NAAA to Discuss Commission Action Before

August 8, 2001

The National Auto Agents Alliance (NAAA), who had announced plans to file suit against several insurance companies that had been cutting commissions, will comply with the wishes of several State Insurance Departments who have requested that the NAAA attempt to talk through the commission issues with the companies before a suit is filed.

The Board of Directors of the NAAA has approved sending letters outlining the issues to the CEOs of each insurer involved in the anti-consumer practices of increasing rates without passing along the reductions to consumers when they reduce or eliminate agents’ fees for service.

Art Mastera, NAAA executive director, stated: “The Board has agreed that companies should be given the opportunity to correct their actions prior to any litigation or formal complaints being filed with regulators.”

The NAAA would like to open up a dialogue with companies that have been arbitrarily and capriciously reducing commissions. NAAA wants to see a potential problem halted before it becomes a large one for both companies and agents.

According to Mastera, “The consumer issue can best be illustrated by the following non-insurance example: A consumer purchases an OEM air conditioner. The consumer pays for a service contract which the manufacturer contracts out to a local independent service vendor. If the manufacturer fails to pay the local independent service vendor, the consumer gets no service and has a legitimate claim.

“The scenario presented is in an unregulated industry where the consumer is, however, still protected by consumer laws. Insurance is a regulated industry and, with a regulated industry, the consumer has even more of a legal issue. Under federal law and state laws there are statutes that govern unfair business practices.”

Should the NAAA be unsuccessful in its attempts to open up a dialogue with the targeted companies, the group said it would continue to interview law firms that have expressed an interest in pursuing litigation against these companies.

The National Auto Agents Alliance, formed in 1995, is a trade group representing independent auto insurance agents in 18 states. For more information, contact Art Mastera, executive director, (877) 367-6223 or e-mail ajmastera@bigfoot.com.

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