Allstate Agents Hope Unionization Sparks Changes at Insurer

Some unhappy Allstate Insurance agents who say the insurer controls them like employees even though they are independent contractors are moving to affiliate with a union.

The National Association of Professional Allstate Agents (NAPAA) claims the giant insurer is manipulating independent contractor rules, terminating long-time agents, cutting agency compensation, and driving down agent morale.

Mississippi-based NAPAA, which claims to have about 1,200 members or about 10 percent of Allstate’s nationwide agency force, has scheduled a membership vote over the coming weeks, with results expected to be known Aug. 17. The vote will be on whether to form a guild, which would then affiliate with the Office and Professional Employees International Union (OPEIU), which has 125,000 members and is itself tied to the AFL-CIO.

Allstate does not appear concerned about the move, pointing out that the group represents only a fraction of its agency force across the country. The company says courts and the IRS have recognized the independent contractor status of its agents. It also disputes the claims of a high number of terminations and low morale, maintaining “growth opportunities have never been better” for its exclusive agents.

Forming a guild of self-employed workers would give NAPAA members more legislative access and lobbying resources to advance their interests but it would not give them any collective bargaining leverage with the insurer, according to Nicole Korkolis, communications director for OPEIU.

Jim Fish, NAPAA executive director, acknowledges that even as guild members agents will still lack bargaining clout but says they hope Allstate will take the group more seriously as a guild.

“I mean, currently, as a group, we can’t bargain with them and they don’t recognize us as an entity at all, actually. They think we’re a bunch of disgruntled agents. I guess, and you know, in a way that’s probably true because we’re not happy with the status quo,” Fish told Insurance Journal.

He said that by gaining access to the AFL-CIO’s lobbying resources, the agents might be able to earn more respect. Fish sees the vote as a referendum on company management.

“Agent morale at Allstate has hit rock bottom, which cannot be good for the company, the agents or the shareholders. This is not a matter of political philosophy; it’s a matter of defending the interests of ill-treated small business owners,” he said in announcing the vote.

He said the vote would be “proof positive that agents are extremely unhappy with the status quo at Allstate.”

Allstate, however, dismisses the significance of the vote.

“This group’s indication that it will seek a vote from its members to affiliate with the OPEIU would seem to be an internal issue for them. Their members include only a small fraction of Allstate’s current agency owners,” said company spokesperson Meghann Dowd.

Fish said the move comes after years of complaints by NAPAA members about how they have been treated by the company under CEO Tom Wilson. Some of its members claim they are facing a 20 percent cut in their compensation. Others have joined his group because Allstate has threatened to terminate them for failure to meet production requirements.

“We’re seeing a lot of agent terminations for not meeting what the company calls ‘expected results,’ which are quotas, basically, production quotas. Of course, as independent contractors, you’re not supposed to have production quotas,” he said.

Fish said the company is terminating or forcing the sale of agencies on a “regular basis” as part of a plan to get more agencies with $3 million to $4 million in business.

Allstate denies it is terminating a lot of agencies but it does acknowledge that having more $3 million to $4 million-size agencies is one of its goals.

Dowd said the company has set long-term growth and performance goals to “put more agencies on a trajectory toward this agency size” and management is working with agency owners to help them reach this model.

If the guild vote succeeds, the Allstate group would be the only insurance affiliation for the OPEIU, which counts pilots and podiatrists among its members. OPEIU had some Prudential employees as members until two years ago under collective bargaining but then they became independent contractors, according to Korkolis.

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