Exclusivefocus - National Association of Professional Allstate Agents ...

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ExclusivefocusWinter 2008/2009An Official Publication of the National Association ofProfessional Allstate Agents, Inc.FEATURES14 New Jersey: Is a New Agent Contract in the Offing?20 Mr. Wilson, “Tear Down This Wall”28 2009 National Exclusive Agent ConferenceIt’s Your Business—Chart Your Course to Success34 Deliberately Misclassified?What Allstate Has in Common with FedExTECHNOLOGY16 Consolidating AgencyOperations for GreaterSavings, IncreasedEfficiencies and MoreProductivityBY BEN RODRIGUEZ26 Mobile BroadbandConnection Cards42 Think Thin: Using aHosted Virtual Server47 Allstate’s Brief of August 12, 2008 in EEOC vs. Allstateand Other Corporate Behavioral IssuesBY RICHARD C. LARKINBUSINESS18 Marketing for Agency Growth in 2009BY BILL GOUGH44 Defined Benefit Plans for Small (and All) Business46 How to Keep Your Head Above Water in This EconomyBY DAVID NEUENSCHWANDERDEPARTMENTS6 President’s Letter10 Letters to NAPAA25 Membership Application58 NAPAA Marketplace62 Advertiser Index50 How NOT to Clear Icy Windshields52 Understanding Online Marketing: The Search for OptimizationBY LORI REEDA Magazine for Allstate Agency Owners and AllstatePersonal Financial Representatives4 — Exclusivefocus Winter 2008/2009

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president’s letterAre Agency Owners in “Good Hands?”BY BOB ISACSENDear Members:I have a lot of good news to report toyou since the last edition of Exclusivefocusmagazine. At last summer’s National EAConference, I announced that one of myprimary goals was to increase membershipto 10,000 members by 2010. Now, just afew months later, I am pleased to reportthat we are off to a sensational start, especiallyin the Northeast.In part, this surge in membershipstems from the realization that changecan never occur without unity and astrong agent association. To start the ballrolling, NAPAA has undertaken the followinginitiatives to jump-start this massivemembership drive:• Last summer NAPAA held sixmembership/communication meetings inFlorida. These meetings helped spur a 45%year-to-date increase in new membershipapplications in the Sunshine State.• The appointment of Keri Rayborn,to the position of State Director andLegislative Liaison in Florida. Floridaagents will also recognize Keri’s namebecause her firm, Rayborn Consultants,also serves as NAPAA’s lobbyist. Alongwith this additional position comes theresponsibility of membership development.Let all nonmembers in Floridashow Keri a vote of confidence with yourmembership application. She can bereached at (850) 524-2394.• Five exceptional membership meetingsheld in Elizabeth, NJ, Melville, NY,Rye, NY, Kennedy Airport, and on WallStreet. With unprecedented attendanceat some of the meetings, the message weheard loud and clear is that New Jersey andNew York agents want their own NAPAAChapters to represent their unique issues.• Thanks to the extraordinary membershipgrowth before and after ourmeeting in New Jersey, we establisheda New Jersey Chapter on November 5,2008. I will be acting as the interim presidentuntil a complete slate of officers isestablished.• In this issue of Exclusivefocus wehave included a special section dedicatedto New Jersey agency owners. New Jerseyagents face issues unlike any otherregion. See firsthand how they are disadvantagedfrom the rest of the country.Agents in other regions should pay closeattention to the prototype the companyis using in New Jersey because it couldbecome the model that will eventually beused elsewhere.• We kicked off the Member-Get-Continued on page 8.ExclusivefocusNational 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 Winter 2008/2009

