Auto Insurance Companies to Face Multi-Million-Dollar Lawsuit

June 7, 2001

A multi-million-dollar class-action lawsuit has been authorized by the board of directors of the National Auto Agents Alliance (NAAA) Board against several insurers.

The lawsuit questions the legality of insurers reducing agent’s compensation expenses without reducing charges to consumers.

The NAAA action comes in the wake of continuing slashes in agent compensation of 25 to 100 percent in some states, eliminating the agent’s ability to provide quality service contracted to policyholders.

Subsequent to receiving approval of rates based on anticipated expense factors, some insurance companies have been reducing agent compensation expenses sharply without obtaining prior regulatory approval or passing on these reductions to the consumer.

The NAAA, representing thousands of agents and millions of policyholders across the U.S., believes that consumers suffer when their agents are financially unable to provide quality service for which the consumer paid.

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