Exclusivefocus - National Association of Professional Allstate Agents ...

ExclusivefocusSpring 2009An Official Publication of the National Association of Professional Allstate Agents, Inc.Is therea CaptiveAgent RevoltBrewing? page 38Steps to aSuccessfulTechnologyConversion page 36Agent’s Letterto Tom Wilson:“Let Me Keep My Job!”page 42What Lenders Look forWhen Refinancing aBalloon Loan page 22The Robots have Arrived!Allstate’s New Consumer Kioskspage 40MoldingAllstate Agentsinto a New Class ofWorker – Meet the“Indeployee”page 44A Magazine for Allstate Agency Owners and Allstate Personal Financial Representatives

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ExclusivefocusSpring 2009An Official Publication of the National Association ofProfessional Allstate Agents, Inc.FEATURES18 Protecting Your Book of BusinessBY RICHARD LARKIN, CLU24 America Needs Insurance Reform NowBY DARREN YANCY26 Pockets Lined With Gold28 Who Controls Allstate Agents? Allstate, of Course!38 Captive Agents, the Forgotten People40 The Robots are Here42 Mr. Wilson: Please Reconsider YourDecision to Terminate Me44 The Emergence of the “Indeployee”BY NANCY FISHTECHNOLOGY14 Our Experience with the AllstateTechnology ConversionBY MO & STEVE WARD36 Steps to a Successful ACT ConversionBY THE NAPAA TECH GUYBUSINESS16 Buyer Beware:All Lead GenerationProviders are not theSame22 Lenders Respond toAgency FinancingQuestion27 How to Train Cats andSalespeopleBY JOHN BOE34 Go to Great HeightsThrough GoalsBY ALLSTATE AGENTBILL GOUGHDEPARTMENTS6 President’s Letter8 Letters to NAPAA56 MembershipApplication58 NAPAA Marketplace62 Advertiser IndexA Magazine for Allstate Agency Owners and AllstatePersonal Financial Representatives4 — Exclusivefocus Spring 2009

president’s letterMr. Wilson,Let’s Think StimulusNot TPPBY BOB ISACSENHere we go again! When most ofmanagement’s growth techniqueshave failed to bring meaningful results,they turn their attention to their mostvaluable asset, the Allstate AgencyOwner.The company is now in the process of“pulling the trigger” across the country byopting to exercise the 90-day terminationprovision under many agent contracts forfailure to meet Expected Results.This purging of agents is counterproductive.What little economic gainthe company stands to realize from thesefirings will more than be offset by loweragent morale and distrust.Achieving Expected Results is harderthan ever with Hurricane Risk Management,unprecedented rate increasesand diminished brand image. Yet themanagement team that created theseproblems continues to look high andlow for someone to blame when all theyhave to do is look in the mirror. Now,as they continue to lop off agenciesacross the country to show they meanbusiness, management seems to have finallytaken note that the competition ispassing them by in new business writings.Never mind that agents have beencrying, “It’s the rates, stupid,” for yearsnow. Let’s all hope they finally get it andthat it’s not too late.Warren Buffett, CEO of BerkshireHathaway, recently wrote the followingabout GEICO, a Berkshire subsidiary:“Tony and I feel like two hungry mosquitoesin a nudist camp. Juicy targetsare everywhere. First, and most important,our new business in auto insuranceis now exploding. Americans are focusedon saving money as never before, and theyare flocking to GEICO. In January 2009,we set a monthly record – by a wide margin– for growth in policyholders. Thatrecord will last exactly 28 days. As wego to press, it’s clear that February’s gainwill be even better.” Obviously, GEICOExclusivefocusNational Association ofProfessional Allstate Agents, Inc.P.O. Box 7666Gulfport, MS 39506-7666Phone Toll Free (877) 627-2248Toll Free Fax (866) 627-2232Web Site www.napaausa.orgEmail HQ@napaausa.orgJim FishExecutive EditorP.O. Box 7666Gulfport, MS 39506Phone (877) 269-3474 • Fax (866) 627-2232Exclusivefocus@napaausa.orgExclusivefocus and DirectExpress are officialpublications of NAPAA - The National Associationof Professional Allstate Agents, Inc. No part of thispublication may be reproduced without prior writtenpermission of the publisher. It is the policy of thispublication to reflect the professional thoughts and attitudesof our members and to advance the professionalismof the insurance industry to the ultimate benefitof the insuring public.The views expressed by NAPAA, or any of itspositions relative to its activities and those of itsmembers’ actions on behalf of this organization, areexpressly those of NAPAA, and do not reflect the viewsor the opinions of Allstate Insurance Company, or anyof its affiliates.Letters to the Editor: All letters must include anaddress and a daytime and evening phone number. Wereserve the right to edit letters for clarity and space.This issue of Exclusivefocus magazine may containarticles of interest submitted to NAPAA by outsideauthors. NAPAA is not responsible for the opinions, adviceor accuracy of any information provided therein.NAPAA’s Mission StatementNAPAA is dedicated to the success of AllstateExclusive Agency Owners and to advancethe independence and entrepreneurial spirit ofour members.NAPAA’s GoalsOur goals are subject to alteration, influencedby a constantly changing environment and theneeds and wishes of our members.NAPAA encourages its members to activelyparticipate in the process of defining and refiningour Mission, Goals and Positions.Our General Goals:• To provide an organization specifically tailoredto benefit Allstate Exclusive Agents• Monitor legislative and legal issues pertinentto Agents and their clients• Maintain an Action Fund to support issuesbeneficial to agents and clients• Provide reliable communications on all issuesthat affect Agents and the ability to call uponour members to act• Provide Agents with a distinct voice on issuesthat affect them, continually exploring optionsand solutions• Make tools and resources available formembers in an effort to increase agency valueand success.For more informtion, please visitwww.napaausa.org6 — Exclusivefocus Spring 2009

is doing something right… when was thelast time customers flocked to Allstate?I find it hard to believe the same corporate-typeswho participated in the “Greed isGood” mentality of Wall Street by providinga viable market for sub-prime (CDO)instruments are now the sole judge andjury for the future of the Allstate AgencyOwner and their families.We are all in this financial debacletogether. The sooner Allstate becomesa true partner with its agency owners,the more resilient and long lasting theywill become. Instead of looking for reasonsto terminate agents, let’s try givingthem more competitive rates. If ratesare high, agents won’t advertise - it’s awaste of time and money. But if rates arecompetitive, agency owners will take thenecessary steps to drive business to theiragencies and grow their books of business.In turn, when agencies grow, Allstategrows. In other words, “let’s thinkstimulus not TPP.”We are very excited about hosting theNational EA Conference in Savannah,Georgia this April. Our NAPAA managementteam has put together a fabulous eventline up. Please join us at our conference thisyear and become part of the solution.Part of the success of NAPAA hasbeen its ability to attract first-rate officersand directors who unselfishly serveour growing membership. If you have adesire to serve your fellow agents, pleaseconsider a volunteer position at NAPAA.Our board is anxious to discuss an opportunityto serve with you, so please letus know if you have an interest.Warm regards,Bob Isacsen, NAPAA PresidentAlways a cell phone away:(917) 553-6404Support Those Who Bring YouThis MagazineIf you have a customer moving out of state, call theAgent-to-Agent Hotline to find an experienced NAPAAmember in the area. Give something back to thosedues-paying memberagents who make thispublication possible.Your support isgreatly appreciated.When you havea Transfer-Out…Call 877.627.2248Send email requests toHQ@napaausa.orgNAPAA Board of Directors 2008-2009ADMINISTRATIVE OFFICESJim Fish, Executive DirectorP. O. Box 7666Gulfport, MS 39506Ph # 877-269-3474ExecutiveDirector@napaausa.orgNancy Fish, Association ManagerP.O. Box 7666Gulfport, MS 39506Ph #877-627-2248Fax #866-627-2232hq@napaausa.orgPlease email HeadQuarters@napaausa.org to contact our officers and directors.Include the name in the subject line.OFFICERSBob IsacsenPresidentHoboken, NJDale RevelsImmediate Past PresidentKissimmee, FLRichard LarkinExecutive Vice PresidentFernandina Beach, FLDebe Campos-FleenorTreasurerTucson, AZGeorge AdamsSecretaryBirmingham, ALDIRECTORSRoslynne Ross, Annapolis, MDJohnny Leigh, Amarillo, TXRon Jay, Yukon, OKIsmael Melendez,Federal Way, WASpring 2009 Exclusivefocus — 7

Just wanted to give you some feedbackregarding the winter issue of Exclusivefocus,which I received in Saturday’s mail.Because of the snow storm which dumped8 inches of fresh powder, I wasn’t able toread the much-anticipated NJ article.While I was plowing, blowing and shovelingmy way to weekend relaxation, which,by the way, included the Giants loss to theEagles, my wife of 20+ years and the coownerof our agency was in front of a cozyfire, reading Exclusivefocus magazine.Much to my dismay, she would notallow me to read the winter issue todayin fear that I would not be able to sleeptonight. She was sickened by the article.She finally understands what RFG meansto our livelihood. How can we be calledExclusive Agents when we are, in fact,treated like employees of Allstate? She isoverwhelmed by the lack of control wehave over our agency. She is livid!As we anxiously begin 2009, I keepmy chin up, my eyes focused on the balland await the next curveball thrown atus by Mother Allstate. Thank you forbringing the NJ plight to the attention ofNAPAA members countrywide.Editor’s response: Good to hear from you!Thank you for your comments. I hope yourwife changes her mind and lets you readExclusivefocus because, while the truth oflettersto NAPAAten hurts, it is the only way to make positivechanges. I’m proud of you guys in NJ.We’re within sight of our membership goal,but in order to get there, we’ll need to reenergizerecruiting efforts at the local level.Hopefully, the magazine will inspire morememberships in NJ.By the way, with all the snow you’reshoveling this winter, it sounds like you’ll beready for a spring break in mid-April. OurNational Conference will be in Savannah,GA, April 15-17. I guarantee that both youand your wife will enjoy it.. . . . . . . . . . . .I’m back and I am glad! It has been afew years, maybe more, but I am finallydoing something about it instead of puttingit off. I have missed the “extras” thatcome along with membership. I have enjoyedthe publications and the newsletters,but I want to be a part of NAPAA again.I’ve been an Allstate agent for over20 years and the first 15 were great. Thelast eight years were extremely stressful,frustrating, surreal, disappointing anddisturbing. I feel like a lost soul on theboat deck of Allstate. I am an extremelyprofitable agent but my financial numbersare barely over the “Expected Results”that Allstate has established forme. I describe myself as a service andsales agent because service is mostly whatis accomplished in my agency. New businessis rare. Allstate’s rates and procedureschase prospects and existing clientsaway. Service consists of fixing mistakesthat are made by other departments. Ourproduct management department sorelylacks professionalism and the claims experienceis not reliable.Our rates are not even close to thecompetition and the word is out. We’vebeen told that we add value and that ourcompany far outshines the competitionin service, but that is not true. Price is thefinal deal maker or breaker. How muchis service worth when the rate differenceis $400 or more? Why would an insuredstay with Allstate and pay more if anothername brand company in the area haslower rates and equal service?Most agents in the area are discouragedand have been for quite some time.I know that many have joined NAPAA,as there is strength in numbers.Agents are paying more and morewith regard to office expenses, supplies,technology, staffing, licensing, etc., andreceiving less in compensation (loweringof property compensation a few yearsago). We look only for business that willfit the guidelines because, as we all know,it is useless to prospect for anything outsidethe restrictive guidelines and rulesset forth by Allstate. Agents are expectedto be profitable with regard to loss ratiobut can only write what Allstate deemsworthy. If a loss ratio falls outside acceptableparameters, how can the agent befaulted when it is Allstate who regulatesnew business?I could go on and on but I am singingthe same song we all have heard before.NAPAA has worked hard to become aprofessional organization and I wantto be a part of that again. Thank youNAPAA.. . . . . . . . . . . .Any ideas on how to unionize Allstateagents? I think that would be theonly way to get Northbrook’s attention.They put all these demands and rules onus as if we are employees, but pay us as1099 contractors. They should get rid ofthe rules or give us benefits in exchangefor compliance.Editor’s response: Allstate agents havetried without success to unionize in the past.But now with a new labor-friendly administrationin Washington, anything is possible.For its part, NAPAA has sought to exposethe misclassification issue at Allstate, hoping thepublicity would change its brazen behavior. Ourgoal is to make the company see that abolishingits employee-like controls is the right thing to dofor Allstate agents who have invested so muchtime and money in their agencies.. . . . . . . . . . .8 — Exclusivefocus Spring 2009

letters to NAPAARE: Old ManagementYour winter edition was spot-on asusual.“If it quacks like a duck, it’s probably aduck…” is right regarding Allstate’s managementof its “employee agents.” That’scorrect, employee agents. Recently, oneregion began to ask its agents “politely”to call in daily automobile policy counts(Rev. Rul. 58-177, 1958-1 C.B.349).The absurdity of this gesture is twofold:First it shows old management techniques…theManagement by Objective…and quite frankly follows the life sales proceduresof the 70s – “The call at home onSaturdays, why aren’t you selling?”Secondly, and perhaps the item thatdrives the point home… how is callingand reporting going to increase sales? Ifanything, it can deflate an agent whoserates are dismal.Name withheld to protect the innocent.. . . . . . . . . . . .Attached is a much belated applicationfor membership. Thank you againfor the invitation last summer to the2008 NAPAA Convention in Las Vegas.Later in the year, I visited with IshMelendez and concluded that NAPAAmembers are truly a hospitable bunchand a group I’d be proud to be a part.I’ve been an agency owner about 4months and have yet to fully understandthe monthly calculations of commissions,PIF counts, RFG and AF scales.It’s been a huge learning experience andI look forward to putting more of what Ilearned into practice in the coming year.All the best to you in 2009.. . . . . . . . . . . .As you know, Allstate is pushing andpressuring new agents here in Californiato move on or sell more. We had the "gutcheck" speech from Hank Barge here inCalifornia. I am thinking if they push meout, I'll need to go independent.Any ideas on getting appointmentswith good carriers without joining a largeexpensive fee-based cluster?Editor’s response: Thanks for writing. Itseems the company is ratcheting up the pressurefor more production all over the country.Going independent isn’t as easy as itmight seem. Getting appointments on yourown is both challenging and time-consuming.The ideal solution would be for you tobuy an existing independent agency thatalready has a number of appointments. Ifyou pursue this option, make sure that theappointments can be assigned or transferredto you.In the absence of buying an existing independentagency, the next best option foracquiring quality carriers is to affiliate witha regional cluster group or a national firmthat represents dozens of carriers. Obviously,there are fees involved, so it wouldbe wise to investigate your choices beforemaking a long-term commitment. To myknowledge, these two options are the mostexpedient way for agents to obtain appointmentsquickly.If you’re not in a hurry, you can try gettingyour own appointments. However, unless youhave a compelling CSRP and a proven trackrecord, it can be an uphill struggle. First, eachcompany will ask you for a premium commitment.Consequently, you could bite off morethat you can chew if you take on too manycarriers. I don’t think you’ll run into thisproblem with the clusters or the nationals becauseof the amount of business they alreadyhave with each carrier. However, this mayhave changed, so be sure to ask.. . . . . . . . . . . .How can we make enough to pay theSecurities Registration renewal fees whenwe earn less than 1% on annuities and 2%on mutual funds? I sold $268,000 of annuitiesin 2008 and was paid less than $2,700.Working hard for what?. . . . . . . . . . . .Thanks for all the help and very usefulinfo. You two are a godsend for any agenthaving problems with the company.Thanks a million.. . . . . . . . . . . .Why did Ed Liddy not have to sign anon-compete clause like he made us sign?If I leave Allstate, I cannot go to AIG becauseof this clause he made us sign.Editor’s response: Actually, you are ablesell policies for AIG the day you leave Allstateas long as you don’t solicit your formerAllstate customers and your office is locatedmore than a mile from your old Allstate office.If you intend to stay in the business afterselling your book, your buyer may also requireyou to sign a non-compete agreement.Typically, the buyer’s non-compete will bemore restrictive than Allstate’s.. . . . . . . . . . . .Thank you for all that NAPAA doesto support Allstate Exclusive Agents.I always read and appreciate Exclusivefocusmagazine. There have been a fewarticles that I have saved, such as “Is YourBusiness REALLY a Franchise?” by NancyFish in the March 2006 magazine. I referto this specific article because I accidentallycame across an Allstate online advertisementfor the EA opportunity. I have oftenseen similar listings when I have searchedonline for insurance agencies for sale. Today,however, it was listed as a franchise. Ihave included a copy for your review.I am not a member simply because Icannot afford the modest membershipfee. I have not taken an income from myagency since I started in January 2004.Again, thank you for all your support.Editor’s note: NAPAA has found at leasttwo regions that promote the Allstate ExclusiveAgency opportunity on “Franchiseopportunity” Websites. We find it regrettablethat Allstate would condone such misleadingadvertisements. NAPAA is well aware thatfranchisees enjoy many protections underfranchise laws that do not extend to insuranceagents. While these laws vary by state,Spring 2009 Exclusivefocus — 9

they are meant to protect franchisees fromfranchisor abuses such as unjust contract terminationsand interference in the sale of thebusiness. Once again, Allstate is trying tohave its cake and eat it too.. . . . . . . . . . . .I have heard from a reliable sourcethat 18 agents in one of the major marketsin my state have put in for TPP. Mysource originally thought these agentswere probably new agents because theyjust can’t make it, but has since found outthat many of them have been agents for10+ years and have $2-3 million books.There are around 140 agents in thatmarket, but still that’s over 10%. Nowonder management is trying to convinceme to stay. What are they going todo with all those accounts and how willthey replace all these agents? What willhappen to all those customers when theyget moved around and don’t know whotheir agent is? I believe a great majorityof them will leave Allstate.. . . . . . . . . . . .I am in my third year as a scratch agentand my finances are extremely tight thisyear. Many of my credit lines have beenreduced, so it is essential that I am ableto pay bills out of my commissions. Afterthree years, I still have not been able to paymyself and am considered one of the betteragents in the area. Unfortunately, I haveno choice but to eliminate all subscriptionsand new finances at this time. Regrettably,this means I must also cancel my NAPAAmembership until things improve.. . . . . . . . . . . .I am a 20-year agent with Allstate anda longtime NAPAA member. I’ll soon beterminating my "agreement" with Allstate.I'd like you to know that havingthe information provided by NAPAAhas been very helpful and informative...you made it more bearable to remain anagent. However, there is no "bailout"letters to NAPAAfor small agencies like mine so I've decidedto call it a day. I will continue myNAPAA membership, so please updatemy mailing address to my home.Feel free to contact me if you needmore information from me.Thanks and continue to do goodwork!. . . . . . . . . . . .We had a 41-year agent terminatedlast Friday. They showed up Fridaymorning and removed his computers andripped out his phones. I knew he was underthreat of termination since early lastyear. He tried to sell without any luck.Most of his book was not TPP eligible.Last year, the company threw a big 40-year anniversary party for him and thenthreatened him with termination a daylater. Interestingly, the local managertried to get him to sell to his wife, but shecouldn't pass her insurance license exam,so the deal fell through.With the economy the way it is andmoney for buying anything in short supply,consumers are pinching pennies.This, along with the highest auto ratesin the industry, paints a bleak picture forthe Big A this year – it will be lucky tohave any agents or customers left by theend of 2009.I switched my own commercial insurancethis year (my office building). Allstatepremium: 1,307. New policy withbetter coverage: $760.The last Exclusivefocus was great, andDirectExpress is much better now, too.Keep up the good work.. . . . . . . . . . . .I really would like to attend the conference,but I'm just not able to make ithappen! I'm very interested in what yourspeakers have to say. Is it possible to sellme a video tape or Webcast of the guestspeakers' presentations? Others who'dlike to attend but can't, might be willingto purchase it, too.Editor’s response: We have looked atdoing this in the past. However, we havefound that audio recordings do not conveythe energy of the speaker or the audience.Most of the time, the speakers interact withthe audience, and their questions cannot beclearly heard on the audio recording, whichdiminishes the essence of the presentation.It’s a little like going to a concert to see yourfavorite artist perform – a good live performancecannot be replicated by any medium,including a DVD with surround sound. Anotherconsideration is the cost of producingand distributing a CD or DVD. And sinceNAPAA only receives a handful of requestseach year for conference videos or DVDs, itappears there is not enough demand to warrantthe cost.Last year, we transcribed Canadian RodLaRocque’s presentation and printed it inthe fall issue of Exclusivefocus magazine. Wemay do that again this year, but that won’tbe decided until after the conference.. . . . . . . . . . . .We are tackling yet even more rate increasesin our state; auto, home and landlords.Then there’s the poor soul with alousy credit score who is getting nailed withincreases that are undeserved. I checkedmy own credit score and it didn’t change,but I went from excellent to good with oneof the rating bureaus. So what does thismean? More customers will be nailed bythe credit score component of rating?I have lost so much business becauseof the continued stream of rate increases.These customers think it is a bait andswitch game. I’ve even lost householdsover $10 bucks a month. I’m good, butnot good enough to save accounts thathave increased by hundreds of dollars ayear. And definitely not good enough tosave those with increases of more than$1,000 per year. Where are those actuariescoming from? What is their real goal?I had one customer with a premium of$1,200; we increased the rate to $2,700(no credit score change); and then aLetters continued on page12.10 — Exclusivefocus Spring 2009

