D"BA=
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<BR>
<B>CANTON, Mich. 11/14/2001 (BestWire)-</B>A group representing agents of Al=
lstate Insurance Co. has filed a federal lawsuit against the company, claimi=
ng that the nation's second-largest automobile and homeowners insurer has br=
eached its agreement with its independent contract agents by unilaterally ch=
anging the terms of the contract.<BR>
<BR>
The Canton, Mich.-based National Association of Professional Allstate Agents=
, which filed the lawsuit in U.S. District Court in Tampa, Fla., has asked t=
he court to determine that Allstate's actions are in conflict with the agree=
ment.<BR>
<BR>
Earlier this month, the National Association of State Farm Agents took simil=
ar action against State Farm, filing a breach-of-contract lawsuit against th=
e company in U.S. District Court in Baltimore on Nov. 2.<BR>
<BR>
As part of a major reorganization announced in November 1999, Allstate let g=
o its 6,200 employee-agents and allowed them to return as independent contra=
ctors, a move aimed at consolidating agents under one contract. Under the ne=
w business plan, about 60% of the employee-agents chose to convert to indepe=
ndent-contractor status and remain with the company, Allstate said at that t=
ime.<BR>
<BR>
Many employee agents chose to become independent contractors because the com=
pany "promised them a greater financial interest in the business," said Ron=20=
Mathison, a former Allstate agent and currently director of agent affairs fo=
r the Allstate agents' group, in a statement. "Since then, the company has c=
reated new rules, regulations and mandates that, in reality, do just the opp=
osite."<BR>
<BR>
Mathison said that agents are very concerned about how Allstate is continual=
ly increasing sales requirements. "For some agents, the sales goals have inc=
reased by more than 200% over the past year," he said. "While NAPAA members=20=
understand the company's desire to raise the bar for performance, they are c=
oncerned about the ethical and moral obligation of agents to sell toward an=20=
arbitrary goal rather than a customer's needs."<BR>
<BR>
The agents don't want to see Allstate "put sales before customers, but when=20=
sales goals are unrealistically increased, that is the end result," he said.=
<BR>
<BR>
The suit also charges that, contrary to its contract, Allstate has changed r=
equirements for the sale of an agent's business as well as commission rates=20=
on certain policies.<BR>
<BR>
Attempts to reach Allstate for comment weren't successful.<BR>
<BR>
In the litigation against State Farm, the nation's leading auto and homeowne=
rs insurer, the National Association of State Farm Agents is seeking tempora=
ry and injunctive relief from company practices, which they say encroach upo=
n agents' businesses, and to "protect State Farm Agents from State Farm's un=
ilateral efforts to marginalize its Agents, to reduce their incomes and to u=
nilaterally drive them out of business in violation of the contractual and s=
tatutory rights."<BR>
<BR>
State Farm declined to comment, saying it hadn't yet seen a copy of the laws=
uit.<BR>
<BR>
The suit lists a litany of alleged violations that agents say started croppi=
ng up about three years ago. These include attempts to impose a "partnering"=
program on agents, which requires agents to affiliate with other agents who=
are qualified to sell noninsurance products and to share policyholder names=
and information with those agents. "As a result of this program, those agen=
ts with whom State Farm Agents are required to 'partner,' are allowed to rai=
d their business and take their customers, thereby breaching State Farm's co=
ntractual obligation to maintain the primacy of the agent...." the suit stat=
es.<BR>
<BR>
The lawsuit also attacks State Farm's mandatory ethics program; the company'=
s requirement that agents pay to use the customer response center, and the s=
elling of insurance over the Internet, which agents claim violates their rig=
hts to be free from encroachment.<BR>
<BR>
The court action follows the company's introduction of its Partner Agent Pro=
gram.<BR>
<BR>
No timetable for an injunction hearing or trial has been set, the agents gro=
up said.<BR>
<BR>
A.M. Best Co. rates Allstate Insurance Group as A+ (Superior) and State Farm=
Group as A++ (Superior).<BR>
<BR>
(By Barbara Bowers, senior associate editor, Best's Review: <A HREF=3D"mailt=
o:Barbara.Bowers@ambest.com)">Barbara.Bowers@ambest.com)
</A>=A0<BR>
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=A0<BR>
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