Exclusivefocus Summer 2012.pdf - National Association of ...

legal updatesAllstate Responds to NAPAA’s Call toStop Interfering with Flood PoliciesOver the course of several months,NAPAA received confirmationfrom multiple members in Floridaand elsewhere that Allstate’s Flood ServiceCenter was sending misleading letters tothe policyholders of recently terminatedagents. Under the National Flood InsuranceProgram (NFIP), when agents terminatewith Allstate, they can continueto service their flood books of businessthrough Allstate until renewal. And if theycontinue to work as licensed independentagents, they can roll their flood policiesinto their new books of business.NAPAA received copies of correspondencesent to flood policyholders withinweeks of their agents’ termination withAllstate. In those letters, Allstate told theinsureds:We have been advised that youragent … is no longer available toservice your flood insurance policy.An active property and casualtyinsurance agent must be assigned toevery flood insurance policy writtenwith the National Flood InsuranceProgram …. Please contact anotherAllstate Insurance Agent in yourarea, requesting that he/she take overthe servicing of your policy.NAPAA then asked its attorney towrite to Allstate to instruct it to ceaseand desist issuing false or misleadingletters to the policyholders of its memberswho had terminated with Allstate.NAPAA pointed out that, in most instances,Allstate’s letters were false to theextent they indicated the agent was nolonger available to service the policy andmisleading insofar as they implied theagent was not actively licensed to renewthe policy.Allstate referred the matter to aprominent Washington, D.C. law firmwith whom it has worked for manyyears, and NAPAA was pleased to receivecorrespondence responding to itsconcerns. Allstate’s attorney explainedthat those concerns were simply theproduct of a “misunderstanding” of theNFIP by NAPAA and that Allstate’ssole intent was to notify policyholdersof their renewal options in order toavoid a lapse in coverage. While he didnot acknowledge that Allstate had actedimproperly, he did confirm that Allstatehad discontinued its use of the offendingletters.NAPAA appreciates Allstate’s effortsin addressing these issues and for beingresponsive to the legitimate concernsof agents and consumers in this matter.NAPAA will continue to do its part tokeep you informed and vows to let Allstateknow when its conduct, whetherintentionally or otherwise, has crossedthe line.Comparetto v. AllstateAs previously reported, a group ofCalifornia agents filed a class action lawsuiton September 1, 2011, in the SuperiorCourt of California against AllstateInsurance Company. Earlier this year,Allstate filed a motion asking the courtto dismiss Plaintiffs’ Complaint, allegingthat the Plaintiffs’ claims were invalid.The court, in granting Allstate’s motion,permitted Plaintiffs to amend their complaintto correct certain deficiencies, andPlaintiffs filed their Second AmendedComplaint on May 8, 2012.The Second Amended Complaintfiled by the Plaintiffs includes claimsfor breach of covenant of good faith andfair dealing, breach of written contract,and violation of California’s Businessand Professions Code, which prohibitsunlawful, unfair, deceptive, and fraudulentbusiness acts and practices. TheComplaint claims that Allstate deliberatelybreached its contracts with agentsby failing to use good faith in exercisingits exclusive judgment regarding theapproval of potential buyers for agents’books of business. This resulted in significantlyreduced values of agency owners’books of business and deprived agentsof the ability to sell their book of businessfor fair market value. Plaintiffs alsoallege that they were forced to sell theirbook of business far earlier than they hadplanned because Allstate implementeda performance based termination program,although Allstate did not have thecontractual right to do so.Allstate has again filed a motion seekingto dismiss Plaintiffs’ Second AmendedComplaint. The motion is scheduled tobe heard in early August. If the Plaintiffs’Complaint survives Allstate’s motion, thecase will proceed. A jury trial is set to beginat the end of February, 2013. Ef14 — Exclusivefocus Summer 2012