We Finance Allstate Agencies!Paul ClarkeChief Operating OfficerTabitha ChisumSr. Closing CoordinatorAllstate SpecialistSteven KemperRelationship ManagerAllstate SpecialistAshley MarcelleClosing CoordinatorAllstate SpecialistOur Staff isDedicated toServing You!Dustin MangoneRelationship ManagerAllstate SpecialistKyle CrawfordRelationship ManagerAllstate Specialist“PPC has been a huge asset to my career and business. Not only have they provided ahassle-free initial loan to fund my acquisition, they have also done a tremendous jobwith ongoing communication as well as recognizing me as a valued client. I have sentother buyers to them and I plan to use their services should I acquire a 2nd location.PPC understands how to value an agency, what personal attributes each individualbrings to the table, and how to leverage multiple banks to ensure the right financingoption for the borrower.” – Adam Pisani, Allstate Agent, Sugarland, TXWith the current lending climate you may notice some companies backing out ofthe Allstate market. In these unsure times you can rely on Professional PracticeCapital to stick to our commitments. Our loans are bank funded and we willcontinue to lend to agents nationwide. If you are left in a bind by another lender -remember you can always count on PPC!100% FinancingLow, Fixed Interest Rates7, 10, &15 Year Loan TermsNo Multiple of Revenue Limits800.456.2779www.ppcloan.cominfo@ppcloan.comSpring 2009 Exclusivefocus — 11

competitor picked it up for $700.The latest rate increase has a new definition,Residential Component Technology.RCT has kicked up the values ofjust about all properties. We are launchingthis as we raise rates and while marketvalues are sinking. Go figure.We call customer service for help withthe explanation and they tell us since thelast renewal this customer has had fourrate increases. We now have a team thatinvites us to send problems from unhappycustomers to them. Basically, they call thecustomer and let them know there is nothingthey can do. Then we get an e-mailfrom them advising us that the customerwill be moving the account to anothercompany. Last week, I had a customer soupset about a $50 per month increase onher homeowners that she stormed out ofthe office leaving the door wide open insub-zero weather. She doesn’t understandwhy Allstate needs another $600 from herfor the same exposure.Is there a surplus issue? Why do wewant to run all these clients off and thenturn around and promote a programwhere the customer is the center of ouruniverse?. . . . . . . . . . . .Don’t throw away: reinvent – The AllstateAgency Guide to the Future! This isyour new employee manual. Tom Wilsonhas spoken and we need to listen.He tells us all about integrity, honesty,accountability and other stuff we apparentlydidn’t know about. While somemay doubt Tom’s veracity in these areas,I’m here to tell you that he really hascome up with some great stuff this time.For example, in the area of integrity, weall can thank Allstate for giving us ourguiding principles in selling the new AllstateOrange Auto. Agents who attendedthe roll-out meetings will remember thatAllstate told us to quote the lowest coverage,highest deductibles, and all of theavailable discounts, regardless of whatthe customer says. That way we can getthem into our offices and “up-sell” themletters to NAPAAlater. Good strategy, Tom. That shouldreally add some integrity to my agency.Then there is the “honesty” thing. Mr.Wilson really knocked this one out of thepark. Without him telling us not to lie to acustomer, I would have really missed thatone. But you know, now that I think aboutit, there was the whole “independent contractor”thing that Ed Liddy promised us.I wonder if Tom can be held accountable ifhe only perpetuates this lie. And I almostforgot about Tom’s promise that the NABwill actually help improve agent/companyrelations. But maybe that’s not much of alie since the company only likes those whokiss-up to management. It’s not the NABmembers’ fault that they don’t actuallyrepresent the rank and file Allstate agent.And then there’s part about accountability.This one really took me for a loopuntil I read it a few times. Accordingto page 24 in the reinvent booklet, thecompany will “actively address those whodo not meet business objectives and notallow them to ‘hide under the radar.’”With threats like these, who needs IDLsor MDLs? In other words, Tom is clearlysaying, “Let’s get rid of the slackers.” Butwait a minute; we’re independent contractors,right? Therefore, we’re not supposedto have quotas. I wonder if Tomtook a few extra valiums after reading the“Misclassified” article in the last issue ofExclusivefocus. I bet he never envisionedsuch an exposé about the company’s misconduct.But now, it looks like the IRSand 13,000 Allstate agents now knowthe truth. What galls me is the doublestandard at Allstate. If the companybreaks the rules, it’s OK, but when anagent does, its “off with his head.”Now, thanks to the “Misclassified”article, agents know they’re simply employeesdressed in independent contractorclothing. To be honest, I’m reallylooking forward to getting my pension,401K, and health benefits back. Becomingan IRS-approved employee againwill do wonders for my bank accountnow that Allstate will be paying all ofmy business expenses, which amount to$7,666 per month. And since Allstatewill be providing me with new company-ownedcomputers, I’ll be able takethose I bought for the ACT conversionhome to my kids. Man, this is going tobe great. Thank goodness I saved thoseold expense report forms.Anyway, I hope all is well with mybrother and sister agents. Now that Allstatepublicly and formally issued ournew employee manual, we can all sitback, relax and enjoy the new “good olddays” as employees.. . . . . . . . . . . .I want to especially thank you for therecent member-to-member referrals thatI've received from NAPAA. Business hasbeen slow and those referrals are certainlyhelpful and greatly appreciated.The magazine keeps getting betterand better. You guys are awesome.The information that you're providingin both the magazine and newsletters isvery enlightening. You're doing a greatjob in keeping us informed. Many, manythanks for all that you do.. . . . . . . . . . . .I have been an agent since taking overfrom a relative in the mid 1990s. Hewas one of the first to convert to the EAcontract in our region. At that time, thecompany required that he stay for fiveyears before I could take over. Unfortunately,he never made it to retirement ashe dropped dead from a massive heartattack. I immediately stepped in and becamean Allstate agent. At that time, Isigned my contract/agreement and tookmy copy and stored it in a safe place.Fast forward to 2005 when I receiveda letter from HR stating they were reviewingagent records and that theydidn't have a copy of my agreement andwould I please sign the one enclosedand send back to them. Well, I’m notstupid nor did I just fall off the turniptruck. I went to my files, and pulled outLetters continued on page 50.12 — Exclusivefocus Spring 2009

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technologyOur Experience with the AllstateTechnology ConversionBY MO & STEVE WARDWhen we first heard that Allstatewas letting us convert our computersystem, we were very excited aboutthe opportunities that would open up forus. As part of a test program, one of thebigger agencies in our market had convertedthe year before and we heard itwas working well. Our initial excitementproved to be short-lived. We discoveredthe process would be both difficult andexpensive. After reading the “Think Thin”article in the last issue of Exclusivefocusmagazine we decided to share our experienceswith other agents in the hope ofmaking their conversion less stressful.Our agency is small. Before the conversionwe had three workstations, arouter and a fractional T1 line for phoneand Internet, all supplied by Allstate.We were using Verizon for our phoneand wireless Internet provider. Early on,we decided that we wanted more speedfrom our computers once the conversionwas complete. We opted for a T1 line forvoice and data. The cost for this optionwas about the same as the projected costsfor our phone and DSL. We changed overto the T1 line several months before thecomputer conversion. It turns out this wasa good decision for us because this proceduretakes 30 to 45 days to complete.Now, back to the computer issue. Allof a sudden, we were contacted by severallocal and national companies wanting todo business with us. Our biggest problemwas that we did not have time to sitdown with each vendor to discuss theirproposals. Secondly, we are not computergurus waiting for the next great digitalwidget to come out. Our expertise is ininsurance, a field we know very well.We quickly learned that computer peoplespeak a language that most averagefolks don’t understand – we call it “geekspeak.” Admittedly, it took a while beforewe became familiar with the termsand acronyms they used.Realizing we needed to get up tospeed, we set aside five hours a weekto educate ourselves and meet with thevarious vendors. It soon became apparentthat every one of them offered the sametwo options; computers just like those wehad before the conversion with tech support,or computers with a server and techsupport. Depending on the system, pricesfluctuated between $8,000 and $15,000.Adding to that are the additional costsfor monthly tech support, which rangesbetween $200 and $400.Then we received a call from a companythat offered several options. Oneof their solutions was one we had neverheard of before. They called it a “HostedSolution utilizing Thin Client Technology.”This option would provide us witha virtual server and take care of backups,upgrades, security and maintenance. Wewere told we would not need typicaldesktop computers, but something called“virtual clients” that would connect totheir servers. Since this was a brand newconcept to us, we did not know whatthey were talking about. However, theyassured us that they had been using thissolution in the medical field for years.As they explained the benefits, whatpiqued our interest were the lower costs.They said it would be less expensive thanthe other solutions we were consideringand the monthly fees would be lower too– now they had our attention!As a result of this information, we decidedto do more research on this “HostedSolution.” What we found was thatwe could save more than 50% on initialstart-up costs and also save money on theongoing support costs.Now for the big question: would this“Hosted Solution” work with Allstate’stechnology? Our first call to Allstate wasdiscouraging. Since no one there understoodwhat we were trying to do, theytold us it would not work. However, thevendor assured us that it would. So, totest the vendor’s theory, we went aboutsetting up a system in our office, tied intothe Allstate Technology and it worked,just as they said it would.We converted to the “Virtual Client/Hosted Solution” last November. We’renot sure who was more nervous on theday of the conversion – Allstate or us.Allstate Tech Support called us all day tosee how things were going. By afternoon,we were up and running and we havenever looked back. And today, everythingis still working just as we were toldit would and we are very pleased with thechoice we made. We have told our storyto several local agents, but we wanted tomake sure we had no problems before wesubmitted this article for publication.We highly recommend that you lookinto a “Hosted Solution” for your office.We have been very happy with the performance,cost and support we have received.Mo Ward is an Allstate agency owner inNew Port Richey, Florida. Her husbandSteve also works in the agency. To find outmore about the solution they used in theiragency, call (727) 862-2886.14 — Exclusivefocus Spring 2009

usiness tipsBuyer Beware:All Lead Generation Providers are not the Samethose who use the Internet. On average, 5%of consumers can be considered “chronicshoppers.” They log onto one site, get a pricequote, and then do the same on another, andanother. Sure, the company promising an“exclusive” is the only one with that particularcontact information, but only until thatclient moves to the next browser window!Don’t pay for flashy slogans, or clever taglines. Be sure you’re paying for quality leads,nothing more and certainly, nothing less!You’re contacted on a regular basisby tons of lead generation providers,each with their own offers and policies,but do you know what to look forto separate the good companies from thebad? Not knowing can hurt you, your clients,and most of all, your bottom line.Different companies make differentpromises, but what’s the best way to go,and who can give you the most for yourmoney? Here’s a quick guide to help younavigate through the noise, and get tothe best value out there.Never pay for leads up front.Some companies will charge youbefore you’ve even received your leads.These charges come in the form ofpre-fees, semi annual fees, and the like.Would you buy a car before you took itfor a test drive? With today’s economy,and the problems that come along withit, it makes sense to look for a lead providerthat has enough confidence in itsproducts to provide you with service beforeasking for money. Paying upfrontfor leads is the first sign of trouble. Astrong company doesn’t need you to“float” its business, and will provide youwith the leads you need BEFORE youpay! A company that believes in its servicesenough to let you pay after you seethe results is a company brimming withconfidence. This is especially importantin times like these, when fly-by-nightschemes are commonplace.Never commit to long term contracts.Asking you to commit to a long-termcontract before you have tried out theprogram is another warning that you maybe choosing the wrong lead generationprovider. A solid company doesn’t needto trap its customers in a semi-annual, oreven a 90 day contract. If you aren’t gettinggood leads, why let yourself be forcedto pay for something that isn’t working?Even a “short term,” 90 day contract canhurt you. Why throw money away forthree months when you know the leadsare weak? That’s three months of wastedtime and money for you, and your employees.A company looking to keep youin a contract is worried that without it,you’ll leave and take your business elsewhere.Never lock yourself up in this industry,always pay as you go.There is no such thing as anexclusive lead!That’s right! Many companies try towoo you with their “exclusive” contact listswhen, in reality, there is no such thing. Alead is only exclusive until the consumer fillsout another inquiry on another Website!People love to comparison shop, particularlyAsk about their return policies.Be sure to check the fine print! It is importantwhen choosing a lead generationcompany to learn about its return policy.Industry standards give you a 5 day returnpolicy for things like disconnected numbers,incorrect leads or dead-end leads.This includes leads where you may alreadybe the current provider for the prospect.Not all lead generation companies offerthese policies, so be sure to ask up front.When choosing a lead generation provider,make sure you get every advantage availableto you, not just the obvious ones.Find a lead generation companythat will work for you.This is probably one of the most importantthings to look for when trying tofind a lead company. Different serviceswork for different agencies, and you needto be sure that the one you’re using worksbest for you.By keeping all of these things in mindwhen comparing lead generation providerscan help save you time and money.Article provided by Find A Local Agent.com, 200 Broadhollow Road, Suite 207,Melville, NY 11747. Find A Local Agent.com has been a trusted source for Insuranceleads among Allstate Agents since 2001.For more information, please visit us atwww.FindaLocalAgent.com.16 — Exclusivefocus Spring 2009

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agent issuesProtecting Your Book of BusinessBY RICHARD LARKIN, CLU©The most valuable asset of Allstateagency owners may be the transferableinterest they have in their book ofbusiness. Prior to 2000, the majority ofAllstate agents were employee agents,and the vast majority of them participatedin the Allstate Agent Pension Plan.Until then, this was their primary vehiclefor funding their retirement. Whenthey lost their employee status and becameindependent contractors (referredto by many as a forced conversion), theywere no longer eligible to participate inthe pension plan.Under the new Exclusive Agent contract,the value of their book of businessbecame a major source of their retirementprogram. However, the security of thatasset is vulnerable, subject to the whimsof Allstate. The company, as has beendetermined, legally may tamper with theagency owner’s right to sell it, notwithstandingthe rampant and widespreadcomplaints of Allstate’s meddling.Furthermore, agency owners, despitebeing called by the company “independentcontractors,” are subject to performancestandards. These are establishedexclusively by Allstate, subject to changeat any time for any reason. Should Allstatedecide to terminate an agencyowner for failure to achieve ExpectedResults, the value of the book will likelysuffer an immediate decline in value.There is little need to examine the manyadverse consequences that may befall anagency owner who is forced to sell, or theunsavory ways they manifest themselves– these are all too familiar to too many.The issue of an independent contractorbeing subjected to certain expectedresults established arbitrarily, and whichare of questionable legality, has becomeof immediate concern due to recentevents, the first of which is the increasein the number of agency owners nowreceiving termination notices, and thesecond being the February 6th article inthe Washington Post that reported that“Allstate last week declared, despite unprecedentedtrouble in the markets, itremains financially strong. But tuckeddeep inside a company report is evidencethat Allstate changed its bookkeepinglast year in ways that improve its financialappearance.”The legality of the bookkeepingchanges is not known at this time. Butwhatever that outcome turns out to be,it does not escape the appearance that adouble standard is being practiced: onefor senior executives whose compensationis predicated upon meeting expectedresults, another for the Expected Resultsagency owners are required to meetto keep their job. This appearance of adouble standard would likely not gaintraction except for a multitude of reasonsthat, when taken in total, suggest the existenceof a corporate culture concernedwith the accumulation of personal wealthto the detriment of agency owners, employees,policyholders and the insuranceconsumers.Consider the following events (spaceprecludes including the many more thatexist), all of which have occurred withinthe past two and one-half years:Lawsuits:• September 20, 2008. An accountantwas struck by an Allstate insureddriver in a low-impact accident. Sheunderwent three months of physicaltherapy and other treatment. The medicalrecords were provided to Allstate,as well as proof of lost wages. Allstate’sstand was that the pain was the result of a18 — Exclusivefocus Spring 2009

long-resolved divorce, that its client wasnot responsible for the accident, despitehaving clearly violated the right of way, adefense “used in many, if not most casesby Allstate.” Their offer was $1,500. Anarbitrator awarded over 30 times Allstate’shighest offer.• July 2008. Allstate lost its appeal ina Missouri Court of a $16 million judgmentagainst it for not settling a $50,000claim on an auto insurance policy. “Allstate’sfailure to recognize the severity ofthe ... injuries and the probability thatthe claim would far exceed ... policy limits;its failure to investigate the claim andrespond to the demand in accordancewith insurance industry standards and itsown good faith claim handling manual... are all circumstances supporting a reasonableinference that Allstate’s refusalto settle was in bad faith,” wrote JudgePaul Spinden in the decision• July 2008. Allstate settled a badfaithcase that drew national attentionand prompted the judge to levy finesagainst the insurer topping $7 million.Both sides declined to disclose the termsof the settlement. This is the court wherea daily fine of $25,000 was levied forAllstate’s refusal to comply with a courtorder to produce, among other things,the McKinsey documents.Regulatory:• August 2008. Allstate finally settleswith the Florida Office of InsuranceRegulation (OIR) after losing aprolonged struggle to avoid turning overdocuments requested by the department.The documents (frequently referred to asthe McKinsey report), had been soughtfor several years by authorities in courtroomsthroughout the country. InsuranceCommissioner Kevin McCarty said“Allstate’s actions clearly evidence a continuingattempt to improperly subvert,manipulate, and undermine the regulatoryprocess, and such actions evidencea lack of trustworthiness on the part ofAllstate’s management, officers, and directors.”Finally, faced with an ultimatumto comply with the subpoena to surrenderthe requested information or loseits authority to transact any new insurancebusiness in Florida, Allstate cavedin. It also agreed to pay a $5 million fine,cut rates by 5.6 percent, not ask for a rateincrease for at least a year, forgive a $175million loan to its Florida subsidiaries,and write 100,000 new residential propertypolicies in Florida.• May 2008. The Texas Departmentof Insurance and Allstate reached an agreementto settle all outstanding litigation withrespect to homeowners’ insurance issuesthat date back as far as December 2004.Under the terms of the agreement, Allstatewill provide $71,300,000 in refunds, creditsand rate reductions. In the same month thecompany agreed to refund $51.6 million toTexas customers it overcharged.• February 20, 2008. Louisiana InsuranceCommissioner Jim Donelonfined Allstate $250,000, and ordered theinsurer to reinstate the wind and hailcoverage of several hundred customerswhose policies were dropped in disregardof a key consumer protections law. Allstateadmitted to no wrongdoing, sayingit disagreed with the department’sinterpretation of the law, and claimed itdecided to settle the matter “in recognitionof the catastrophic events of 2005,the continuing concern for its customersand as a gesture of ‘goodwill.’”• December 2007. The MarylandInsurance Commissioner announced afine of $750,000 – the largest ever imposedagainst a property and casualtyinsurer – against Allstate for failure tocomply with state laws regarding mandatorynotices to consumers and a requiredfiling with the Maryland Insurance Administration.State insurance officialssaid Allstate had already paid Marylandconsumers nearly $18.6 million in restitutionfor similar violations.Independent Authorities:• July 2007. A report by the ConsumerFederation of America (CFA) chargesAllstate with “Questionable claims settlementpractices, resulting in unjustifiablylow claims payments. Allstate was oneof the first major insurers to adopt claimspayment techniques designed to systematicallyreduce payments to policyholderswithout adequately examining the validityof each individual claim, such as an automatedpayment system called Colossus.Spring 2009 Exclusivefocus — 19