Continued from page 6.A-Member Campaign in the last issue ofExclusivefocus magazine. The campaignis now in full swing and the early resultsare promising. We hope to have lots ofwinners, so current members, help usgrow by signing up a few new members!• At our board of directors meetingin October we ratified the inclusion of a“Defined Benefit Plan” for Jim and NancyFish, the true heart and soul of NAPAA.By adopting this benefit we are ensuringtheir continued commitment to serveNAPAA as Executive Director and AssociationManager for four years or more.As you can see, we have been workinghard to build your association tomake our voice louder and stronger thanever. With your support, we’ll make sureyour views are heard in Northbrook.I’m writing this letter to you the weekafter the presidential election. No doubtit was the most riveting election in recentmemory. Many Americans are excitedabout the outcome and many are not.Whatever your political leanings mightbe, I know we will support the new president-electas he moves forward in a perilousenvironment.For Allstate agents, this election couldhave some positive effects. As you know,agents living in coastal areas have beenseverely disadvantaged by the company’sHurricane Risk Management (HRM)initiative. The new congress may be moreapt to consider and pass legislation thatwould add wind coverage to the NationalFlood Insurance Program. Allstate hasbeen a major proponent of establishinga national catastrophe fund for severalyears. Let’s hope this reaches a positiveconclusion.Another legislative initiative beingproposed by the Democrats is the EmployeeFree Choice Act, also known as“Card Check.” If passed, this legislationwill make it easier to form unions. Allstateagents might ask, “What does thishave to do with me?” The answer lies inhow we are classified as workers. Whilethe company insists that its agents areindependent contractors, many disagreedue to the extensive control the companywields over the agency force. Stateand federal entities could disagree too ifpresented with enough evidence to thecontrary. For more details about the employeevs. independent contractor issue,please check out the article titled “DeliberatelyMisclassified?” in this issue ofExclusivefocus.NAPAA is not advocating unionizationby any means. We simply wantagents to be treated as true independentcontractors. We believe that by leveragingour options, it may be possible to changethe company’s behavior. We recommendthat agents print any documents thatdemonstrate company control over youractivities and forward them to: NAPAAHeadquarters, P.O. Box 7666, Gulfport,MS 39506.I hope you all enjoy this latest editionof Exclusivefocus. If you’re not currentlya member, please join today to helpNAPAA grow stronger. For those of youwho are already members, thank you foryour continued support.Warm regards, Bob IsacsenNAPAA PresidentAlways a cell phone away:917-553-6404NAPAA 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, WA8 — Exclusivefocus Winter 2008/2009

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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.comWinter 2008/2009 Exclusivefocus — 11

Team.” You preach high morals, but practiceimmorality. You preach unity, butpractice division. You preach giving, butpractice stealing. When one group of employeesis persecuted, especially the groupthat generates all the revenue, the wholecompany and its shareholders suffer.While you and your “LeadershipTeam” collect your bonuses, ride into thesunset and move into your Dream Housesin the U.S., Spain and elsewhere, whichyou have built on our shattered dreams,we wish you all well. We hope and praythat our unintentional curses, or thoseof our families, will not fall upon any ofyou. And in your retirement, as you growin wisdom and face your mortality, thatyour souls will not be tormented by pastactions of deceit, greed and injustice.Finally, if we have said anything thatis not true or have exaggerated the facts,then we sincerely beg your forgiveness.The greatest tragedy of this new Visionlies in the fact that we stood helplesswhile our friends and colleagues, whoworked long and hard with honesty, integrity,dedication and who sacrificed thebest years of their lives and those of theirfamilies to build Allstate for the last 50years, were humiliated, fired or forced toleave unceremoniously with no compensationor gratitude. For being silent spectators,we and all the other employees atACG are as guilty as the active perpetratorsof this brutal injustice. For this, wesincerely beg God’s forgiveness.Yours sincerely,Neighbourhood Office AgentsCC:Leadership TeamJim FishBoard of Directors US and CanadaPresident IBCTom Wilson, CEO Allstate USJames Daw, The Toronto StarScarfone Hawkins Barristers& SolicitorsCurrent and former NOAsI was told in no uncertain terms to“hit $28,000 by the end of the year orthe Market has no choice but to ‘recommend’termination.”I cannot tell you how many attemptsI have made to partner with an EFS. Iam continually told that no one will workwith me until I am committed to the referralprocess. I’ve been here for 2 ½ yearswithout an EFS and no one to give meone. I have told management time andagain that I am committed to the referralprogram, but evidently, they don’t have anEFS available to help me. This has beenthe most frustrating experience I haveever been through and, quite frankly, themost absurd.I have read the last two magazines coverto cover and cannot express to you howaccurate you are on the translation of whatis going on out here in the real world.I am a 14-year agent who was givena 90 day, “you better show significantprogress in AFS” letter in June 2008.The TDL and the IDL could not tellme what “significant progress” meant. Imade it past my 90 days, but have beenadvised that the time period really hasnothing to do with it because I could receivea “certified” letter telling me to sellin 90 days at any time.What I find so dishonest about thiswhole procedure is:If Allstate was going to close medown…Why did I have to participate in theACT conversion and go through theexpense of purchasing new computers?Also, my new DSL line requires a 2 yearcontract.Why do I have to purchase anotheryear of E&O?Why should I purchase the Allstatead in the telephone book?I have expressed to management thatthe treatment is not fair. No one shouldhave to work under the atmosphere thattomorrow is their last day. I feel like adead man walking! Even the managersdon’t seem to know anything.After I received the “letter,” I alsoreceived a telephone call from the TDL(Territorial Distribution Leader) askingme if I had spoken to any buyers yet. Hewas “concerned” that I might have to sellthe agency for a reduced price back toAllstate. But all he was really checkingon was to see if I had considered sellingout to the agent that he has handpickedto take over my agency.As of November 1, 2008, I have yetto receive my second letter, so maybe I’vemade what they consider “significant improvement.”The interesting part to this wholemess is that several months ago, before Ireceived the first letter, I received a visitfrom another local agent. He told methat he had been advised by managementthat he needs to open up a satelliteoffice as close to my front door as possible,making his goal to run me out ofbusiness. As he put it, maybe I should goahead and sell out to him, and that wayhe won’t have to open up another agencyso close. I sent a letter to the RVP and hejust passed it down to the same TDL thatput the agent up to it in the first place.I can’t believe the changes that theagents are being exposed to. Whatthought has been given to a union forAllstate Agents?Please process my membership applicationand debit payment. I look forwardto reading more of the interesting articlesand letters you publish.Letters continued on page 54.letters to NAPAA12 — Exclusivefocus Winter 2008/2009

