Exclusivefocus - National Association of Professional Allstate Agents ...

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