that are occurring. Defendants’ wrongfulcourse of conduct ... has exposed theCompany to regulatory liability, judicialfines and caused substantial losses to Allstateand other damages, such as to itsreputation and good will.”Typically, disparate events lack a commondenominator. I believe, however,these events are tied together by a corporateculture that has existed for far toolong among Allstate’s senior executiveswhose performance-based compensationmay indicate their incentives are forshort-term profits and stock gains overthe longer-term health of the company.Performance-based compensation can actas a motivator for manipulating companybooks in order to increase the value ofIt adopted these techniques after beingtold by a consultant that these systemswould put them in a ‘zero-sum game’ withclaimants, including their policyholderswho filed claims, in which Allstate shareholderswould benefit financially at theexpense of policyholders.”• May 2008. According to its Website, “Audit Integrity is the leading providerof accounting and governance riskanalysis on public companies. Throughthe forensic study of the factors behindfraud, Audit Integrity proprietary modelingeffectively detects and measuresfraud and transparency-related risks inover 8,500 publicly traded corporations.”In addition to forecasting material financialrestatement risk, and equity performancerisk, it also identifies companiesthat are “at risk of financial and governanceproblems that can lead to class actionlitigation.”As evidenced by the chart labeled “3Year AGR Score” found elsewhere in thisarticle, Allstate is “currently rated as having[an] Aggressive Accounting & GovernanceRisk.” So while Allstate seems tobe risk-averse on the property-casualtyside of its business, the same cannot besaid for its approach to corporate governance.An aggressive stance can produce,and even invite, such class action lawsuitsas the January 2008 shareholder derivativeclass-action lawsuit, Fojas vs. Allstate,which charges “breaches of fiduciaryduties, abuse of control, gross mismanagement,and waste of corporate assets20 — Exclusivefocus Spring 2009

stock options. Furthermore, the combinedposition of Chairman and CEO is consideredby corporate governance authoritiesas one of the most extreme cases of lack ofindependence between a company’s boardof directors and its officers.Taking into consideration the abundantexamples provided in this examination,including the Allstate Scoreboardfound elsewhere in this article, the evidencesuggests that the actions of Allstate’sTom Wilson and his senior executives,when measured by categories thatshould be included in any proper evaluationof performance standards, expectedresults, or by whatever name might beapplied, are unacceptable.Agency owners are not in control oftheir destiny. They do not set the requirementsthat they are expected tomeet. They cannot set the rates for thepolicies they sell. They have no say in theunderwriting of policies that determinewhich risks they may or may not write.When the company elects to no longerwrite business in coastal areas, or otherareas the company deems to be at highrisk of a catastrophe, non-renewing policyholdersby the hundreds of thousands,agency owners cannot make bookkeepingadjustments to improve the ExpectedResults they are required to meet in orderto keep their jobs. Needless to say, anelement of doubt will cast a dark shadowover the integrity of any termination notice:have my numbers been restated toachieve a desired result? What other yetto-bediscovered bookkeeping changeshave been made?The company’s code of ethics proclaimsthat “Allstate is committed tooperating its business with honesty, integrityand the highest level of ethicalconduct. These values are absolute.” Atthe Sanford C. Bernstein and CompanyStrategic Decisions Conferenceheld May 30, 2008, Allstate CEO TomWilson said “. . . there's plenty of waysto get information about Allstate. Wedo believe in full transparency.” Allstate’sWeb site goes even further, saying “Weconsider transparency and verificationessential ....”Mr. Wilson and I are in completeagreement that transparency and verificationare essential, so we followedAllstate’s advice and engaged in the essentialverification, sadly concluding thatthe trust we so readily gave appears tohave been abused. And this has createda new and serious dilemma: what to dowhen trust is misplaced? This is a questioneach agency owner must answer forthemselves. Once answered, they mustthen take some kind of action. To avoidmaking a decision or to do nothing istantamount to approving the status quo.Thus you become complicit in all that isgoing on in Northbrook.All agency owners are encouraged tobecome actively and aggressively involvedin charting their own destiny. Write toyour representatives in Congress, askingfor their ideas and their help. JoinNAPAA, we need your financial support.Come to our convention this April.Exchange and share ideas. Volunteer tohelp, run for a position on our board ofdirectors. Be a part of the team that seeksonly to make Allstate fulfill its vast potentialfor good. Help us to breathe newlife and energy into the Good Hands.Cast aside any fear you might have aboutAllstate’s anti-NAPAA position.Can we, working together, make adifference?“Yes, we can!”YOU ARE THEIRYour Clients Hold You in High Esteem…They Value Your Guidance and Opinions…They Count on You and Follow Your Advice …When Your Customers Transfer Out of State,Continue to be Their Hero…CALL THE NAPAA AGENT TO AGENT HOTLINE:877.627.2248We help locate experienced Allstate Agents for customers transferring from state to stateRequests by email should be sent to HQ@napaausa.orgSpring 2009 Exclusivefocus — 21

usiness tipsLenders Respond toAgency Financing Questionour business finance partners on what todo for agency owners with balloon loanscoming up for renewal?”QUESTION FROM AGENT:“I’m another one of those who’s investeda large amount of money in myagency. I have a commercial loan thatcomes up next year. What are you hearingfrom members about renewing loansand replacing loans? If a lender were tolook at my retention, I’d be hard-pressedto sell the concept that this whole processwill change and that, someday, I’ll bewriting business again. I am losing sleepon this one. Can we get some advice fromOAKSTREET FUNDING, LLCRESPONSE:Whenever you borrow money toachieve business goals, first ensure thatthe terms and structure of the loan alignwith your business strategy. In otherwords, be absolutely clear about whyyou’re borrowing. Then be upfront andhonest with lenders—don’t exaggeratestrengths or hide weaknesses. And beprepared to provide supporting documentationand personal information.To justify the need for capital—whetherrenewing or replacing a loan—startwith a strong, unwavering belief in youragency’s future. Then demonstrate to thelender why this capital will enable youragency to retain or increase your book ofbusiness. This may mean documentinghow you’ve built the agency in the past,revealing your business plan, and explaininghow the infusion of capital will allowyou achieve the goals stated in your plan.Always choose a responsible lenderwith a proven track record of taking prudentrisks—one that has never over-leveragedclients or overreacted to marketchanges. Your lender should understandthe complexities of the insurance field andthe unique business model of agencies andbrokerage firms. Plus, the lender should beable to recommend strategies to help positionyour business for long-term success.Rick Dennen, CEOwww.oakstreetfunding.comPPC LOAN RESPONSE:Unfortunately, the only available financingfor some Allstate agents comesin the form of a balloon note. This is22 — Exclusivefocus Spring 2009

commonly provided by the selling agentor by a small community bank that iswilling to give an agent a payment basedon a 7 to 12 year loan, but who wantsall its money back in 4 years or so. Theagent is then left hoping that favorablerefinance terms are available when theloan balloons on the 48th month.In situations where an Allstate agenthas a loan that balloons, the agent bearsadditional monitoring responsibilities:1. Keep a close eye on your credit. Weall know that one or two missed paymentscan really affect your credit score. If yourcredit score drops below 650, you may notqualify for financing regardless of howlittle you owe relative to the value of youragency. Or, if a lender approves the loan, itcould be subject to unfavorable provisionsthat may include higher rates and fees.2. Save as much money as you can.I’m talking cash! Market conditions dictatethat agencies are sometimes up andsometimes down. If you find yourselfreturning to your lender with a less desirablebook, you may still be able to getquality financing terms if you have 10%or 20% cash to put down. It’s always agood idea to have “rainy day” funds available,so living conservatively for 3 or 4years will put you in the best position.This includes holding off on buying thatrental property or vacation home untilyou know you are in the clear.These economic times certainly tellus that there is no guarantee that what isavailable today will be available tomorrow.By avoiding a balloon note and borrowingmoney for a fixed-term at a fixed-rate ofinterest will ensure that your loan will bepaid off at maturity. It will also relieve youof the hassle of procuring replacement financingin very uncertain economic times.Making use of this strategy will not onlygive you peace of mind, but will allow youto turn your attention to more importantitems, such as growing your agency andretaining customers.Taking a higher rate fixed-term loanover a loan that balloons is probably theright thing to do and will save you a lotof headaches. However, if you do findyourself in a situation where a balloonloan is the only option, make sure youare prepared. If not, the debt you have onyour agency may force you to sell it muchearlier than you would like.Paul Clarke, EVP, COO and Fred deRoode, Chairman, CEOwww.ppcloan.comCAPITAL RESOURCESRESPONSE:Capital Resources is excited aboutthe opportunity to respond to one ofyour readers.First, borrowers should be prepared tohonestly discuss any negative issues, suchas retention, loss ratio, lack of new businessproduction, evaporating bonuses, etc.They should also be prepared to openlydiscuss and demonstrate why these negativeissues occurred and what measures arebeing taken to correct the problems.Second, although you are already acustomer of another lender and haveestablished ownership of your agency, anew lender will require documentationjust as they do with any new application.Here are some helpful tips on applyingfor a business loan. These helpful tipsalso appear on our Website.“Know Your Credit Score:Before you apply for a loan, you shouldknow your personal credit score. If you do notknow what your credit score is, it will likelybe to your advantage to review your creditreport before you start the loan acquisitionprocess. Your FICO credit score is availablefrom www.myfico.com for a small fee. Youcan get a credit report free, however freecredit reports do not contain a credit score.To order a free annual credit report fromeach of the three major credit bureau agencies:Equifax, Experian and TransUniongo through www.annualcreditreport.com orcall 1-877-233-8228. Take steps to cleanup any derogatory remarks listed on yourcredit report prior to applying for a loan.Most lenders use your median credit score aspart of their approval process. The medianis the middle number of the three nationalcredit reporting agencies, (Experian, TransUnion,and Equifax).Credit Report Red Flags:Excessive credit card debt and highly leveragedassets (i.e. HELOC’s, 2nd mortgagesto consolidate debt, etc.) are red flags thatwill mark you as being high credit risk. Takingsteps to pay down these types of debts anddemonstrating they will not recur before youapply for a loan can dramatically increaseyour probability of being approved for a commercialloan.Tax Returns and Accounting:File both your personal and (if applicable)business tax returns on time and donot file extensions. Furthermore, be sure thebusiness that you are acquiring is currentand has filed their most recent tax returns.This not only demonstrates responsible businesspractices and good organizational skillsto your lender, but it also will supply yourlender with the most current information,which could increase your chances of a loandecision in your favor. It should be notedthat sloppy or deceptive tax practices can bea major hurdle in qualifying for a commercialloan. For example, businesses sometimesmaximize expenses in order to lower taxliabilities. This can work against you sincemost lenders like to see that the businessesthey are lending to are profitable.Know your Agency:A lender will expect you to proveyour commitment to the business and demonstratethat you'll have the ability to paythem back. Have an intimate knowledge ofall aspects your agency. You should know theagency's history, market area, expenses, revenuetrends and revenue makeup. Additionally,be proactive in cutting agency expensesto make up for revenue shortfalls, and beprepared to project what your agency's expenseswill be going forward. A lender willexpect to see that you have a thorough anddetailed knowledge of the agency cash flowsand how that will effect your compensationas an owner. If you don’t have a detailedbusiness plan, start working on one.Documentation and Presentation:Obtaining a commercial loan requires agreat deal of legwork and preparation. Theorganization and timely preparation of allthe requested and required documents willbe a reflection of how you will run yourbusiness, so pay close attention to the presentationon all documents. Fill in all blanks,write neatly and legibly, make sure copiesare dark enough to read and supply all requesteditems at the same time if possible.”Tom Sanders, Vice Presidentwww.capitalresources.comSpring 2009 Exclusivefocus — 23

other voicesAmerica Needs Insurance Reform NowBY DARREN YANCYThat’s right, an insurance agent talkingabout insurance reform.I’ve spent 15 years representing NationwideInsurance as an agent in Texas.In that time, I have worked hard to builda successful business the right way. Mostof my competitors share my commitmentto honest representation of theirclients. As direct writer agents, we arethe personal link, the face of the insuranceindustry.Direct writers see and feel the movementsof the economy on a very personallevel through our friends, our familiesand the clients that we work hard toserve. When things are tough, we feel itlong before many other businesses andindustries.Folks, times are tough now and everydirect writer in America can tell youstories about how the economy impactsthose we do business with each day. Oureconomy is in turmoil and so is our industry.How we respond reactively andhow we address important issues proactivelywill determine the fate of our industry.Today, we face carriers with everchangingbusiness models, alternativedistribution channels, and increasedcompetition. With so many forces outsideof our control individually, we mustrely on a stronger commitment to ourcustomers, a better work product andimproved responsiveness to compete inthe marketplace.Years ago, major insurance companiesand direct writers shared in the benefit ofworking together toward a common goalof making an honest profit while protectingthose we insure. Over the years,a number of well-intentioned changeshave had a negative impact on our industry,our reputation and the way weconduct business.In recent years, direct writers havebeen required to look into “alternativedistribution channels” that have resultedin a shifting of costs, pricing differences,increased paperwork and ultimately lowerprofitability for direct writers. Thosechanges often harmed the working relationshipbetween the company, theagent and the customer – a relationshipthat must be built on trust, performanceand fairness. The customer is the focalpoint that must be protected. If the carrierslose sight of providing quality serviceand prices to the agents that writethe clients through that channel, thenthe carriers lose premium, profitabilityand the ability to compete. We, in turn,lose our businesses as our core clients aredriven to other channels by the carriers.Ultimately, the client loses the relationshipthat has advised and guided themin their insurance protection decisions toone that may have no vested interest intheir successes or failures, such as a servicecenter representative or Internet site.While we, as front-line foot soldiers, seethese flaws, some of the carriers may not.That means, as direct writers, we mustact together to protect both our customersand our industry.Industries that fail to see flaws inprocess regularly find themselves diggingdeeper and deeper holes that canbecome nearly impossible to ascend. Theinsurance industry has been a drivingforce behind the American economy andAmerican success for generations. Nowis the time for all of us to assess wherewe’ve been, where we are and where weneed to go.Our industry, particularly the futureof the direct writer, is at a crossroads.The direct writers and the carriers mustcome together to create the reforms necessaryto make it easier to price, accessand deliver products for our customersusing the only channel that was designedwith the vested success of the client inmind – the agency force. Failure to doso in this economy may well make dinosaursout of all of us.Darren Yancy, a direct writer for NationwideInsurance, is running for the UnitedStates Congress in Texas District 17. Inaddition to understanding the needs of hisDistrict, Darren knows and understandsthe challenges facing direct writers and thecarriers that utilize them. For more abouthis ideas, visit his Website at www.darrenyancy.com.24 — Exclusivefocus Spring 2009

Why Is This Guy So Relaxed?This is FrankFrank is an independant Allstate AgentYesterday, he didn’t have Geeks On Call to handle his IT needsToday, he doesYesterday, Frank Called Geeks On Call And FoundThe Solution For All His Business IT NeedsCall us, or visit us online at www.geeksoncall.com/allstate, today for a free, no obligation review ofyour computer and telecommunication systems and a customized management proposal that willsuit your specific needs. It’s an investment you can’t afford not to make.

opinionPockets Lined With GoldONE AGENT’S PERSPECTIVEIs Corporate “greed” the root cause ofmany of our recently felt corporatefailures and the economic downturn thatwe are all now experiencing? Is “greed”really good?What is happening to our company?The current management teamhas evolved since 1994, when Ed Liddymoved from Sears to Allstate. Slowly butsurely, most, if not all, of the pre-Liddycareer management people have beenmoved out. Now our top managementconsists of people from outside the insuranceindustry. This, in and of itself, isnot a basis to question where we are going,but I certainly believe that when weanalyze the current strategies, we havereal cause for concern.We are experiencing a loss of marketshare. We have seen the company changecourse under the guise of “fiscal responsibility,”to halt writing of homeowners andcondo insurance in many coastal regions.This could be understood, in light of themajor losses suffered in hurricane-proneareas, supported by the predictions ofthe National Weather Service. The factis that many of the FEMA models havesince been refuted and proven wrong, yetthe company has not seen fit to changeits course of action. The reality is thatmany of these areas have experienced along history of profitability and relativelylow to moderate loss ratios; a benefit toboth the company and the agent.The new push for “emerging business”is nothing more than a shell game.We are substituting policy numbers forpremium dollars. Just like the move awayfrom property, this is not sound corporatestrategy. Allstate should be playing to itstraditional core business of personal autoand property insurance, and business insurance.Many years ago, the companychose to abandon commercial insuranceunder the pretext that it would be betterserved in directing its resources to its personallines. Now we broker these lines toother carriers, all of whom seem to be doingwell producing the policies that Allstateno longer provides. It is strange, andagain, not good corporate strategy, to haveAllstate agents sub-producing many typesof insurance through company-sponsoredprograms at reduced commissions, whilethe company has contracts with independentagents at higher commission rates.Over and over, Wall Street analystshave cautioned the risks associated withproperty insurance and, at the same time,warned against Allstate’s involvement inthe financial services world. Why wouldthe company be guided and persuadedby one viewpoint stemming from WallStreet but not the other?In these dark financial times, withfederal bailouts, bankruptcies and foreclosuresrunning rampant, we couldalso question the awarding of stock tocorporate officers and board members.Shouldn’t we reward for extraordinaryperformance or results? At this point inDecember of 2008, 1,584,043 shares ofstock have been awarded. Note that Allstatestock has been as high as $55 pershare in the past 52 weeks; but even ifwe use $27 per share, this amounts to$42,769,161. These giveaways took placeas the company was oozing negative resultsthroughout much of 2008. It shouldalso be noted that Tom Wilson received375,021 shares of the above-mentionedawards and, using this same formulawould represent $10,125,567.These awards were issued during aperiod when Allstate indicated that itmust reduce costs. It was also a periodthat saw the company squeeze agenciesby shifting more expenses to them.Paradoxically, as the company shifts itsmassive technology expense to its agents,past and current corporate officers stillfly around in company-owned corporateaircraft. The expense reduction initiativesof the company appear to have fallenunilaterally on the agents. I am confidentthat the agents would be willing to forgoextravagant corporate-sponsored eventsand trips if it meant better claims andtechnology service. Could the same betrue of the current management team?It is said that “distance makes theheart grow fonder” but it appears to methat while prior Allstate managementmay not have always put the agents first,at least they were always concerned withthe overall corporate and fiscal well-beingof the company. Can we say the samefor our current management team, or arewe left to watch them as they fill theirpockets and ride off into the sunset,moving on to destroy yet another nationalrecognized brand and institution?The sad part is that this crew has ashort-term mindset. Is it possible theydo not realize what they are doing tothis once-great company? Could it betheir goal is to pump up short-term resultsfor as long as possible and then dontheir golden parachutes, only to leave thecompany in a shambles? In the end, itwill be the loyal and steadfast agents ofAllstate that remain.26 — Exclusivefocus Spring 2009

usiness tipsHow to Train Cats and SalespeopleBY JOHN BOEWhich do you think would beharder to train, a cat or a salesperson?Seriously, which one would youpick? While it's true that cats have awell-deserved reputation for being independent,demanding and virtually impossibleto train, the same can be said formany salespeople. Surprisingly, the sametraining and reward techniques requiredto get Fluffy to jump through a hoop canalso be utilized to motivate your salesteam to achieve peak performance!One evening while channel surfing, Icame across a fascinating animal act thatgrabbed my attention. The act featureda cat trainer with a half-dozen cats ofvarying size, shape and color. Unlike acircus lion tamer who attempts to intimidatewith a chair and whip, this mansimply used a combination of treats andverbal praise to motivate his cats to performdifficult tricks. Using only soothingvoice tones and a pocket full of cattreats, he would calmly command eachcat to do its own specific trick. Amazingly,he got one cat to walk on his frontpaws, one balanced on a ball, while yetanother pushed a toy baby stroller acrossthe stage.After the performance, the cat trainerwas interviewed and asked how he wasable to get his cats to willingly obey hiscommands. His response surprised mewith its simple wisdom. He said that hedidn't train the cats at all; he simply figuredout what each cat liked to do bestand then encouraged that behavior!"People need to realize that a cat's indifferencedoesn't mean they can't learncool tricks," says celebrity animal trainerJoel Silverman. "It simply means youhaven't convinced them yet that doingso is in their best interest. A dog naturallywants to please you and will workfor you, but a cat needs a paycheck to bemotivated."Five Tips to Help You TrainCats and Salespeople1. Temperament testing is amust! Before you invest your timeand energy into training make sureyou check for temperament suitability.Temperament testing allowsyou to identify those whoby nature lack the discipline,desire or self-motivation to consistentlyachieve peak performance.Sales managers who lack the benefit oftemperament understanding are inclinedto place too much emphasis on their gutlevelfeelings during the hiring process.If you hire someone that is not suitedfor the position, you will experience lowmorale, high turnover and find yourselfconstantly in the training mode. On theother hand, when you recruit the rightperson you will find that they are selfmotivatedand eager to learn.2. Look for "hot buttons". Traditionally,sales managers have relied primarilyon commission to motivate their salesforce. Unfortunately, a compensationstructure based solely on commissiondoes not address individual motivationalfactors and, therefore, money alone willnot motivate your sales force. A successfulincentive program is a mixture of awards,recognition and peer pressure. There istremendous power behind a timely wordof praise or a handwritten note acknowledgingachievement. While money iscertainly an important ingredient in anyincentive program, it should by no meansbe the only tool in a manager's motivationaltoolbox. If money by itself were asufficient motivation, commission-basedsalespeople would simply sell more withoutadditional enticement.3. Make the training fun and positive.All cats and most salespeople have prettyshort attention spans and lowboredom thresholds. Keep lessonsshort, interesting and always tryto end on a positive note.4. You must be patientwhen training cats or salespeople.It's important torespect individual abilitiesand preferences. Make allowancesfor personality,and don't get frustrated ifthe training schedule doesn'tgo exactly as expected. Remember thatpeople have off days and on days justlike cats. "When I'm really pushingand the going gets tough," says Silverman,"sometimes the cat just sits downand says, 'I give up'. Even the brightestcats, if they feel you're pushing themtoo hard, will, in effect, say, 'Screw you,buddy, I'm going to go over there, sitdown, and stare into space.'"5. Make sure to take time for restand relaxation. All work and no playwill make the cat, the salesperson andthe trainer grumpy. Whether it is playingwith a ball of yarn or enjoying a round ofgolf, taking time out to play is criticallyimportant. By successfully balancing playand work, you will return recharged, refreshedand ready to accomplish more.By incorporating these five powerfultips into your training program, you willdevelop an award-winning sales teamand achieve unbelievable results!John Boe presents a wide variety of motivationaland sales-oriented keynotes andseminar programs for sales meetings andconventions. John is a nationally recognizedsales trainer and business motivationalspeaker. To learn more, visit www.johnboe.com or call 877 725-3750. FreeNewsletter available on Website.Spring 2009 Exclusivefocus — 27