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agent issuesNew Jersey:Is a New Agent Contract in the Offing?SUBMITTED BY THE NEW JERSEY NAPAA CHAPTERBackgroundThe last several issues of Exclusivefocushave focused on the plight of Allstate agentsin Canada. What has transpired there istragic, as evidenced by the searing letter toformer Allstate Canada CEO Mike Donoghue,ostensibly written by one or moreCanadian agents, found in the “Letters toNAPAA” section of this magazine.What the company got away within Canada was made possible in partbecause Allstate Insurance Companyof Canada, a wholly-owned subsidiaryof The Allstate Corporation, is smallenough and inconspicuous enough toserve as an experimental laboratory totest and refine new products and agentdistribution models.It may surprise you, but Canada isnot the only proving ground for TheAllstate Corporation; another is thestate of New Jersey.In 1991, after losing hundreds of millionsof dollars over the previous 20 years,the company announced that it wouldwithdraw from the New Jersey market. Inaddition to the losses it had experienced,Allstate found the New Jersey regulatoryclimate unbearable and “excessive.” Thiswas due in large part to then GovernorJim Florio’s efforts to enact insurance reformlegislation and a mandatory reductionin auto insurance rates.After a protracted court battle, Allstateagreed to stay until December 31,1997, at which time Allstate InsuranceCompany and Allstate Indemnity Companysurrendered their certificates ofauthority and ceased operations in theState of New Jersey.In the interim between 1991 and1997, however, Allstate quietly madeplans to re-enter the New Jersey market.Then on November 10, 1997, it declaredthat it had formed Allstate New Jersey InsuranceCompany, a new subsidiary that itdeveloped specifically for New Jersey.When the company announced itsintention to stay in the state, agentsbreathed a collective sigh of relief knowingthat their jobs were secure. Theirexhilaration was stifled, however, asthey learned the terms and conditions ofthe new structure. They would have toagree to a “temporary” commission rateof 6.5% on both new and renewal business.Now, 11 years later, the base commissionrate has not changed. Insteadof giving them the additional 3.5% theywere promised, the company has introduceda plan whereby agents must “earn”it. Agents can increase their incomes byachieving a Performance Bonus, but likethe RFG formula, it is hit or miss andis dependent on uncontrollable factors,such as loss ratio.NAPAA New JerseyEarly this summer, during the NationalEA Conference in Las Vegas, NAPAAPresident Bob Isacsen, met with a coupleof agents who were interested in startinga NAPAA chapter in New Jersey. Onething led to another and Bob made plansto travel to New Jersey to meet with otherinterested agents. Most of those attendingthe meeting joined NAPAA.Meanwhile, NAPAA Headquarterswas busy making plans to hold a seriesof agent communication meetings inNew York and New Jersey. The NewJersey and Long Island meetings werewell-attended and produced many newmembers.NAPAA has since seen a surge inmembership from both New York andNew Jersey, but the New Jersey agentshave taken it to a new level. Unlike anythingNAPAA has seen in years, theNew Jersey Chapter has grown by morethan 300% since the effort started. CurrentPresident Bob Issacen was recentlyquoted as saying, “We have visited a lotof states over the years, but the membershipgrowth in New Jersey, in such ashort time, is unprecedented. The NewJersey agents have a lot to be concernedwith – the recent developments in thestate, their contracts and revenue structurewith the company, loss mitigation(PML), property brokering, and theability to grow and maintain their businesses.They obviously have seen theneed to unite through the formation of aNew Jersey Chapter of NAPAA and wefully expect membership to continue togrow at a record pace.”Agents in New Jersey are assuredof one thing – much like Canada, theirstate is a training ground. To paraphraseRegional President Bill Ballinger, “NewJersey is what the rest of the countrywould look like if senior managementhad its way.” As an example, New Jerseyagents have argued that the “variable”revenue/compensation plan is unfair anddetrimental to the long term growth oftheir agencies. Local and regional managersinsist that the New Jersey variablecompensation plan is what’s best forNew Jersey and the rest of the countryand that, eventually, it will be rolled outnationwide.So, instead of earning a base of 10%new and renewal compensation like theirpeers in other states, agents in New Jerseyearn a paltry 6.5% new and renewal commission– 35% less than agents elsewhere.And like agents in other states who can14 — Exclusivefocus Winter 2008/2009

