Canton, Mich.-based National Association of Professional Allstate Agents (NAPAA) filed a lawsuit in U.S. District Court in Tampa, Fla. against Allstate Insurance Co., claiming that the insurer breached its agreement with its independent contract agents by unilaterally changing the terms of the contract.
According to BestWire Services, the agents advocacy group requested the court determine that Allstate’s actions are in conflict with the agreement.
In November 1999, Allstate laid off 6,200 employee-agents, allowing them to return as independent contractors. The move, part of reorganization plan, was an effort to consolidate agents under one contract. The company reported at the time that about 60 percent of its former employee-agents chose to remain with the company as independent contractors.
Ron Mathison, a former Allstate agent and currently NAPAA agent affairs director told BestWire that many of the former Allstate employee-agents became independent contractors as a result of the company’s promises to allow them greater financial interest in the business.
However, Mathison said the company’s new policies have had the opposite effect. Additionally, the company continues to increase sales requirements for agents, in some cases by 200 percent. Agents are concerned that their moral and ethical obligations to customers are being jeopardized by the company’s pressure to increase sales as an arbitrary goal.
The group’s suit also alleges that the company changed commission rates on certain policies and modified requirements regarding the sale of an agent’s business.
The National Association of State Farm Agents filed a breach-of-contract lawsuit against State Farm in U.S. District Court in Baltimore on Nov. 2. That lawsuit seeks temporary and injunctive relief from company practices that the agents group alleges encroach upon agents’ businesses.
Among the company practices challenged in the suit is State Farm’s “partnering” program, in which agents are required to affiliate with other agents who are qualified to sell non-insurance products and to share policyholder names and information with those agents.
The company’s mandatory ethics program, which requires that agents pay to use the customer response center, and issues regarding the selling of insurance over the Internet are also being disputed in the State Farm litigation.
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