agent issuesWho Controls Allstate Agents?Allstate, of Course!SUBMITTED BY AN ALLSTATE AGENTLet’s begin with a definition of theterm “adhesion contract.” Accordingto Law.com it is described as follows:“adhesion contract, n. (contract of adhesion)a contract (often a signed form) soimbalanced in favor of one party over theother that there is a strong implication itwas not freely bargained. Example: a richlandlord dealing with a poor tenant whohas no choice and must accept all termsof a lease, no matter how restrictive orburdensome, since the tenant cannot affordto move.”Contracts are used to codify a relationshipbetween two or more entities.Adhesion contracts are used when thecontrolling party does not want negotiationto be part of the contract signingprocess. They are often used by employerswhen there is a desire for a heightenedlevel of control over workers. Thistype of contract is also known as a “takeit or leave it” type of contract. TenuredAllstate agents are familiar with this typeof contract and will recall the methodof conversion from their prior status asemployees. The “take it or leave it” EAcontract was presented during countrywide“take it or leave it” meetings. Neweragents will recall their hiring process alsoincluded the “take it or leave it” presentationbut in a much more benign setting.Regardless of the method, current AllstateExclusive Agents all have signed anadhesion contract.Tenured agents will also rememberthat when transitioning from employee to“independent contractor” there was greatemphasis placed on the value of the investmentagents had accrued in their bookof business. Managers quickly remindedagents (rich landlord, poor tenant) that ifthey did not accept the new contract theywould be losing hundreds of thousandsof dollars in “equity” they had invested asNOA agents. Agents were encouraged toseek legal advice, but were told that theExclusive Agent contract was non-negotiable.But because agents were promised“new freedoms” as true independent contractors,few, if any, attempted to have thecontract reviewed. At the time, very fewagents could afford to walk away from alifetime of investment.New agents are presented an updatedversion of the “take it or leave it”meetings agents faced in 1999. Because28 — Exclusivefocus Spring 2009

negotiation is not part of an adhesioncontract, it is the sales pitch behind thecontract that entices new hires to becomeone of the “Good Hands” people. Whilepromising independence, prospectivenew hires are routinely misinformed anddeprived of critical career-deciding informationby many managers. Typically,the first time they see the EA contractis when they are asked to sign it. Worseyet, the most important document of all,the 300 page EA Supplement, is rarely,if ever, furnished before the contract issigned. And from the company’s pointof view, for good reason. Imagine howmany prospective agents would run forthe hills after realizing the extent of thecompany’s controls.New agents often have already visitedthe Allstate.com/careers Web sitewhere they are promised the ability to“run their own business.” Managers dolittle if anything to correct the misperceptionof independence. While it iscertainly the responsibility of the personsigning a contract to have full knowledgeof its contents, it is the misdirection of apromise of independence that softens theharshness of the Allstate “take it or leaveit” contract.It is this promise of “delivery,” therefore,that is a key element of adhesioncontracts. Software users will rememberthe acceptance screen that must be acknowledgedbefore a program is activated.And it is doubtful any of us have readthe Hertz rental contract while a herdof angry travelers awaits its turn behindus. We want the software, so we checkthe box; we want the car, so we sign thecontract. No negotiation allowed: takeit or leave it. There are many other examplesof adhesion contracts that affectour daily lives. It just takes an educatedeye to spot one. The preceding exampleshave been provided to give you a basicunderstanding of the concept. However,it is important to understand if a contractis truly an adhesion contract, it will befound unenforceable when challenged,or at least those parts that are deemedunfair or unreasonable.It is easy to see how this type of contractcan be used to enforce a high degreeof control with employees. Performanceexpectations are specified, as are workschedules and required hours of employment.But equally important to this typeof control is the ability of the employerto modify the contract thereby exerting awhole different level of control. Becauseit is disadvantageous for an employer toconstantly swap contracts, a reference toan addendum or supplement allowingfor change is incorporated into the bodyof the contract. Therefore, an employerneeds only needs to announce a revisionto its supplement to reassert control andremind workers of the tenuous “take it orleave it” nature of their jobs.When adhesion contracts are usedin conjunction with independent contractors,the all important threshold ofcontrol must be avoided. In the case ofthe Allstate contract, the goodwill valueaccrued after years of sweat equity aswell as the actual monetary value, areheld in abeyance unless and until all ofthe terms of the contract are agreed to,which amounts to control. Once executed,the constantly changing terms ofthe contract via the Supplement are usedto manipulate performance outcomesand/or to terminate the agent/companyrelationship, yet another example of theunbridled control exerted by the company.Remember the rich landlord and thepoor tenant described in the opening ofthe article? Is there any doubt as to therole the Allstate agent plays?Independent contractors, by IRSstandards, have to be treateddifferently than employees.Adhesion contracts fit easily into theemployer/employee relationship becausethe employer can rightfully exert employeecontrols. Employers can changework descriptions, work products, andeven require higher or more sophisticatedskill levels for employees to keeptheir jobs. The “take it or leave it” aspectof the adhesion contract must be employedjudiciously to keep employee moralein check, but is overwhelmingly thecontract of choice by many corporationswho use employees. But this level of controlcomes at a price: employer responsibilityfor payroll taxes and liability undervarious statutes aimed at regulating theworkplace are among the trade-offs.Independent contractors who signadhesion contracts are not intentionallytrying to convert themselves to employeestatus. Neither are all employers who useadhesion contracts trying to convert theirindependent contractors to employees. Agood example of this is Allstate’s closestcompetitor, State Farm. Their agentshave signed an adhesion contract, thebody of which contains a mere 6 pages.But that contract cannot be modifiedwithout the consent of both the agentand State Farm. It is this bilateral elementthat eliminates the possibility foreither side to exert an unchecked impositionof will. Said another way; State Farmcannot exert control over its agents. StateFarm agents have no quotas, no set officehour requirements, do not have to callforward office phones, are not required toattend mandatory meetings, and are notgrouped into teams required to achievecorporate goals. The State Farm contractrepresents only a gateway for the agentsto perform their duties, whereas the Allstatecontract embodies every aspect ofcontrol found where corporations useemployees.The better, State Farm way.Every “Good Hands” agent is awareof the severity of the employee controlsthat Allstate utilizes. Allstate imposesrequired office hours, annual employeestylereviews, quotas, mandated meetingsand more. After operating under Allstate’semployee-style contract for nearlyten years, many agents are beginning toexpress their frustration, as evidenced bythe recent Agency Relationship Survey.But, few, if any, of the Allstate sales forcerealize there is an alternative to the unilateral,employee agent Allstate contract.After reading this article, every agent willknow that there is another contract thatnot only conforms to IRS standards, butis readily used by its closest competitor,State Farm. Printed below are completesections as well as direct excerpted quotesfrom the State Farm Agent Agreement.“PreambleThe purpose of this Agreement is to reduceto writing the objectives, obligationsand responsibilities essential to the relationshipbetween the Agent, operating as an independentcontractor, and State Farm. It isSpring 2009 Exclusivefocus — 29

to our mutual interest to satisfactorily servethe insuring public, to comply with all applicablelaws, to increase business commensuratewith the available potential, and tomaintain the Companies’ operations on aprofitable basis in order to insure the necessaryfinancial strength to protect the policyholders’interests.Insurance is a closely regulated business.The Companies and the agents must dealequitably with policyholders as to rates andclaims, be trustworthy in handling money,avoid false advertising and unfair practices,and refrain from any action that wouldresult in violation, by State Farm or anyagent, of any applicable law or regulation.The Companies believe that agents operatingas independent contractors are bestable to provide the creative selling, professionalcounseling, and prompt and skillfulservice essential to the creation and maintenanceof successful multiple-line companiesand agencies. We do not seek, and willnot assert, control of your daily activities,but expect you to exercise your own judgmentas to the time, place, and manner ofsoliciting insurance, servicing policyholders,and otherwise carrying out the provisionsof this Agreement. You have chosen this independentcontractor relationship, with itsopportunities for financial reward and personalsatisfaction, in preference to one whichwould place you in an employee status.”Leaving no doubt as to the status ofState Farm agents as independent contractors,the preamble confidently statesthe agent’s role in the company. StateFarm’s contract is an adhesion contractthat it is painstakingly crafted to err onthe side of the agent. There is no mentionof an addendum or supplement that canbe modified from time to time. The StateFarm contract is explicit in detail and becauseit is a bilateral contract, assures theagent of mutual loyalty and respect.Reinforcing the message of independence,State Farm repeats a key messagein Section I of the contract, shown below.“Section IMutual Conditions and Duties” [Note:section contains sections A through M]“B. You are an independent contractorfor all purposes. As such you have full controlof your daily activities, with the rightto exercise independent judgment as to time,place, manner of soliciting insurance, servicingpolicyholders, and otherwise carryingout the provisions of this Agreement.”Companies utilizing adhesion contractsfor their independent contractorsmust be careful to delineate not onlyNeed Help Selling AFS?Learn from a ProWhen You Join NAPAAGerry Flores was Number #1 in AFS Production Credit 4Times in the Last 5 Years. After 37 Years as an Allstateagent, Gerry retired last year and now wants to help yousucceed. Receive some good tips when you join NAPAA.To Learn More ContactGerry Flores at (563) 564-1800or at GERBEAR_61@HOTMAIL.COMthe ongoing working relationship in theagreement, but the termination processas well. Companies whose independentcontractors are subject to unreasonabletermination procedures or to other inequitiesin the termination process, aresubject to scrutiny by the IRS. This isbecause the termination of a worker for“any reason” is a key element in establishingan employee/employer “at will” relationshipBoosting Agent Morale theAllstate way: Hire, fire, deny,then repeat.According to the Allstate agent’s contract,it can terminate an agent for “anyreason.” Allstate may then impose thesubjective guidelines in the ever-changingSupplement to disapprove the sale ofthe agency to a prospective buyer. Whilethe termination of an agent’s contractand subsequent disallowing of a sale aretwo separate events, they both clearly areconstituted in Allstate’s favor. BecauseAllstate retains the “right” to amend theSupplement to the Exclusive Agent contractat any time, there is an “unequal”basis for management’s dealings withan agent. Simply put, when a contractis enforced through the imposition ofunilaterally dictated changes, there isan unconscionable event. In Fanning vs.Fritz’s Pontiac-Cadillac-Buick Inc. thecourt ruled there is a “doctrine of unconscionability”where there is an “absenceof meaningful choice on the part of oneparty due to one-sided contract provisions,together with terms which are sooppressive that no reasonable personwould make them and no fair and honestperson would accept them.”Reprinted below is the entire StateFarm Termination of Agreement section.“Section IIITermination of AgreementA. This Agreement will terminate uponyour death. You or State Farm have the rightto terminate this Agreement by written noticedelivered to the other or mailed to theother’s last known address. The date of thetermination shall be the date specified in thenotice, but in the event no date is specified,the date of the termination shall be the date30 — Exclusivefocus Spring 2009

of delivery if the notice is delivered, or thedate of the postmark, if the notice is mailed.Either party can accelerate the date of terminationspecified by the other by givingwritten notice of termination in accordancewith this paragraph.B. In the event we terminate this Agreement,you are entitled upon request to a reviewin accordance with the terminationreview procedures approved by the Boardof Directors of the Companies, as amendedfrom time to time.C. After termination of this Agreement,you agree not to act or represent yourself inany way as an agent or representative of theCompanies.D. Within ten days after the terminationof this Agreement, all property belonging tothe Companies shall be returned or madeavailable for return to the Companies ortheir authorized representatives.E. For a period of one year following terminationof this Agreement, you will not eitherpersonally or through any other person,agency or organization (1) induce or adviseany State Farm policyholder credited to youraccount at the date of termination to lapse,surrender, or cancel any State Farm insurancecoverage or (2) solicit any such policyholderto purchase any insurance coveragecompetitive with the insurance coveragessold by the Companies. In the event the “periodof one year” conflicts with any statutoryprovision, such period shall be the periodpermitted by statute.”In the End, Everybody Loses,but Allstate is the BiggestLoser of AllOppressive employee controls, a “takeit or leave it” contract and a subservientagency force have combined to giveAllstate a product delivery system that isdying on the vine. As company managersscratch their heads figuring out waysto wring more AFS sales out of theirunhappy agents, many of the agents areleaving on their own for greener pastures.Imbedded deep inside Allstate’s corporateculture is management’s inabilityto admit when it is wrong. Clearly theagent/company relationship has beenstrained for decades. But the patentlyunconscionable imposition of employeecontrols has done more to damage thatbond than anything in the previous twentyyears. NAPAA has repeatedly reachedout to Allstate, but any olive branch thatcould have been accepted has been eitherrebuffed or ignored.Agents are reluctant to invest ingrowing their agencies when confrontedwith the prospect of losing everythingfor missing something as trivial as aquota. Financial tragedy hits especiallyhard for new agents who are driven bymanagers to spend thousands if not hundredsof thousands of dollars only to findout they are being terminated for missingtheir quotas. Rather than deal withits agency force equitably as partners andwith a bilateral contract, Allstate insteaduses its unilateral, employee-style agreement.Were it not for the control Allstatedeems necessary to exert over its workforce, agents would respond to the challengesof entrepreneurship with vigor.Faced with termination on a daily basis,no one can thrive for long. The fact thatso many have tried for so long speaksmore to the determination, convictionand perseverance of these agents than totheir faith or belief in the unstable andone-sided relationship that Allstate forcesupon them.Not only does the all or nothing,“take it or leave it” contract not work, itis being implemented by IDLs, MDLsand TDLs who do nothing but profit offof the hard work of the very agents theyclaim to support. Clearly then, it is notjust a rich landlord and a poor tenant thatare described herein. More to the point, itis a greedy corporation utilizing a confiscatoryemployee program to enrich itself.Unwilling to give up the employee-stylecontrols described by IRS rules, Allstateconsciously chooses to perpetuate itsmisclassification scheme through the useof an employee contract.Aside from counting on the IRS forhelp, the only way for agents to overcomethis inequitable relationship is tosupport their agent association. GrowingNAPAA is a little like growing a vegetablegarden, if you nourish it with yourmembership, it will grow and flourish.Withholding nourishment will inhibitgrowth and reduce your harvest. Thesame applies to NAPAA - limited fundingcan only produce limited results.Folks, it is time to support your agentassociation. There’s a membership applicationincluded in this magazine. Pleasefill it out and fax or mail it to NAPAA.It’s springtime, it’s time to water andfertilize the NAPAA garden with yourmembership.Spring 2009 Exclusivefocus — 31

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usiness tipsGo to Great HeightsThrough GoalsBY ALLSTATE AGENT BILL GOUGHGoals; there's no telling what you cando when you get inspired by them.There's no telling what you can do whenyou believe in them. And there's no tellingwhat will happen when you act uponthem. The major reason for setting a goalis for you to reap the benefits and feel thepride of accomplishing it. What it makesof you will always be of far greater valuethan what you get.If you go to work on your goals, yourgoals will go to work on you. If you go towork on your plan, your plan will go towork on you. We all have two choices: Wecan make a living or we can design a life.Henry Ford once said, “If you thinkyou can or if you think you cannot, youare right.”What this means to us in business isthat if you truly believe your business willbe a success, you will be able to achievethat success. On the other hand, if youaren’t working on your business and don’twant to expand it, you won’t.You have to believe in yourself tobelieve in your success. To be successful,you may have some failures alongthe way. Learn from them, and then tryagain. Stay positive and focus your energyon what you want to accomplish, not onwhat didn’t work in the past. It’s easy tobecome disillusioned or discouraged, butdon’t allow yourself to wallow in self-pity.It is important to nip these feelings in thebud. They can be overcome by staying focusedon your goals, maintaining a positiveattitude and learning to eliminate anynegatives within your control.Most everybody wants to achieve successin some aspect of their life. There arethose who aspire to be successful at beinga mother, a father, a golfer or an insuranceagent. And some want to be a success inevery facet of their lives. But just dreamingabout the successes you want fromlife isn’t enough. Success cannot happenwithout action…don’t forget that!At times, when we are exceeding theexpectations of others and moving towardour goals, the people around us may wantto keep us in their comfort zone. By this, Imean they may not want you to be smarteror wealthier or healthier than you used tobe. They will try to pull you back into the34 — Exclusivefocus Spring 2009

circle that you’ve long since left behind.Sometimes, they may even accuse you ofbeing uppity for doing things differentlythan you did in the past.This is the time when you need tomake a choice to step forward and achieveyour goals while leaving your old ways behind.This is not to say get rid of your oldfriends; rather make some new ones thatcan help you on your path to success.Maya Angelou once said, “If youdon’t like something, change it. If youcan’t change it, change your attitude.Don’t complain.”There are people in this world whowill remind you that great things can beaccomplished even under dire circumstances.People have achieved success fromdisastrous efforts, made millions of dollarsby starting with pocket change, andinvented new things just from pictures intheir head. If you want your agency to besuccessful, you can’t be afraid to changethe things that aren’t working.Try new things…you may be surprisedat what works! Get out in theworld and promote your changes. Peoplewill come running if you hit the righttargets. Always remember, change isgood and constant…and success cannotbe had without Action!Bill Gough has been an Allstate agent since1984. He is also the President of BGI MarketingSystems, which is dedicated to helpingAllstate Agents take their agencies tothe next level of growth while maximizingprofit. He can be reached at Bill@bgisystems.com or by calling (877) 208-9649.Bill Gough,Allstate Agency OwnerPresident, BGI MarketingSystemsRevealed . . . The Secrets to Increasing YourReferrals 59.3% in the Next 93 DaysClients who are referred by other happy clients are your best and most profitable clients,have the highest closing percentages, remain clients longer, and are absolutely where ourhighest profit centers come from. Improving your existing referral sources and finding newones are critical to your business.You must have systems in your business to create consistent, profitable referrals on aregular basis.To find out how to have more referral leads than your agency can handle . . .Go to www.BGIMarketingSystems.com for Your FREE CD titled:“The 5 Keys For Creating Endless Referrals With Little or No Work!”Spring 2009 Exclusivefocus — 35

technologySteps to a Successful ACT ConversionBY THE NAPAA TECH GUYSince the beginning of the company’sgreat technology changeover,NAPAA has worked hard to inform andeducate agents about the challenges theywould face on conversion day if theyweren’t prepared for it. I have written abouttechnology several times in past issues ofExclusivefocus magazine and other writershave also contributed articles. My hope isthat the agency force has been saving pastissues of Exclusivefocus because there isa whole lot of information that can savetime, money and headaches for anyonewho is about to undergo the transition toagent-owned technology. The good newsfor those readers who haven’t taken time tolearn more about the impending conversionis that this article will cover some ofthe basics you’ll need to know in advanceof your conversion.Step 1: Choose an Internetaccess option and order it.There are three types of data lines foryou to consider. Their availability andcost will be considerations when decidingwhat is best for your particular agency.I will provide analogies for the typesof lines for basic understanding.A T1 line can incur the highest cost,both for installation and ongoing monthlyfees. Imagine a two lane road with oneentrance and one exit, stretching fromyour office to the Internet. You are theonly traveler on this road and the speedlimit is fixed at 1.5 megabits per second(mbps). The speed is equal and exact inboth directions. You are the only travelerwith no other traffic, exits or stop lights.The fact that this line is monitored foruptime and optimized for you contributesto its overall cost.Costs for a T1 line can vary fromplace to place, depending on such factorsas the availability of the service, uniquelocal issues and equipment rental. I haveheard some locales can get full T1 servicefor $350 to $500 per month. Generally,lease terms, length of contracts, servicelevel agreements, etc. are all figured in aspart of the overall cost.Be aware that T1 ones can be ‘split’or limited in their bandwidth and quotedat a lower cost. You want full T1. Youcan split your T1 for your telephone serviceinto your office as part of an overallpackage. A full-service T1 is about 25times faster than the current Alstar dataline connection into your office. Thisis also true for the download speeds ofDSL and cable. If we consider that yourcurrent Alstar company connection letsyou travel at 2 ½ miles per hour on theseroads, you will like what 55 mph will do.DSL, or digital subscriber line, usesthe existing telephone company copperwires coming into your office to accessthe Internet. Its cost can be on the lowerend of monthly charges. If we revisit thetwo lane road to the Internet, you wouldstill be the only driver on this road. TheDSL usually offers a range of Internetspeed options. The faster your connection,the more you’ll pay. You can choose1.5 mbps, 3.0, 4.5 or even 6.0 mbps. It isimportant to understand, however, thatthe DSL speed limit is a one-way limitonly – from the Internet to your system(download). The speed limit from youroffice to the Internet will be slower, perhaps384 kilobits per second (kbps). Thisis actually fine and quite acceptable becauseyou’ll likely receive 10 times moredata from the Internet than you send.While there are no other drivers onyour road, the quality of the DSL circuitis not as stable or conditioned as the T1.Storms, glitches in phone service, outagesat the telephone company or switchingstation, severed cables and other thingscan slow you down or stop you from timeto time. However, these disruptions arenot an everyday occurrence.Costs are minimal to establish andmaintain DSL service, perhaps in the $50to $90 per month range. There may be an36 — Exclusivefocus Spring 2009

additional cost for filters for your existingphone lines/fax lines – a minor cost - andthe phone company will likely include theDSL modem. 1.5 is the lowest serviceavailable but I would recommend 3.0 to4.5. But all would be quite satisfactory fornormal Allstate and Internet services.Cable Internet service is the third optionto consider. A coaxial cable like yourcable television line will be brought intoyour office. It may already be in your building.Speed levels for this ‘road’ are 6.0, 7,8 mbps and higher for normal service levels.Much like DSL, the upload speedsare lower. Cable can be more like a fouror six lane highway, with other traffic inthe neighborhood slowing you down, butjust by a little. Data downloads can flexup and down almost imperceptibly duringthe day, but overall, you will enjoy a betterlevel of service than DSL in most situations.The cable company may include thecable modem or you may have to purchaseyour own. Service outages should also berare, but will happen if you have an electricservice failure in your town.You can inquire about any of theseservices with a simple phone call to yourlocal telephone company or cable company.Keep in mind there may be a twoweek or longer installation time frame.As soon as you receive the letter aboutyour office conversion you should be preparedto order your Internet access.Step 2:Now it’s time to make a decisionabout the new computers and hardwareyou’ll be installing in your office. Mostnormal items can be ordered, shippedand received in 7 to 12 days. There is alot of information available about thetypes and minimum specifications, muchof which has been written about in pastissues of this magazine. My advice hereis to not overthink this, just observe thenormal computer specifications and getthem ordered.One item you will need is a router.Only one per office is required. SomeDSL modems include a built-in router,but many do not. A router permits allof the computer devices in your officeto talk to the Internet. The router plugsinto the modem, and then all of the computersare connected to it, either directlyby cabling or through a switch.Your office should already have computercabling running from each computerto an existing router. You will exchangeyour new router for the company’sexisting Cisco router and then plug thenew router into the cable/DSL modemor T1 interface. This all sounds prettysimple, but it can be more complicated ifyou have more computers than the routerhas built in switching capabilities. In thatevent, your network setup person willdetermine if you need to use a switch.This would generally be the case if youhave five or more computers or, as statedbefore, more computers than the routerhas switching capabilities. Every agencyalready has a switch in their existing Allstatesetup, which should work just fine.The techs have not typically sent the existingswitches back, so, chances are, itwill be left with you.Step 3:Once you have your Internet serviceline installed and your computers delivered,it is time to schedule your conversionvisit. There are several options tothink about here. You can choose thecompany-paid conversion visit, pickone of several vendors that advertiseconversion help or you can do the jobyourself.Conversion by company-paid personnelcan take from 1 ½ to 3 hoursper computer. The company-providedconversion techs will unbox your computers,set them up for you and preparethe company-owned equipment forshipment. It is imperative that you haveyour Internet connection and router setup for the technician’s visit because theconversion cannot be completed withouta live hook up.Some final recommendations: SinceAllstate agents are now making major investmentsin office technology, it wouldbe prudent to spend a few extra dollars toprotect these new systems from potentialharm. First, I would recommend a UPS/surge protection system with a batterybackup for each computer and anotherfor the modem/router combination. Theyrange from $75 to $90 each. A good Anti-Virus with an Internet Security Suite thatupdates daily is also essential.If you are about to be converted, it isimportant not to wait until the last day toprepare yourself. Go back and read the articlesin past issues of Exclusivefocus andtake the steps necessary to ensure a smoothconversion. You’ll be glad you did.I Want to Help You sell More AFS!I Have Some Tipsthat Can Help You Achieve Your Expected Resultsthis Year. Learn from a Pro when You Join NAPAA.Ranked #1 in AFS Production Credit in4 of the past 5 Years.To Learn More Contact Gerry Flores at(563) 564-1800 or at GERBEAR_61@HOTMAIL.COMSpring 2009 Exclusivefocus — 37

other voicesCaptive Agents, the Forgotten PeopleWhat if you decided to start yourown business? You find a productyou feel you can really market. Youinvest thousands of dollars and years ofhard work into establishing a successfulbusiness, which includes hundredsof faithful returning customers. Thingsbegin to look like maybe you are finallymaking it as a successful business owner.You are established and respected in thecommunity. You own the building yourbusiness is in. Things are really lookingup. But suddenly, with one fell swoop, it isall taken away from you. Someone biggerand more powerful than yourself decidedyour business was theirs. You are out withessentially nothing, including your reputation.Sound familiar?This is the plight of the captive insuranceagent today. Captive agents arecontrolled like employees but claimed bycaptive insurance companies as independentcontractors. Captive agents are oftentold how to sell, what hours they must beopen, and when they cannot take a vacation.They are required to attend meetingsof questionable importance. They’regiven sales quotas that are often beyondthe realm of possibility because the captiveinsurance company controls the rates.They are asked to submit endless progressreports and are reprimanded and threatenedif these reports are not submittedin a timely manner. Agents are told whothey can and cannot hire. Often captiveinsurance companies provide phone systemsand computer systems to the agentin an effort to control and monitor theagent. Captive agents often find that eventhough they pay the monthly phone bill,the company has forced them to sign anagreement that their phone number belongsto the company. Advertising is oftenforcefully shared in order to control theagent. Agents are blamed and often findtheir contracts terminated for too manylosses, too few 100/300 liability coverages,too low a retention rate, too low an applicationcount, or any other of a list ofabout 20 “indicators” upon which agentsare judged. The list of controls goes onand on.Captive insurance companies seemto take the word captive literally. Thedictionary defines captive as a “prisoner,unable to escape, forced to use or acceptsomething.” If a captive agent tries toleave a captive company to sell as a trueindependent agent, he is often sued andrestricted by claims that the names, addresses,phone numbers, coverages andrenewal dates of his clients are “trade secrets”that belong to the insurance company.In the independent world, agentsare truly independent. Independents ownthe names, addresses, and client data thatthey brought into their agency. What exactlyis the difference here? Nearly alldata collected by both types of agents isreadily available for public viewing. Whythis same information is considered atrade secret by captive insurance companiesand not by independent companiesis very unclear and unfair.Captive agents’ contracts are oftenterminated because the company wantstheir policies to give to new agents-intraining.Or perhaps a district manageris being asked to step down, so the companysimply figures out how to fire theagent and then takes his agency awayin order to give it to the district manager.Terminating an agent’s contract isquite easy because the district managercan place any production requirement hewants on the agent regardless of whetherthe company’s rates allow an agent to sellor not. Often excuses for terminating are“manufactured.” Agents have been falsely38 — Exclusivefocus Spring 2009

accused, defamed, and ‘used as examples’in an attempt to intimidate other agents.The agent is guilty till he can prove incourt that he is innocent and usually thisis at a great financial cost to him…onefrom which he may never recover.We believe it is time the world, includingthe courts and government departments,such as the IRS and the EEOC, beginto recognize there is a serious and unfairinconsistency evident here that is causing agreat deal of stress and monetary loss to the“forgotten people,” the captive agents.Captive agents are unable to formunions to negotiate these issues (with thecompany) because they are not employees.Captive agents are unable to influencejudges because captive insurance companieswith extra deep pockets (provided bypolicyholder money, incidentally) are ableto influence them with various perks thatare way beyond the capabilities of individualagents. Politicians heed the highly paidlobbyists hired by insurance companies.The news media seem influenced by the“credible” large corporations rather thanthe “small guy” because these “generous”companies are donating hospitals and parksand other wonderful gifts to humanity.Captive agents are a totally unrepresented,unfairly treated, forgotten segment of theAmerican workforce. Every other group ofworkers in America is represented by somegovernment entity, some union, or sometrade association, but not the captive agents.If captive agents were able to quit workingfor the captive company that is abusingthem, they could start over. Many agentsare willing to make this sacrifice even late inlife, but captive companies won’t allow themto do this. The companies sue the agentswho have gone independent for violationof non-compete (without proper proof), forcomputer fraud (even without realizing thatthe lists they’ve accused the agent of “stealing”off their computers were lists that theagent was required by the district managerto run for marketing purposes), for violationof trade secrets (even though what the companyis calling trade secrets is data that ispublicly available to anyone in the insurancebusiness and data collected by the agenthimself…not an internal employee).We are going to make every attemptto expose the plight of captive agents.We believe that agents must be treatedas the true independent contractors theIRS has labeled them. We believe thecompanies have misrepresented to thecourts and to the IRS exactly how theytreat captive agents.We suggest agents write to their representativesboth in Washington and inyour state. Perhaps we are ready for federalregulation of the insurance industryas proposed by the present administration.Contact public media such as JohnStossel of ABC’s 20/20, Oprah, SixtyMinutes, or your local newspaper. If thepublic knew how our businesses are beingtaken away from us, there would bean outcry demanding fairness to a groupof sincere agents who are trying to do anoutstanding job of servicing our clients,but who are hampered by the threats andcontrols of the captive insurance companies.This is America and our voicesmust be heard!This letter was received from agents whoare asking to remain anonymous. It is beingsubmitted to you by the Board of theNational Association of American FamilyAgents, (NAAFA). www.NAAFA.com.Whether you’re launching a new business or trying to help yourcurrent business reach new heights, you really should advertise inThe Blue Envelope TṂWe make it our business to grow your business.Call us at 1-800-825-7254 or visit valpak.com/advertise to learn howValpak can help your business soar.TM3254.0729 AllstateAd.indd 1 7/18/08 12:15:17 PMSpring 2009 Exclusivefocus — 39

featureThe Robots are HereAllstate has quietly announced itsnewest distribution system in a pilotprogram that was scheduled to beginlast December in Georgia, Alabama, andNorth Carolina. Ten “Allstate Kiosks”are being installed in shopping centersin these test states and will be connectedto Allstate via the Internet. Accordingto a message sent to field managementin the area last October, the Allstate Kiosks,or robotic agents, will initially onlybe able to show ad videos and will includethe Agent Locater function. In thefuture, however, the Allstate Kiosks areexpected to give quotes, BIND COV-ERAGE, take payments, provide claimstatus, print insurance cards, and otherfunctions. The memo went on to explainthat a big roll-out was not planned, presumablyto avoid upsetting the agents.A paragraph about the project appearedin the Southeast Region’s November13th “EA Communicator.” Hereit is in its entirety:“Southeast to Pilot Allstate KiosksThe Southeast region has been chosen topilot 10 Allstate kiosks tied to Consumer2.0 Internet-based applications in severallocal malls and one motorcycle dealership.The purpose of this kiosk project is toimprove customer experience and increasebrand awareness. These kiosks are a pilot forAllstate’s multi-access strategy that has beenbuilt on a long-term goal of serving customershow, when and where they want to beserved: through local agencies, the CIC andonline via allstate.com. Future functionalityof these kiosks could include acceptinginsurance payments, providing claim status(when the kiosk is dropped into CATzones), playing informational videos andcustomer testimonials, showcasing an insurancevideo game, and printing proof ofinsurance. Five of the kiosks in Georgia willbe equipped with NQ2 access. We believethat piloting innovative ideas like this onein order to improve the customer experienceis crucial for our continued success. If youhave any questions or would like additionalinformation on the locations, please contactyour sales leader.”Note that the references to the AllstateKiosks’ ability to make quotes andbind coverage have not been included.An agent in Atlanta was astonished tolearn that one of the Allstate Kiosks was tobe located almost directly across the streetfrom his office, in view of his sign. His immediateconcern, as expressed to membersof the National Advisory Board (NAB), isthat his walk-in clients will now be drawnto the Allstate Kiosk, as it has a better locationthan his office, and will be directedelsewhere by the Agent Locater function.But the real threat is longer term, whenthe machines are able to bind coverage orto direct clients to the CIC. Apparently,the agent learned about the Allstate Kioskfrom the management company ofthe mall and from his neighbors. This wasonly a couple of weeks before the scheduledinstallation. Allstate had not thoughtit necessary to inform the agent that it wasabout to install this “virtual agent” a fewhundred feet from his desk.It does not appear that any informationabout the project has been given toAllstate agents outside the SoutheastRegion, or even to field managementelsewhere and a search of the various AllstateWebsites reveal nothing about theAllstate Kiosks. The project has clearlybeen in the works for quite a while, sincebig bucks have been spent to get it thisfar. And given the obvious threat to theagency force that it involves, it seemsclear that the company is planning onbuilding an entire new distribution systemin almost total secrecy.40 — Exclusivefocus Spring 2009

Spring 2009 Exclusivefocus — 41

agent issuesMr. Wilson: Please ReconsiderYour Decision to Terminate MeEditor’s Note: Following is the uneditedtext of a long-term agent’s letter to AllstateChairman and CEO Tom Wilson askinghim to spare her from termination. Despiteher heartfelt desire to remain with Allstateand her commitment to improve and growher agency, she “never received the courtesyof a reply” from Mr. Wilson. Instead, she receivedphone calls from the Human ResourcesDepartment and the Territorial SalesManager who told her that theirs would bethe only responses to her letter. Ms. Coppolahas now sold her agency and has moved on.Allstate Chairman and CEOThomas J. WilsonAllstate Insurance CompanyNorthbrook, IllinoisDecember 10, 2008Dear Mr. Wilson:Yesterday I met with Olga Otero ofAllstate’s Human Resources Departmentin Palm Beach County, Floridaand with Richard Cairns, DistributionLeader in a private meeting where I hadno representation and no recording orwritten documentation of said meeting.I was told that I was being terminatedand that there was nothing I could doto prevent it. As a veteran 30-plus yearagent I was shocked by such treatment,especially coming as it did on the heelsof one of the worst years for Allstate inFlorida ever.As you are aware, we are in the midstof a huge recession with the largest numberof people unemployed in history. Insuranceand brokerage firms have madeheadlines in very infamous ways. Addedto this, the State of Florida mandateda moratorium on Allstate writing newbusiness in Florida for many months andour Governor, Mr. Charlie Crist, toldFloridians to take their insurance businessto another company. It has been adamaging blow to our reputation. Ontop of all this, Allstate has non-reneweda large portion of my book of business inorder to lower their hurricane exposurerisk. As a 30-year agent I had to spenda large portion of my time and moneytrying to retain clients by rewriting themwith brokered companies and often losingnot only the home insurance policy,but often the multi-car auto policy aswell, due to clients far too disgruntledto stay with Allstate. Newer agents mayhave been able to concentrate their effortsprimarily on new business, but thathas not been the case with my agency.Now, I am being told I will be terminatedfor not growing my agency. Thisseems totally unreasonable to me.I proposed to Mr. Cairns and Ms.Otero that I have a new business plan for2009 that includes maximizing the newAllstate auto product coming out in January2009. I have also recently hired twonew agents who previously worked for avery successful agent in our district and Iam quite confident that this will improveour agency results, as well.When I contacted my manager, EliasSmith, to request assistance with approvalof a new location as my lease isexpires 12/31/08, he indicated to me thatI should not consider signing a new leaseas I was to be terminated soon. I thenasked human resources and sales managementfor more concrete informationbut they avoided me for weeks and havenot sent me anything in writing to confirmwhat they have told me orally.Independent Contractor statusshould not cause me to be terminated forquotas. I am not ready for such abruptaction to be taken. I have always cooperatedwith the company in trying to reachcompany objectives. Many life specialists,hired and trained by the company,have come and gone without ever helpingme reach my financial services goals.Obviously, it is my desire to reach thesegoals as well as it benefits my agencyin many ways. I have invested my ownworking capital in mailings, purchasingleads, hiring staff, advertising, etc. topromote Allstate products and services.Recently, as you are also aware I’m sure,I have even been purchasing paper with42 — Exclusivefocus Spring 2009

the Allstate logo on it from the companyto print the policies and endorsementsand receipts that the company requires.Since so many costs have been passed tothe agent I cannot see why it is imperativeto terminate an agent for not meetinggoals set by management. I have beenquite willing (and have discussed withmy manager Elias Smith) to hire an aggressiveproducer to work in my office togenerate new business. The disabilitiesI sustained in an auto accident in 2003have left me permanently disabled andlimit my activities, but I do manage theoffice and spend as much time as I cansupervising my employees, paying bills,communicating with clients and maintainingcompliance with licensing, etc.Ms. Otero conveyed to me yesterday thatI could not hire a producer to work forme as I must be active full time with myagency. This is not how I understood ourIndependent Contractor status to worknor does in allow for my disabilities to beaccommodated. I am always available toAllstate, my agency staff and my clients.In the past few years my book of businesshas dwindled from approximately2,500 items to around 1,100. My agencyrevenue is down by over $100,000 a yearat a time when costs have risen tremendouslyfor rent and payroll and expenses.It is imperative for me to be given achance to move to a better location, marketthe new auto product and do my bestto regrow my agency to its former levelor better. I would sincerely appreciateit if local management would assist mein my endeavors to grow my book andincrease my agency instead of managingnegatively. One of our managers ata kick-off meeting told us “The secondwinner is the first loser”. Do you honestlythink that criticism is an effectivemotivator?I now find myself, a disabled seniorcitizen at 55-years-old, not marketablefor a career change and not being able tosell my book of business for even half ofwhat it was worth a few years ago beforeall the homeowner cancellations and badfaith with the Florida Governor andDepartment of Financial Services. Thisafter 30 years of loyal service to Allstateand its customers. Such a terminationseems unreasonable.I recently participated in a communitycharity event with my two children2,500 items to around 1,100. My agency nity charity event with my two childrenand we represented The Good HandsPeople”. I want to be proud to be a partof a company that is reputable and honest.I have been affiliated with Allstatesince 1978 and the company is now regroupingand trying to adapt to a newbusiness environment. I ask you for theopportunity to continue my affiliationwith Allstate.Sincerely,Debbie Millard Coppola,Allstate AgentCc: Richard Cairns,District Distribution Leader,Florida RegionOlga Otero,Human Resources, Florida RegionElias Smith,Distribution Manager, Florida RegionBob Jackson,Regional Distribution Leader,Florida RegionPhil Lawson,Field Vice President, Florida RegionHuman Resources, Northbrook,IllinoisFor many people, disability means an interruption in earnings that can put them financiallyat risk. With the NAPAA Long Term Disability Income Insurance program, Allstateagents can get the coverage they need to help protect against that risk. With no medicalunderwriting necessary* and additional flexible options available, each participant caneasily customize a plan to suit their own specific needs.* Benefits subject to a pre-existing condition limitationInsurance Program Administered by Lockton RiskServices. Underwritten by Standard Insurance Company,Portland, Oregon.This policy has exclusions, limitations, reductions of benefitsand terms under which the policy may be continued in forceor discontinued. For costs and complete details of thecoverage please contact Lockton Risk Services.Spring 2009 Exclusivefocus — 43

featureThe Emergence of the “Indeployee”BY NANCY FISH,ASSOCIATION MANAGER AND FORMER AWARD-WINNING ALLSTATE MANAGERDuring the campaign and election ofthe 44th president of the UnitedStates, Americans saw unprecedentedevents unfold before their eyes. I watchedthe candidates closely and learned a lotfrom those competing for the highest officein our land.As the economic situation has worsened,one thing has become abundantlyclear. Our best hope for recovery goingforward is not divisiveness, but unity.Now is not the time to focus on individualinterests, but the needs of all citizens.The importance of pulling together forthe common good of the country cannotbe overstated.This spirit of “all for one and one forall” is not unlike the many calls NAPAAhas made for agent unity since its foundingnearly 20 years ago. NAPAA is focusedon the needs of the entire agencyforce, not just the narrow interests ofindividual board members or individualagency owners. As an organization, ourpassion is grounded in our sense of commonpurpose. Every time an Allstateagent’s contract is terminated withoutjust cause, every Allstate agent suffers aninjustice. Each time the company rejects,for no apparent reason, a seemingly giltedgedbuyer, with impeccable credentials,a clean background check and a passingscore on the track test, it increases thepossibility that the same thing couldhappen to other sellers. Whenever anagent is forced to attend training sessionsdue to lack of production or for otherreasons, then other agents lose some oftheir autonomy.In recent years, we have witnessedunprecedented employee-like controlsfoisted upon agency owners. These controlsinclude the imposition of the “ExpectedResults” quota system, mandatedoffice hours, ever-changing “make upthe rules as you go along” buyer approvalstandards, compulsory call forwarding,and mandatory meetings, just to namea few.Most recently, the company is attemptingto force agents and staff to useits “Good Hands® Coverage Checkup.”We can only assume that the companydoesn’t want agents using their own policyreview methods because of its keendesire to follow the lead of McDonald’sand other national franchises to createthe same experience for customerswherever they are. This one-size-fits-allapproach might work well for the purveyorsof Big Macs and Whoppers, butinsurance? Could it be that the companyis gearing up to convert its agencies intofranchisees or is it just trying to act likea franchisor?In addition to telling agents how toperform customer reviews, the companyhas also strongly suggested that agentsbegin “Quoting the lowest price availableevery time.” So now, not only areagents being told how to perform customerreviews, they are being told howto sell auto insurance policies by managersthat have little or no insurance salesexperience. Leaving no stone unturnedin their quest for increased auto production,managers are now counting agentquotes, calculating agent closing ratiosand, in some cases, requiring agents toreport their production on a daily basis.If this isn’t bad enough, some agentshave reported that they’ve been askedto develop and submit a plan to theirmanagers for “approval.” In most casesthis is being requested during the annual“Agency Review” process.The preceding paragraphs offer sev-44 — Exclusivefocus Spring 2009

eral examples of company practices thatopenly defy the independent contractorguidelines of the IRS. These employeelikecontrols have no place in an independentcontractor environment. I findit unimaginable that any principled companywould openly disregard the rules offederal and state taxing authorities. Sincereading the article “Deliberately Misclassified?What Allstate Has In Common WithFedEx” in the last issue of Exclusivefocusmagazine, I have given this matter agreat deal of thought. And so have a lotof others, including agents who routinelyexpress a “my company right or wrong”stance. Most agents want to believe thatthe company’s intentions are honorableand aboveboard, but after reading the articleand reviewing the IRS Private LetterRuling, most now question the company’smotives. Many, in fact, are angryabout being subjected to such controlsand by what they perceive as a “we’reabove the law” attitude by the company.Shortly after Allstate announced itsPreparing for the Future initiative in 1999,the massive agent conversion plan that allbut eliminated employee agents at Allstatein favor of so-called “independent contractors,”NAPAA began voicing its concernsabout the company’s employee-like treatmentof these new Exclusive Agents. AsNAPAA pushed back, support for the organizationgrew at an unprecedented rate.Agents appreciated the fact that NAPAAleaders were voicing their concerns.NAPAA’s efforts did not go unnoticedby the company, and by 2002 itwould make the decision to terminatetwo of NAPAA’s most popular and vocalleaders, Jim Fish and John Bryant. Thefirings came at perhaps the most volatiletime in company history. Outraged bythe company’s actions, a new firestormerupted. Lurking in the backgroundwas a nascent effort to unionize Allstateagents, and when Jim Fish was fired forhis alleged “failure to maintain a professionalbusiness relationship” with thecompany, all hell broke loose. Thousandsof angry agents submitted union authorizationcards, catching the companyoff-guard. NAPAA had clearly struck anerve.The company, stunned by the vastnumber of union authorization cards andbeset with a serious agent uprising, beganto back off. Senior management soughtways to stem NAPAA’s growing influenceamong Allstate agents. It was duringthis period that the NAB was conceived.It was rolled out amid much fanfare andtouted as a huge step for agents, whichit was. In essence, the company, headedby Ed Liddy, found itself giving in tothe pressures brought on by NAPAA.But rather than give credit where creditwas clearly due, the company declaredthat it didn’t need and wouldn’t recognizeNAPAA, even though its leader hadbeen one of the very top Allstate agentsin the country and was an ardent advocatefor the agents of Allstate.NAPAA saw the creation of the NABas both a blessing and a curse. While itlauded the company’s decision to givethe agents at least a faint voice in Northbrook,it was disappointed to learn thatit would not be invited to the table. Theproblem NAPAA saw with the NABwas that the company chose only highlysuccessful,“my company right or wrong”board members who were not the typeto rock the corporate boat. There wouldbe no room for dissenters, average agentsor below average agents, even thoughthey comprised the vast majority of theagency force.While the NAB still exists, it hasseemingly been rendered impotent. Inthe early years, the NAB was productiveand provided input on some importantissues. The individual members of thiselite group of hand-picked agents werehonored to be chosen and proud to serve.Surprisingly, however, a number of NABmembers have stepped down in recentyears. Could this be because they weredisillusioned or because the issues theywere allowed to discuss were increasinglymundane, unimportant or irrelevant?With the NAB now in check and theunion movement a distant memory, thecompany is, once again, attempting toincrease its control over the daily activitiesof the agency force. This is alarming,but not unexpected. If a company perceivesits work force as weak and unableto defend itself, the possibility forcorporate exploitation increases. Is thishappening at Allstate? You be the judge.The company has started firing agentsfor missing production quotas and hassuggested that it could fire more basedthe individual results of the new AgencyLoyalty Index. Add this to the lengthylist of terminable offenses for Allstateagents. What the company is saying, inessence, is that agents had better toe theline or risk termination. But wait a minute,aren’t we supposed to be independentcontractors and free of such controls?I’ve concluded that the company’s deliberateefforts to increase control over its‘independent contractor’ agents are not afluke, it is an integral part of its masterplan. As I said before, I have thoughtlong and hard about this issue. Followingare a few of my theories and thoughts regardingthe company’s inexplicable corporatebehavior:1. Senior managers have no idea howtheir underlings are treating agents.Okay, this is a real stretch, so I’ve alreadydismissed this theory. My thought wasto give senior leaders the benefit of thedoubt, but they can’t really be that clueless,can they? Not only has NAPAA hasbeen talking about this issue for years; iteven implemented a program called theInfractor Alert that provided managementwith examples of independent contractormistreatment. The bottom line is that seniormanagement cannot feign ignoranceon the independent contractor issue.2. Senior managers have somehowbeen persuaded that the current independentcontractor model has outlivedits usefulness. If true, this would meanthe company is searching for anotherdistribution model such as the Canadianmodel or a franchise model. In both instances,the company would essentiallycontrol the look and feel of each agencyand the manner in which policies aresold. It would seem that U.S. managersare being trained to exert more and morecontrol over agents, an important key inthe Canadian model where agents areemployees. To a lesser extent, this wouldalso hold true in a franchise model wherethe franchisor calls most of the shots.3. Allstate’s Modus Operandi.There can be no doubt that Allstate boldlypushes the envelope when it comes toSpring 2009 Exclusivefocus — 45

testing regulatory agencies. The company’sstable of highly skilled attorneys andlobbyists, along with its financial wherewithal,can be a huge hurdle for cashstrappedstate and federal agencies thatwant to challenge questionable companypractices. Obviously, Allstate knows thisand, in fact, counts on it in order to getits way. The company’s deliberate refusalto observe IRS independent contractorguidelines is a case in point. If the IRSpushes back, the company will then beforced to deal with the issue, but notwithout a fight. That is why it is importantfor Allstate agents to rally aroundthis issue and ask the IRS to intervene.The IRS case is not the only example.Here are some other recent examples:• In 2008, Allstate had its authorityto sell insurance suspended in the Stateof Florida for, among other things, failingto produce certain documents thatwere requested by subpoena in October2007. In the eyes of many observers, itappeared that the company defied and/orchallenged the Florida Office of InsuranceRegulation every step of the way,essentially making a mockery of the proceedings.It got so bad that Florida StateSenator Bill Posey declared, “I haven'tseen this much bobbing and weavingsince Mohammad Ali did the rope-adope.”Posey’s comment was in directresponse to testimony from then AllstateFloridian CEO Joe Richardson, whohas since been promoted to senior vicepresident of Sales and Customer Service.It appears that “taking one for the team”has its rewards.When the dust settled from all of thecourt decisions and appeals, Allstate oweda $5 million fine along with other concessions.“It is unfortunate that Allstate's disregardof Florida law required the Officeto take the drastic actions that we did inorder to bring Allstate into compliance,”said Commissioner McCarty.• Then in 2007, Allstate was heldin contempt of a Missouri Court (DaleDeer and Terri Deer vs. Allstate Insurance)and ordered to pay fines of $25,000 perday for the violation of two court ordersinvolving production of documents forthat case. In an act of unbelievable defiance,Allstate continued to ignore theorder and told the judge in a hearing thatit would not produce the documents, nomatter what the fine.• In 2006, Allstate paid $18.6 millionin restitution for improper notificationof rate increases and policy changes.Just over a year later, the Maryland InsuranceAdministration fined Allstate$750,000 for basically the same violations– the largest fine ever imposed ona property and casualty company. “It isvery simple,” said Maryland InsuranceCommissioner Ralph Tyler. “Here wehave multiple compliance violations, andAllstate moved too slowly to correct theproblems. Allstate was put on notice andfined more than a year ago for similarcompliance violations.”• As stated earlier, the foregoing arerecent examples of a company that appearsto be begging for legal confrontationson several fronts. We called thiskind of behavior “crusin’ for a brusin’”when I was growing up.But this pattern is not new - it has existedfor a number of years. Many agentswill recall the Preparing for the Futureinitiative that was announced in 1999, inwhich the company dismissed approximately6,200 employee agents whileoffering to rehire them as ‘independentcontractors’ without benefits, but only ifthey signed a pledge not to sue for anyviolations of employment law.The Equal Employment OpportunityCommission (EEOC) warned Allstatebefore the agents were dismissed that itwas probably illegal to require them togive up their rights. Allstate ignored theEEOC warning and proceeded to forceagents to sign the waiver in order to keeptheir jobs. The EEOC later sued thecompany and, as we go to press, the caseis under appeal.I offer the preceding examples onlyto illustrate what government agenciesand the agency force are up against inchallenging Allstate. While not unbeatable,the combination of the company’sdefiance, bluster, tenacity and formidablearsenal of top-notch attorneys is reasonenough to think twice before filing suit.The few rights that Allstate agentshave left are being eroded one by one.Most recently, it was announced in someregions that, as of March 1, all new agencystaff will be required to attend the company’sSales Producer University (SPU)within 18 months of obtaining an Allstateappointment. Staffers who don’t complywill have their appointments revoked.NAPAA has also received word thatagents in some markets are being requiredto ask a specific set of questions whenprospects call their offices for a quote. The“enforcement police,” otherwise known as“mystery shoppers,” reportedly will monitoragency compliance.So, the amount of control over yourbusiness continues to grow and no agencyowner is immune. More control begetsmore anxiety and stress on agencyowners which, in turn produces morehealth and family problems. Moreover,these unhealthy pressures can be compoundedby circumstances beyond thecontrol of the agent. Say, for example,that you are lucky enough to have a greatEFS in your market. He’s so good thatnearly every agent in the market makestheir Expected Results. Suddenly, oneday he quits, with no replacement insight. For years, you and the others havedepended on him to make your numbers.Now you have no help and have forgottenmost of what you knew about sellinglife insurance and securities. How willyou reach your Expected Results now?Or, what if your child, parent or spousecontracts a major illness, forcing you tospend more time away from the office?In either case, how long do you think thecompany will tolerate poor results? Thecompany’s take-no-prisoners approachis that agents have a job to do, and thatjob includes making Expected Results. Ifyou are among those with a good EFS,you should be counting your blessingsevery day.The frustrating part about the company’sautocratic approach is that it simplydoesn’t work well. It is counterproductiveand stifles productivity. This thick-headedphilosophy is a big part of the reasonwhy the company is struggling with marketshare today. The results of the latestAgent Relationship Survey were dismal.46 — Exclusivefocus Spring 2009

And had the survey had 100% participation,the results would have been muchworse. Chances are, most of those whofailed to participate are, perhaps, themost dissatisfied of all. Even some ofthe blue-blooded company faithful havelost confidence. Something’s very wrong.And threatening agents with terminationwill not improve the results.There are plenty of good things to sayabout Allstate, but its willful disregardof IRS rules as they relate to independentcontractors and its heavy-handedcontrol tactics are not among them. It isclear that the company is attempting toblur the lines that separate independentcontractors from employees. It’s almostif Allstate is trying to create a new classof worker, a hybrid of sorts that we callan “Indeployee.” This worker possessesnearly all of the characteristics of an employee,but has no rights, privileges orbenefits, yet must still pay all business-relatedexpenses. For its part, the employerenjoys immense tax advantages and hasthe power to control, bully, berate andterminate indeployees at will.Fans of cartoon character Popeye willrecall that every time he was pushed toofar he would declare, “I can stands somuch, but I can’t stands no more.” Popeye’snemesis was a bully named Bluto,an intimidating giant of a man, whowould pulverize Popeye whenever possible.But Popeye always carried a secretweapon with him, a weapon that Blutokept forgetting about. So as Bluto waspounding away on him, Popeye wouldreach inside his shirt and grab a can ofsuperpower-producing spinach, whichwould save the day.Let’s face it; the agency force is weak,but not helpless. Agents can help themselvesby becoming NAPAA members.For nearly 20 years NAPAA has beenprodding agents to coalesce together ina united front. Can NAPAA slow downor stop the assault on agent rights? Yeswe can, by reaching our goal of 10,000members. Just think what NAPAA couldaccomplish with over $3 million in annualrevenues.Joining NAPAA is the least of yourworries. Membership is highly confidential.No one will ever know youare a member unless you tell them oryou run for a position on the NAPAABoard of Directors. To this day, Allstatemanagers across the country tell agentsthat NAPAA is comprised of a group of“disgruntled” agents. Sure, many of ourmembers are discontented for a numberof reasons, including the RFG formula,the events in Canada and being subjectedto employee-like controls. But basedon the last Agency Relationship Survey,it’s crystal clear that even nonmemberagents share these same concerns. Thedifference is that NAPAA openly discussesit and is willing to do somethingabout it. Our only limitation is funding,which can be easily solved by reachingour goal of 10,000 members.What should concern agency ownersis that every agent in this country is nota NAPAA member. NAPAA is the onlyprofessional trade association dedicatedsolely to your well-being and success.There is no other organization that canhonestly make that claim. There is absolutelyno benefit to not joining.If you are concerned about managementfinding out you’re a member, forget aboutit. The only way they’ll find out is if you tellthem. In addition, there are no rewards fornot being a NAPAA member. Never oncehas a nonmember been exempted fromcompany requirements such as ExpectedResults, office hours, call forwarding, oropening their office on holidays. Nor hasAllstate ever stopped a termination becausesomeone was a nonmember. Therefore,being a nonmember won’t save yourjob or get you special favors.You cannot wait until your house hasburned to the ground to buy your homeinsurance; you cannot wait until there isno oil left in the world to find alternativesources of energy, and you certainlyshouldn’t stand by watching fellow agentslose their livelihoods or passively witnessthe disappearance of your few remainingindependent contractor freedoms. Isn’t ittime you put your big boy pants on andstand up for yourself?Many tenured agents will recall thestunning blue acrylic pyramid the companypresented, presumably, to all agentsand employees around the time the companywent public in 1993. When it wasintroduced, the company explained thateach of the three sides of the pyramidwere equally important to the long-termhealth of the company. The idea wasthat all stakeholders would share in thecompany’s success. In any case, it wasan awesome and admirable vision whichsenior management, with some notableexceptions, appeared to enthusiasticallyembrace.Fast-forward to 2009. Clearly, thepyramid has lost its luster. The GoodSpring 2009 Exclusivefocus — 47

Hands Commitment that promised “extraordinaryrelationships” with customersand Allstate employees, has gone awry,except, of course, for those employees insenior management.It seems pretty clear that the companyhas forsaken its vision, its stakeholdersand its principles in favor of profitsat any cost, a motive many would call‘greed.’ This imbalance is not healthy forthe company or its stakeholders and isthe root cause for the problems we facetoday. It is also the reason the companyuses the agency force as its favorite whippingboy.Isn’t it time someone pushed the resetbutton to bring the pyramid back inbalance? Allstate customers and Allstateagents were supposed to be stakeholdersin the company’s grand plan, but bothhave plainly suffered since the ascensionof the Liddy regime. Customers have experiencedunprecedented rate increasesand questionable claim practices whileagencies have been under intense productionpressures and increasing control.Now all of a sudden, the companyhas recently implemented “loyalty” measurementsfor its agents and employees.Evidently, the customer attrition rate hasaccelerated and the company wants toknow why and who’s responsible. Andthose agents and employees who don’tdeliver satisfactory loyalty numbers standto be pressured to improve or terminated.The reality is that longtime Allstatecustomers are typically a fiercely loyalbunch. But after enduring several yearsof back-to-back rate increases, they’vehad enough. Every year when they calltheir agents, they get the same song anddance about why rates have increased andthey just don’t buy it anymore. Then afterchecking around, they find out they cansave hundreds of dollars a year. The trustis gone - they leave feeling like suckersfor not shopping sooner.Another stakeholder represented onthe Allstate pyramid is the “Employee.”And when the pyramid was introduced,the vast majority of the agents were stillemployees. Some would argue that we’restill employees or at least ‘indeployees’ assuggested above.Until recently, most agents were alsoloyal to the company. But like thoseloyal customers who have tired of beinggouged time and again, Allstate agentsare weary of being squeezed from allsides. More and more company controls,ever-increasing operating expenses, constantpressure to attain Expected Resultsand a poorly designed RFG, are just afew examples that agencies face today.These and other pressures have mountedsteadily for the past several years andagency owners are fed up. The companyhas over-milked its cash cows (agentsand customers) and the milk is all butdried up. There is nothing left to give.The good news is that Allstate agentshave a professional trade association thatcan voice their concerns and take appropriateactions when needed. NAPAANow all of a sudden,the company hasrecently implemented“loyalty” measurementsfor its agentsand employees.remains the only viable option for agentsto achieve positive changes in their relationshipwith the company. But in orderto effect change, NAPAA needs a majorityof Allstate agents to join. Withoutsignificant membership numbers, itis difficult to convince the company tomake the kind of changes agents needand desire. Would it listen if NAPAAcould boast of 10,000 loyal members?Yes it would. And, there has never beena better time to join NAPAA. With itsstock price languishing, its dividendslashed in half, its continuing loss ofmarket share, its declining revenues, its$1.6 billion net loss last year, its dissatisfiedagency force and its recent downgradesby S&P, Moody’s and Fitch, thecompany has its hands full. And thingswill likely get worse before they get better.The last thing Allstate wants rightnow are more problems, especially laborproblems. That is why this is a perfecttime to build a stronger NAPAA. With amajority of the agency force as members,NAPAA will be able to deal with Allstatefrom a position of strength.The peculiar twist here is that whatis good for the agent is good for thecustomer and good for the company. A10,000 member NAPAA will surely helpthe company improve certain businesspractices that will result in improving thecustomer relationship, retention, and thebottom line.I will close with an appropriate anecdoteI recently saw in The Voice, theUnited Farmers Agent Associationmagazine. It was about a mouse whowitnessed a farmer opening a newly arrivedpackage, only to discover it was amousetrap. The mouse quickly ran outto the barnyard to let his fellow farmanimals know there was a mousetrap inthe house.As you might imagine, the otherfarm animals paid little attention to themouse’s warning. Some were sympathetic,but they all said the same thing,“this is too bad for you, but it doesn’t affectme.”That night, the trap was triggeredby an unexpected prey. In the dark, thefarmer’s wife did not see that it was thetail of a venomous snake caught in thetrap. She was bitten by the snake andrushed to the hospital.When she returned home still ill fromthe poison, the farmer decided nothingwould be better for her recovery thanfresh chicken soup. So went the chicken.As the illness worsened, friends andfamily came to help care for the farmer’swife. In order to feed them, the farmerhad to butcher the pig.Finally, when the farmer’s wife died,the farm was overrun with well-wishers.Again, the farmer found it necessary toshow his gratitude by feeding them, sohe slaughtered the cow.The moral of the story: Don’t ignorethe problems of your fellow agents astheir problems may soon become yourproblems. Like it or not, we’re all in thistogether and we should be watching outfor each other. Meanwhile, please joinNAPAA – it’s our last, best chance forsolving the issues we face.48 — Exclusivefocus Spring 2009

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letters to NAPAALetters continued from page 12.my copy which was signed by me, mymanager and my TAM as required. Ofcourse, the contract had the 90 day rulein it, but what I found interesting wasthat the agreements were different. Thenew one included Expected Results andlisted them whereas the original made nomention of any results monitoring. I justignored the letter from HR. I felt theyknew what they were trying to do.I have copies of both contracts andwould be happy to share them with you.Unfortunately, I am not a NAPAA member,but I follow your progress. Businessover the last few years has really suckedand joining at this time is not an optiondue to financial constraints. I will be happyto fax you copies of these agreementsif you like. I don't know yet how strongeither is but plan on taking them to myattorney for clarification. I keep copies ofmy original contract in two different safeboxes just in case.Editor’s Response: Thanks for writing.While we do have copies of some of the contracts,we don’t have all of them. So yes, wewould be interested in copies of the agreementsyou have.Please send them by US Mail to PO Box7666, Gulfport, MS 39506.One other major difference you shouldnotice is that the contract you signed backin the 90’s offers the Termination PaymentProvision of 1.5 times the renewal book.Since this is in the contract, it cannot bemodified by revisions to the R3001 Supplement.This provision is missing in all contractssigned after November 1999. Sincethen, the provision for the TPP is found inthe Supplement, which means it can be reducedor eliminated at any time.As for Expected Results, they are referencedin the Supplement and R3001 Manual.And since these manuals are explicitlyincorporated into the contract, the ExpectedResults quotas can be imposed.In other words, contractually there is noargument for termination for failure to meetthe quotas – however, we believe the argu-ment is actually that of misclassification ofindependent contractor versus employee. Independentcontractors do not have quotas.We hope you enjoyed the last issue of theExclusivefocus magazine and took the timeto mail the postcards. We also hope that youwill reconsider supporting NAPAA withyour membership. If we reach our goal of10,000 agent members by 2010, our operatingbudget will be $3.5 million. We wouldthen have the resources to affect some majorchanges. Support from each agent is less thana $1 a day, but as long as there are agentswaiting until things change – the longer itwill take for things to change.. . . . . . . . . . . .I find it interesting that managers aretelling agents how to sell.We had a manager here in my statewho, for years, would stand in front ofagents at meetings and tell us how to sell,how to retain, etc.Approximately 1½ years ago he purchasedtwo agencies; they are now for sale.It turns out he can neither sell nor retain.Editor’s response: As the great H. L.Mencken once wrote, “Those who can – do.Those who can't – teach.”. . . . . . . . . . . .I'm not at all certain whether or notan issue that I had last year with Allstatewould help the cause in our quest to trulybe independent, but I thought I wouldshare an experience I had with AllstateFinancial.The agent who mentored me when Istarted with Allstate had been allowed toobtain his Series 7 license simply by askingAllstate Financial to open the windowfor him to take the exam. He toldme that he just requested to be allowed totake the test from his MDL, and it wasgranted. I assumed my request would alsobe granted. So, I asked my MDL at thetime about getting the license. He toldme what the process was and assured methat it shouldn't be a problem because heknew of other agents who had done thesame thing.Well, I spent about $2,000 for a hotelstay and a crash course to prep me for theSeries 7 exam. But when I returned andsubmitted my paperwork and paymentinformation to open the window for theSeries 7 exam, the Regional FinancialServices Leader (RFSL) wrote me anemail saying that my AFS productionwas not sufficient enough for them to allowme to take the exam. He also notedsome other justifications (complianceand supervisory) to deny my request. Hisemail was copied to several folks includingthe RDL and TDL. The initial replyfrom the RFSL was obviously composedand written by him.I hit "reply all" and asked him to reconsiderhis decision based on the fact Ihad already incurred a great deal of expenseand that I had been led to believeby my MDL that it was a routine matter.Perhaps they saw I was raising some legalissues. Well, about 2 weeks later I receiveda response. This time, his responseappeared to be a much more carefullycrafted email (as if prepared by the legaldepartment), but still denied my request.I was pretty hot over this issue at thetime and still am. However, I decided tolet it go because I really didn't feel therewas much use of fighting it.Let me know if you guys would likemore information on this matter.Editor’s response: Thanks for your email.This is just another example of an MDL notresearching your question before spouting offan incorrect answer. What he should havedone was say, “Let me check on that and getback to you.” Whether it was laziness, ignorance,or simply a desire to appear like heknew what he was talking about, the factis that he didn’t know and shouldn’t haveled you on a wild goose chase before investigatingthe facts. We have seen this time andagain. This is the quickest way for an MDLto lose credibility among his agents.. . . . . . . . . . . .50 — Exclusivefocus Spring 2009

letters to NAPAAIs NAPAA aware of the Websitewww.employerrap.com? This site is allowsusers to post reviews about companies.It is a great way for prospective newagents or employees to research a companyBEFORE they take the job.I would think that prospective agentsshould be aware of the high failure rateof new Allstate agencies.Also, here’s another Web site thatmay interest your readers: www.canmybossdothat.com.. . . . . . . . . . . .A NAPAA member emailed me thenew payday schedule. The dates continueto get later and later in the month. Thisyear we’ll only be paid on the 17th threetimes. The rest of the months we’ll bepaid on the 20th, 19th and the 18th.I made a recommendation to theNAB about five years ago that agentsshould be paid between the 1st and the15th of the month because that’s whenmost mortgage payments and other billsfall due. Plus, most government and corporateemployees get paid twice a month.I never heard back from the NAB rep regardingmy suggestion.The NAPAA agent said that paychecksused to be bigger, so the paydaywas not a big issue then. But nowour paychecks are smaller because we’relosing PIF and money is a lot tighter.Would it really hurt the company towork with us on this? Just because Mr.Wilson doesn’t have to live paycheck topaycheck, some of us do.What is NAPAA’s feeling on this issue?Editor’s response: As I recall, payday alwaysfell on or near the 17th of the month. Ialso recall there were instances when paydaywas later than the 17th. Of course, I haven’tbeen an agent for a few years, so maybe thecompany has tweaked its formula.NAPAA agrees that changing the paydaywould help agents in their budget planning,especially now, when budgets are strained.Many bills come due on the 1st of the monthand waiting until the 20th to pay them ispushing it. My guess is that unless thousandsof agents complain about the existingpayday, nothing will change. Maybe whenyour fellow agents read your letter in Exclusivefocusmagazine, they’ll lobby Tom Wilsonto make a change.. . . . . . . . . . . .I am attempting to gather more informationabout our “independent contractor”status with Allstate. Specifically, Iwould like to know if we are free to makecertain choices and, if we are threatenedfor making these choices, what recoursedo we have, if any? Also, where can I goto find out what is within my rights?Any direction is appreciated.Editor’s response: We believe that anyof the control issues we wrote about in thearticle Deliberately Misclassified? could begrounds for the IRS to examine Allstate. Asa practical matter, however, the IRS doesnot have the resources to investigate everyinstance of misclassification. This being thecase, our belief is that they will only pursuecompanies who are flagrantly treatingindependent contractors like employees. Inour opinion, Allstate falls into this category,which is why we encourage agents to mailthe postcard we provided in the magazineto the IRS.In addition, the IRS has a formal processin place to assist individuals in determiningtheir status. To initiate this process, anindividual must complete and file IRS formSS-8. Once this form is submitted, the IRSwill make a determination of the individual’sstatus.. . . . . . . . . . . .Great Exclusivefocus with the IRS/FEDEX/Allstate independent contractorstory.I think another cause for a class actionis the TPP that Allstate gives terminatedagents. This amount should be resetor based on the size of the book whenpurchased. Not from that point forward.When I purchased my book for $640Kmy termination payout number was under$300k. I paid 2.2 times renewals. Askany agent who purchased a book whatthe TPP would be and it will be less thanhalf of what was paid for the book, whichis less than the 1.5X Allstate uses.I also think that Allstate had a moralobligation to inform prospective buyersof agencies that they may initiate anHRM policy that could affect the valueof their business and the amount of newbusiness that they could write. There aremany agents who purchased books rightbefore Allstate started HRM.Editor’s response: Thanks for the feedbackand suggestions. To be sure, there is no shortageof actionable concerns when it comes to Allstate.Based on what you’ve wrote about yourTPP, I would guess that you bought yourbook from a long-term agent who had writtena substantial amount of business as anemployee agent, which would have been beforethe year 2000. The Termination Paymentwill not compensate you for any policythat was written while the seller was anemployee. However, you are free to sell thosepolicies to other approved buyers. Unfortunately,many BOB sellers neglect or forget toinform buyers that these policies are excludedfrom the TPP.I agree that the company should do moreto inform buyers and sellers of initiatives thatcould devalue their books of business. It wouldseem that either the company is content tolet “buyers beware” or it simply considers itsplans and strategies privileged information.We’ll have to let the lawyers decide if this lackof disclosure is actionable or not.. . . . . . . . . . . .What a fantastic magazine. I literallyread it cover to cover. Your individualarticles and Bob Isaacsen’s piece weregreat, and the post card idea was awesome.Mine went in the mail anonymouslyyesterday.Well done.Spring 2009 Exclusivefocus — 51

. . . . . . . . . . . .This [the Canadian model] has got tobe the direction planned for the USA. Thecompany will again say that the marketdemands it, especially if the EEOC rulinggoes through or the IRS proclaims weare employees. The corporation NEVERdoes anything without a purpose.The Canadian model makes greatsense for Allstate and its control issuesand offers a fresh approach to the market.Imagine an Enterprise Car Rentaloffice as an agency. Staffed with young,fresh hires that are happy to make $25 to$30k a year. And Allstate gets to keep allthe renewals! This is definitely the directionAllstate will take. I'd bet my hat andfanny on it.I have often thought that the SalesProducer Universities (SPU), touted bythe regions, are nothing more than traininggrounds for future hires under the yetto be announced company-owned salesoffices – agent-funded training grounds,I might add. The more one looks at theCanadian model, the more sense it makesfor Allstate to implement it here. It finallysolves the distribution dilemma. Agentsin the USA had better wake up and beginto at least have an exit strategy.. . . . . . . . . . . .I came across this quote by RachelMaddow last month in a magazine.“Humans are ambitious and rationaland proud. And we don't fall in line withpeople who don't respect us and whowe don't believe have our best interestsat heart. We are willing to follow leaders,but only to the extent that we believethey call on our best, not our worst.”I sent this to you because I wish Allstatewould understand that we wouldwork our butts off if we felt our companyrespected and valued us. I believe thatleadership rolls downhill. If we do notfeel good about how the company treatsus, it doesn’t just affect us; it tricklesdown to our customers and community.Being beat up every day over our ratesletters to NAPAAand a lack of coverage options does notbring out the best person within us.We are in tough times. I have hadcustomers crying on the phone whodon't want to leave because of the relationshipthey have with my agency. Yetwhen we are $800 a year higher, not thanProgressive or Geico, but than our originalcompetitor, State Farm, then Allstateneeds to pay attention. And not just atyear end. They need to look at the ratingstructure now. Also, if SRM was the bealland end-all solution, then why are wetaking rates twice a year, especially nowwhen people are driving less and fatalitiesare down? Do we employ actuariesor not?Thanks NAPAA for supporting theagent.. . . . . . . . . . . .I’m looking forward to the next magazine.Every copy I have is dog-eared becauseI usually read it over and over! Youguys do such a great job.Former Allstate Agent,Dawn Fields. . . . . . . . . . . .Can you give me any advice on agencymanagement software? I am confusedand want to make sure we get paid on thebrokered business we write, etc.Editor’s response: The three companieswe’re familiar with are AMS, Applied Systemsand Hawksoft. They are all excellentcompanies. However yesterday, the presidentof Hawksoft wrote in an email “Allstatehas shut us out by not allowing us todownload for the captive agents.” I wroteback and asked if he was having the sameproblem with independent agents who holdAllstate contracts and he said, “No, we havebeen downloading to the independents forsome time.”Both AMS and Applied Systems advertisein Exclusivefocus magazine. Hopefully,you have received the latest copy. If not, hereis the contact info: AMS: www.freeyouragency/napaa.comApplied Systems: (800)786-1362.. . . . . . . . . . . .We are very happy to renew and havebeen very pleased with the incredibleimprovement in the quality of the EX-CLUSIVE FOCUS MAGAZINE. Youand your staff and everyone involvedwith NAPAA deserve a “big pat on theback and “atta girls and atta boys”. Pleasecontinue the strides you are making inmaking this the premier informationsource for important issues that can bedealt with in depth on a regular basis.Happy New Year!D. Fred de RoodeChairman and CEO, PPC LOAN. . . . . . . . . . . .Your most recent Exclusivefocus wasoutstanding! Your article "Mr. Wilson,Tear Down This Wall" should motivatemore Agents to join NAPAA. The factof the matter is: Without NAPAA whoelse can agents rely on for their futures?I think agents fall prey to a sheep mentalitywhen dealing with their respectiveregions or having the NAB representingour best interests. As if "they will takecare of us." Agents need to wake up andfight or they will face bankruptcy.Thank you NAPAA for inspiring allof us to find our voice.Colorado Agent and Member. . . . . . . . . . . .It's hard to say whether or not managementwill can me or not, but my partnerand I have decided that we are gettingto old for this, so we’ll try to sell ourbooks of business. We have a couple ofpeople interested, but nobody has signedon the dotted line yet. Do you think that3 times our annual commission is a fairprice? We both have low loss ratios and52 — Exclusivefocus Spring 2009

letters to NAPAAour combined retention ratio is about92.5%. Any advice is greatly appreciated.Thanks for all your help.Editor’s response: In my opinion, 3X annualcommissions would be an exceptionalprice considering the location of your agencyand the current economic environment.There are a lot of factors involved in pricinga book. First, the Region would haveto approve a merger of your books. The sizeof your combined books will make a differencetoo. In general, smaller books fetch lessthan big books do. If your combined booksare $3 million range, you will have a bettershot at the higher multiple. Also, don’tbe surprised if management offers up somebuyers. Oftentimes these buyers are “coached”about how much they should offer, especiallyif they know you are desperate. Once thecompany knows your books are for sale, yourMDL will start suggesting buyers. Beware,because this process may not be in your bestinterests. One mistake that many agentsmake is going to their MDLs to get buyerapproval. If at all possible, don’t do this. Requestsfor buyer approval should go throughthe RDL. Another consideration is the glutof books on the market. We expect it to getworse before it gets better. This may not bethe case in your state, but smart buyers maylook at states where book prices are depressedand the multiples are lower.Since you’re a member, I believe we canhelp you avoid some of the pitfalls in the saleprocess. Give us a call with your questions.Nancy Fish, our association manager, is aformer manager and is especially knowledgeableon this topic.. . . . . . . . . . . .I have been an agent with Allstatefor over 18 years. Recently, I received a90-day termination letter from my TDLindicating that my contract would be terminatedfor "failing to achieve businessobjectives established by the Company.”The letter was not on company letterhead,and was signed only by the TDL.Before that, on February 29, 2008, I hadreceived a letter that stated: "Failure tosignificantly improve results could jeopardizeyour agency's continued relationshipwith Allstate." This letter was onletterhead, and signed by the TDL.After receiving the first letter, I contactedthe TDL and, because he wasbetween flights, he said he would callme back. He called several days later,and then on a conference call with me,my partner and our IDL, he suggestedthat we hold seminars at hotels in ourarea, at our expense and push AWD. Hewent on and on about how if we spentthe money, we would have results. I didnot have the money to do this. Besides atanking economy, Allstate was cancelinghomeowner policies and our auto ratesare very uncompetitive.It is difficult enough to hold on towhat we have. We spend most days tryingto convince 15-year customers not toleave. My loss ratio is 32% and my retentionis 94%. I come to work every dayand actually deal with all my customersmyself.I love my job as an Allstate agent anddo not want to leave. I am being forced tosell my BOB in the worst recession sincethe Great Depression. And as a parentof two young children with a mortgage,I have to spend my holidays trying to sell“my business” and look for a new job,so that I do not lose my house. WhenI called Allstate management to expressmy shock, they were very nonchalantand acted as if they just wanted me to goaway. I do not know what the motivationbehind this decision is, although I knowthat it is wrong. If you can help, or addany insight, please contact me.. . . . . . . . . . . .Editor’s note: The email letter belowwas forwarded to NAPAA from Canada. Itwas sent to the following Allstate Canadamanagers: Chris Kiah, Christianne Dostie,Tim Currie, Rose Cisterna, Tom Rose, EricPickering, Sue Morrison and Pete Breuer.As I begin this note, I know that youhave seen many, and will, most definitely,see many more of the same, but I justcan`t bring myself to leave [Allstate]without getting a few things off of mychest!As June 15, 1981 has been an extremelyspecial date for the past 27 yearsplus, you can then understand that February13, 2009 will now likely replacethat date in my life. You see, June 15,1981 was the day I began my career withAllstate and today is the day it is ending.Not by my choice, unfortunately, but itseems almost forced out the door. It hasbeen a great ride for these 27 years butyou guys have made it a very bumpy oneover the past couple of years.When I think back to 1981, as abrand new agent, attending meetingsand kick-offs with all of the most senioragents of the time, it was a learning experienceand a very exciting time. I lookedup to those agents, names like Al Lazaro,Dev Chugh, Jim Werechuk, BrianBulbulia, Ed Washington, Ted Devinish,and many, many more like them. Theseguys were the class at the time! Alwayswilling to help the new kid on the block!I looked up to them! The same goes forthe management of the day. Ken Parker,Gary Moroney, Lorne Clodge, GerryRoberts, and, once we got rid of JerryFournier, all of the presidents who followed.The difference between thosedays and now—respect! They always hadrespect for the agents and the agents allhad respect for them. It seems that now,that has disappeared. There cannot berespect from the leadership team, andhave us (the agency force) treated in themanner we have been!For all of the years I have been withAllstate, I have respected this companyand have shown that to my friends, myclients and my peers. That respect hasleft me. I can no longer say that I amproud to represent Allstate. This companyhad heart, but this leadership teamhas succeeded in ripping that very heartfrom the body of Allstate and left it tosimply die!That having been said, how can I remaina faithful, loyal, dedicated agent? Time toSpring 2009 Exclusivefocus — 53

letters to NAPAAWhen Richard Crist spoke to theNew Jersey Regional Agency force onNovember 15, 1997, he informed usthat Allstate had agreed to create a newinsurance company in New Jersey. Thenew company would be called AllstateNew Jersey Insurance Company and itwas being capitalized with $400 million.At that time he also informed us that theautomobile combined loss ratio was approximately113.4%. Mr. Crist held outhigh hopes for the coming of the (then)new Tier Rating rate plan, which hadbeen statutorily approved in New Jersey.The new Tier Rating Plan “eliminatedsurcharges” and would begin its roll-outto the public as the many insurance carriersfiled and received approval for theirrespective rating plans. The new TierRating Plans would roll-out beginningin the NJ insurance marketplace startingon January 1, 1998. Allstate’s tiered ratingplan was being created and would besubmitted for approval. After numerousdelays, the plan took effect with businesswritten November 2, 1998. This was almoveon. This is not the same company thatit was and I cannot accept this.As I have said before, the straw thatbroke the camel’s back was when mydaughter was forbidden to continueworking with me. She had been my associatefor almost 5 years and I had trulyexpected to have her for many moreyears. With the changes, she was not allowedto be "grand-fathered" as she wasdeemed to not be employed as she wason maternity leave. This was wrong. Shewas offered a position as a CCA but notwhere she would have liked. She lives inCambridge and it would have been veryclose for her. She asked you, Tom, to havea look and see if there was something elseshe could do as she had the experience.However, as soon as she questioned you,you took the offer off the table! Recently,she went to Eric Pickering to questionall of this (on my suggestion) and hecame back to her saying Tom told himthat he offered her a BDA position andshe turned it down as she did not havethe experience. Nothing could be furtherfrom the truth! Anyway, she decided notto try and fight city hall, but just go hometo her family and enjoy them.This brings me to the present time.I too, have decided not to fight city halland will simply go on my merry way, notexpecting any sympathy from the powersthat be, but we will survive quite nicely,THANK YOU!As a former manager of mine alwayssaid, "Never Better" and one day soon, bothmy daughter and I will say exactly that.Good Luck!Eric RouthSenior Account AgentAs always, 636993. . . . . . . . . . . .From another former Canadian agent…Happy New Year to you!Agents know that Allstate is playinghardball and that things are really bad.If an agent can sell $30,000 with All-state, they might as well do it as a brokerand get the $3,000 in renewal commissionfor the rest of their life and have100% ownership.I spoke with one longtime agent yesterdayand he says every time he leavesthe office he is asked if he went to gethis RIBO by his manager. He has to login and out and can not take longer thangovernment regulated breaks allow.Another agent was at my home theother night and said that he has to pushthe pee-pee button if he gets up to relievehimself. He was so humiliated.One agent told me that most managersare asking agents to write new policiesif someone calls to do an add-on inorder to help push up the numbers.I feel so sad for the people who aretrapped into staying at Allstate. Everymonth they stay is another month in lost renewalcommission that will last a lifetime.Thanks for thinking of us.. . . . . . . . . . . .most a full year after the inception of theTier Rating Plan began, statutorily.I clearly recall losing many long-termcustomers through the course of that year,while we awaited Allstate’s Tier RatingPlan. Many of our customers saved morethan $500 a year by deserting us. Therewas little we could do to stem the exodus.They simply couldn’t afford to staywith Allstate any longer. My office partneralso experienced a similar attritionof disappointed, loyal Allstate customersto the competition. Some of us “older”agents also recall that Allstate made ahalf-hearted attempt to address this attritionof loyal, longtime customers byproviding us with a list of customers whocould be re-written with somewhat lessthan required documentation. Allstatenamed this list of prior customers the“Defector list”, which speaks volumes inand of itself.Richard Crist further emphasized thatthe new company, Allstate New Jersey,needed to make a profit. If it didn’t, andthe initial $400 million were to be lost toclaims and expenses, then Allstate NewJersey would fold up its tent and leave thestate. Most of the agents took this warningseriously. In spite of this, the companywas cautiously optimistic, but indicatedit needed to take steps to ensure itssuccess and, as a result, we were informedthat the compensation plan for agents inNew Jersey would be different than thatof the rest of the country. This meantthat New Jersey agents would receive alower commission rate than agents in theother 48 states where Allstate does business.We were given the assurance that ifthe new company proved to be profitable,the lower commission rate issue wouldbe addressed when that happened.That is precisely what has now happened.Boy, did our new product hit ahome run in terms of being profitable.Think of the extra profit, extra commissionsand customers that were lost becausethe rating plan was not ready at thebeginning of that year.New Jersey, led by its agents have exceededlocal and Home Office expecta-54 — Exclusivefocus Spring 2009

letters to NAPAAtions ever since. We are among the mostprofitable, if not the most profitable region,in the country. We need the companyto make good on its promise regardingour commission plan. It shouldbe on par with the rest of the country.New Jersey agents did their part by profitablygrowing the company and sacrificingpart of our commissions.We need a compensation plan that isstable and allows us to plan our staffingand future expenses. The massive fluctuationsthat occur in our basic compensationdo not allow for us to have any confidencein our ability to maintain control over ourcontrollable expenses, such as staffing,advertising, office upgrades, etc. In theAmerican economy this is referred to as“Consumer Confidence.” How can we effectivelyplan for our future when we havelost our own version of “Consumer Confidence?”This loss of confidence prospersneither the agencies, nor Allstate.The current New Jersey Compensation“Grid” needs to join “Parts andLabor” in the Allstate junk pile of failedprograms.. . . . . . . . . . . .I have been an Allstate agent for almost10 years now. I have detected adistinct pattern of one step forward, twosteps back. All of the agents in my cityare fed up with Allstate and their heavyhand. I'm sure this feeling is widespreadamong agents throughout the country.Agents realize the honeymoon is overand Allstate is an abusive spouse.We need a new agent contract that isnegotiated with our best interest as wellas Allstate's. Now is the time to pushforward. Although agents may not beNAPAA members, they are willing tosupport a movement.Where do we go from here? If weband together and become one, the companywill have to negotiate in good faith.I'm sure the Teamster's would love tohelp us. We need to act now!. . . . . . . . . . . .Nancy,Thank you for contacting me andthank you and Jim for the tireless campaignyou have conducted on behalf ofall Allstate agents, we are very much inyour debt.I feel like I am riding off into the sunsetbut I feel you and Jim by my side.Keep up the good fight!. . . . . . . . . . . .I haven't spoken with you in a longtime, but sure appreciate all of the publications.I'd like to be able to go to EAConference in Savannah.You know, I'm wondering what youthink about Bill Gough's seminar, etc.He’s coming to town next week. It's prettypricey and I'm wondering if you knowanyone that has been to it? I believe it tobe a good value, but time wise, its threefull days. I’m trying to weigh that outand wondered if you had any feedback.Also, I thought you should know thatI have lost nearly 1600 policies in thepast few years due to increasing rates.Editor’s response: Great hearing fromyou and it would be great to see you in Savannah!Bill Gough is a fine individual and hisheart is with the Allstate agents. I don’tknow anyone who has attended his seminars,but I’m sure that he would be able togive you some referrals. I can assure you, ifthe seminars weren’t a good value, NAPAAwould hear about it. So far, we haven’t receiveda single complaint. Unfortunately,Bill had to back out of his speaking engagementat our Savannah conference, but haveno fear; we’ll find a suitable replacement.Wow, your PIF loss is stunning. And Iunderstand there is another property rateincrease on the way. These are trying timesindeed. Sounds like you could use a break.Why not come to Savannah? You’ll be gladyou did.Customer MovingOUT OF STATE?We’ll help you findan experiencedAllstate AgentCall theAgent-to-Agent Hotline:877-627-2248A Free service provided by NAPAAEmail requests should be sent toHQ@napaausa.orgSpring 2009 Exclusivefocus — 55

NAPAA Membership Applicationand/or Action Fund DonationName:______________________________________ Off Ph:_______________________ Fax__________________________Street:________________________________________________ E-Mail:__________________________________________City:________________________________________ State:_____ ZIP:__________ Home Ph: _______________________Is this address your ❑ Home or ❑ Office?Status: ❑ Active Agent ❑ EFS Agent ❑ Staff ❑ Other (please explain)____________________________________Date: _____________ Years with Allstate________ Office Zip Code (If using home address) __________________Referred by: _______________________________(name of person or publication that inspired your membership)MEMBERSHIP SECTION - (CONFIDENTIAL)Includes:• Free Insurance Leads from the NAPAA Website ❑ Annual $350/yr• Member-to-Member Transfer-in Referrals• Timely Communications, including a weekly newsletter ❑ EFT $29/mo• Comprehensive Resource Center• Resources for Buying and Selling Agencies❑ E-chx will pay dues• Sponsorship and Support of Agent Friendly LegislationACTION FUND DONATION SECTION Check or CC EFT amountPAYMENT SECTION$____________ or $____________/mo.❑ CHECK - Annual payment only.Please make payable to NAPAA and mail to the address at the bottom of this application.❑ CREDIT CARD – Annual payment only. I authorize this amount to be charged to my credit card.(Please complete the information below)Card type: ❑ VISA ❑ MasterCard ❑ Discover ❑ American ExpressName on account ______________________________________ Amount to be Charged: $__________ (Annual only)Account Number ________________________________________ Expiration date __________ Security code________Address on Card _____________________________________________________Zip on Card_____________________Signature of Cardholder _________________________________________________ Date ____________(3/09 EF)❑ EFT - Monthly (attach or fax voided check)I understand that the amount stated above will be deducted from my checking account every month until instructed otherwise.I have enclosed a voided check and understand that the withdrawals will occur on or about the 20 th of every month.Authorization Signature: _____________________________________________________________Date ____________❑ E-chx will pay my dues – I am an E-chx client processing payroll at least twice per month.NATIONAL ASSOCIATION OF PROFESSIONAL ALLSTATE AGENTS, INC.Please fax application Toll Free to: 866.627.2232Mail application to: P. O. Box 7666, Gulfport, MS 39506Call Toll Free: 877.627.2248 • E-Mail: HQ@napaausa.orgNote: You do not have to be a member to donate to the NAPAA Action Fund

Why are Allstate Agents so Excited?E-chx Payroll and NAPAA have joined forces to make an excitingoffer that has Allstate Agents jumping for joy!WarningProgram Highlights:E-chx pays your NAPAA membership dues.E-chx is saving many agents between$350-$3,500 per year on their payrollprocessing and NAPAA membership costs.Incorporation services at a discountedrate**Incorporation services provided by Incorporators USA, LLCWarning:Excitement has been known tospread through Agents“This program has been so much easier to usethan my previous service company, and costsless too.”Scott SileoAllstate Agent, NAPAA member“E-chx has made processing payroll simple.The attention to product quality and customerservice is amazing.”Yvonne S. WhitakerAllstate Agent, NAPAA memberE-chx Offers:Multiple input options “Insight” for your accountantReal-time reporting HR HelpdeskEmployee Homepages Complete tax serviceAward winning customer Employee benefit solutionsserviceGet excited! We’ll save you time and money!Contact:Tom MistrettaProgram Manager(866) 312-8863tmistretta@e-chx.comSpring 2009 Exclusivefocus — 57

the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleCALIFORNIAGlendaleRobert Feldmanrobertfeldman@allstate.com818-415-8000Asking Price: Open to discussPIF: 6,410 Premium: $6 millionNumber of Licensed Staff: 4Large Agency. Top 5 in countryfor EB. Low LR. Make LifeNumbers every year!. Knowledgeable,talented staff. Oneof the most successful agenciesin CA.Los AngelesJim AstorinoJimastorino@allstate.com323-665-7300Asking Price: $1,975,000PIF: 3,387 Premium: $4,700,000Number of Staff: 3, (2 lic)Los Feliz Area. 28 yr agent,same location for 12 yrs. Agentwill stay 1 year for transition.ChatsworthMike KrupkaMikekrupka@allstate.com888-457-8752Asking Price: Offers EntertainedPIF: 6,900 Premium: $8,000,000Number of Staff: 5 (4 lic)Large Agency! Same location17 yrs. $1,050,000 from Allstatebook alone. Retention 92%, LR.44%. Inner Circle.PetalumaJohn FeerickJohnFeerick@allstate.com707-763-2238Asking Price: $540,000PIF: 1,700 Premium: $1,800,000Number of Licensed Staff: 2Great location 22+years.Agent retiring after 38+ years,staff will stay. Cell at (707)217-3158.COLORADODenverTom Callahana072418@allstsate.com303-584-5814Asking Price: NegotiablePIF: 1,454 Premium: $1,277,000Number of Licensed Staff: 125 year agency, RockyMountain Area. Ideal location-affordable rent . Retention88.39. LR 38.41.CONNECTICUTNorwalkRonald McKnightronm@allstate.com203-854-6608Asking Price: $700,000PIF: 1,943 Premium: $2,465,000Number of Licensed Staff: 126 year agent ready to "retire".Excellent retention and LR.Total Items 2644.FLORIDAHomosassaSteve Centolastevecentola@allstate.com352-397-7053Call for agency detailsDeltonaDenise Whitedwhiteco@gmail.com386-532-1206Asking Price: $150,000PIF: 700 Premium: $734,000Number of Licensed Staff: 23 yr agent, qualifies for newagency bonus. Includes F&E.Or, Allstate book only $300,000in premium, price $90,000.Saint Lucie CountyJohn G Gaffneyjgaffney312@aol.com772-828-0008Asking Price: $1,350,000PIF: 3,750 Premium: $5,000,000Number of Licensed Staff: 52 locations, combined PIF 3,751& $5mil GWP. 5 figure RFGBonus. 100% funding required.MiamiEduardo Aljureeakpea@comcast.net305-785-7082Asking Price: $180,000PIF: 313 Premium: $701,645Number of Licensed Staff: 13 yr agent. Includes F&E. Noowner-financing available.Qualifies for new agencybonusFort MyersAlberta LewisALEWIS@EMBARQMAIL.COM239-560-3732Asking Price: $250,000PIF: 650 Allstate, 500 BrokeredPremium: $900,000Number of Licensed Staff: 1Qualifies for new agentbonusesKissimmeeLarry Newmanlcn1986@aol.com407-529-4147Asking Price: $1,100,000PIF: 2,600 Premium: $2,650,000Number of Licensed Staff: 3Great location, 21 year agentretiring, staff will stay, turn keyKissimmeeDale Revelsdrevels@cfl.rr.com407-924-5336Asking Price: $850,000PIF: 1,100 Premium: $2,200,000Number of Licensed Staff: 121 yr agent. Paperless office.Close association with AllstateHall of Fame Life Specialist.Low overheadPalm BayRichard Youngermrrgy@earthlink.net321-591-2225Asking Price: $2,500,000PIF: 4,500 Premium: $5,600,000Number of Staff: 4 (2 lic)Turn key. Fast growing area.Less than 1% of Auto is AI.HAWAIILahainaMichael D Amatomichaeldamato@allstate.com808-661-3542Asking Price: call for detailsPIF: 1,153 Premium: $1,003,257Number of Staff: 2 (1 lic)Beautiful downtown office,tastefully furnished. Turn-key.Talented EFS. Call 9AM-11AMAloha timeIDAHOMoscowNadine Belieunadine@allstate.com208-882-8000Asking Price: Reduced$320,000PIF: 1,800 Premium: $1,400,000Number of Licensed Staff: 120 yr agent, retiring. Retention89%, LR >30%. Will helpwith transition. Beautiful area- hunting, fishing, recreation.58 — Exclusivefocus Spring 2009

the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleILLINOISQuad CitiesRosales Agencysrosales1@mchsi.com309-737-1688Asking Price: Will discussPIF: 2,650 Premium: Just over2 millionNumber of Staff: 2 (1 lic)20 year agent, retiring. EMoline, IL - Licensed in IL andIA. Low-overhead, staff willingto stay.KENTUCKYLexingtonLee Kempkempinsurance@alltel.net859-338-8033Asking Price: NegotiablePIF: 1,559 Premium: $1,600,451Number of Licensed Staff: 28 year business in growingpart of town.LOUISIANAAlexandriaPhil Jonesa049606@allstate.com318-473-9401Asking Price: $300,000 or bestofferPIF: 1,018 Premium: $1,457,224Number of Licensed Staff: 130 yr agent, 20 yrs samelocation. 89% retention, 49%LR. Fast growing area. Staffwill stay, F&E incl. No propertywriting restrictions.MAINEAugustaAndrew PerryAndrewPerry@allstate.com207-623-1394Asking Price: $195,000PIF: 1,120 Premium: $900,000Number of Staff: 1 (0 lic)90.3% retention, 12 mo LR37.61%. Atlantic Ocean to theeast, mountains to the west.Qualifies for new agent bonus.MARYLANDFruitlandJack Thomaspoconojack@comcast.net410-341-0805Asking Price: NegotiablePIF: 900 Premium: $1,028,737Number of Licensed Staff: 1Beautiful East Shore locationsince 1988. LR 56%. Retention90%. Willing to finance for Allstateagent, manager or staff.MONTANAMissoulaNicole SchreckendgustSchreck@allstate.com406-728-6336Asking Price: $350,000PIF: 1216 Premium: $1,250,000Number of Licensed Staff: 1NEVADAHendersonEric R. Zimmermanericzimmerman@allstate.com702-809-4747Asking Price: $925,000PIF: 2,848 Premium: $2,912,000Number of Staff: 2Clean book. Agency established21 years. LR 40%, retention89%.Las VegasMary Ann ConnollyMAConnolly@allstate.com702-604-0732Asking Price: NegotiablePIF: 1,270 Premium: $1,595,000Number of Licensed Staff: 211 year established agency,great location. 83.63% Retention,LR 42.41%. Turn key.NEW JERSEYSummitJames Fitzsimmons IIIjfitzsimmons@allstate.com908-598-9302Asking Price: $975,000PIF: 1,932 Premium: $2,700,000Number of Licensed Staff: 130% LR. Great loc for AF.$325,000 in revenue.SpringfieldJim FitzsimmonsJfitzsimmons@allstate.com908-598-9302Asking Price: $1,600,000PIF: 4,555 Premium: $5,700,000Number of Licensed Staff: 3Retention 93%. Great location.Firm asking price. No buyerfinancingNew JerseyPoets Square Insurance, LLCpoetssquareins@aol.com732-996-4802Asking Price: $85,000PIF: 220 Premium: $230,000Number of Licensed Staff: 1Ret. 88% LR 20%. Great location!Average walk in 1 autoper day, Turn key. Rumoredto be the nicest office in NJ.Build out was over 150K.NEW YORKAstoriaEd Rodriguezerod1@prodigy.net718-274-1004Asking Price: $749,000PIF: 2,500 Premium: $2,500,000Number of Staff: 2 (1 lic)Ask for agent only. Price doesnot include broker business.Prime location.New YorkCentral Manhattan Agency, Inc.bisacsen@optonline.net917-553-6404Asking Price: $465,000PIF: 1,900 Premium: $1,500,000Number of Licensed Staff: 1High profitability location/ excellentLR, will assist in transition.Seller Rep – Bob Isacsen.bisacsen@mac.comNew YorkEileen Marie Rooneya056442@allstate.com212-680-1127Asking Price: $700,000PIF: 2,300 Premium: $2,300,000Number of Licensed Staff: 1NORTH CAROLINAFranklinBurl Parksburlparks@allstate.com828-369-9500Asking Price: $650,000PIF: 2,669 Premium: $2,262,733Number of Licensed Staff: 3FayettevillePaul Dalpepauldalpe@earthlink.net910-574-0895Asking Price: $100,000 firmPIF: 450 Premium: $601,624Number of Licensed Staff: 2Asking less than 1.5 time earnings.Financing available forqualified buyer.Spring 2009 Exclusivefocus — 59

the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleOREGONBendStan Stiebenstanstieben@allstate.com541-318-8536Asking Price: NegotiablePIF: 1,274 Premium: $1,000,005Number of Licensed Staff: 1Same location 10 years. Fastgrowing area. LR 31.57%,Retention L10, 88.60%, L70,91.94%. Owner retiring.TENNESSEEKnoxvilleConfidential listingprest222@yahoo.com865-691-0000Asking Price: NegotiablePIF: 1,200 Premium: $900,000Number of Licensed Staff: 1Affluent area, long time agent,high retention, LR under 20%.Low overhead, able split to

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the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleWISCONSINMiddletonRod AbrahamRodAbe@Allstate.com608-220-0321Asking Price: $250,000PIF: 1,595 Premium: $1,000,000Number of Staff: 2 Part time(1 lic)Growing medium agency.Only Allstate in Middleton WI- Voted #1 mid sized city inAmerica. Good retention, LRand Financial results. Exc licstaff, 9 years. Low expenses,positive income flow. Reasonableoffers entertained.The NAPAA market place…where buyers meet sellers.Place your classified ad here for just $99 per issueof Exclusivefocus (Price reduced to $50 if ad is inconjunction with online ad.)For more information, go to www.napaausa.org,or contact NAPAA at 877-627-2248,or HQ@napaausa.org.Contract Terminated?If you have been terminated by the company,NAPAA wants to help. We will postyour agency for sale on our Website at nocharge. Just fax or email a copy of yourtermination letter to 866-627-2232, orhq@napaausa.org.After forwarding your termination letterto us, go to the Sell Agency Listing page atwww.napaausa.org and fill out the informationyou want included in your ad. Important:Be sure to click “NAPAA Member– No Charge” before sending. We will postyour listing for free.ADVERTISING INDEXAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 33Applied Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5BGI Marketing Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3DataTech. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Dell Computer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17E-chx Payroll Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Find A Local Agent.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Geeks On Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Gerry Flores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30, 37Glass Doctor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49International Card Establishment (ICE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Back CoverLockton Risk Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 35,43Oak Street Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Professional Practice Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Smart Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back CoverSprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41TWFG Insurance Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front CoverValpak . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Wright Penning & Beamer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3162 — Exclusivefocus Spring 2009

The Best Way to PredictYour Future Is To Create ItBe the competition!100% agency ownershipUnlimited income potentialInsurance CentersContact Smart Choice Insurance Centers at888.264.3388 ext. 3041 and get startedon your journey to success today!Branding, marketing and salesexpertiseDevelopment, growth andperpetuation strategiesThe ad is for information only and is not an offer to sell or a solicitation to buy aSmart Choice ® Insurance Center franchise. We offer franchises solely by meansof our Franchise Disclosure Document. Smart Choice ® Insurance Centerfranchises are currently available to qualified prospective franchisees only incertain states. Some states have laws governing the offer and sale of franchises– Smart Choice Franchise Corporation will not offer or sell a franchise in thesestates unless we have satisfied applicable legal requirements.