earn an RFG bonus, agents in New Jerseycan earn a “Performance Bonus.” Butmaking the Performance Bonus is farfrom being a slam dunk. So, if an agentdoesn’t make the bonus, and many don’t,an agent with a $5 million book wouldgross $325,000 in New Jersey as comparedto $500,000 in another state – a $175,000difference. That’s a lot of cabbage.The New Jersey Performance Bonusis currently tied to two basic factors: lossratio and PIF growth. It allows agents toearn an additional 4.7% if both the lossratio and the policy growth requirementsare met. Of the total possible bonus, theloss ratio component accounts for 2.7%and the growth component for the remaining2%.In the last century, field underwritingplayed an important role in controllingloss ratios. Carriers would rely onagents as their eyes and ears out in thefield. Back then, agents had to depend ontheir prospects to disclose accidents andtickets because there was no such thingas “instant MVRs.” It was not uncommonfor agents to rely on their “gut feelings”to assess a risk. If they suspectedsomeone was lying or not disclosing allthe facts, they would either enter theirconcerns in the remarks section of theapplication or they would find a way todiscourage the person from applying forinsurance.Today assessing risks has becomehighly sophisticated, changing the salesprocess dramatically. Most transactionscan be completed over the phone and applicantsare pre-qualified before the appis written. The insurance carriers havenow assumed every aspect of qualifyingthe risk. The PQB Risk Assessment isthe be all and end all when it comes todetermining insurability. So if that’s thecase, why is there a loss ratio componentto qualify for the RFG or the PerformanceBonus?Imagine busting your hump all year toachieve Inner Circle. You are praised andhonored for your outstanding performance.Management touts you as a hero– telling other agents that they should bemore like you. Then, on a snowy winterevening, a few of your best customershave serious auto accidents after losingcontrol on icy roads. A couple days later,another long-term customer has a housefire – a total loss. Your 12 month loss ratiogoes from 63% to 85% which, in turn,pushes your 24 month and 48 month lossratios above 65%. So, the year after youearned Inner Circle and were treated likea hero, you will now be faced with a substantialloss of income because you won’tqualify for the loss ratio bonus. Then,managers begin to shun you and no longertell other agents to emulate you. Intheir eyes you’ve gone from hero to zerofor losses you had absolutely no controlover. This is exactly what can happen,and has happened, under New Jersey’sVariable Compensation plan.As pointed out earlier, there are twofactors that affect the Performance Bonusand both are problematic. Agents havelittle control over their loss ratios becausethe company has taken on the bulkof this responsibility. How can agentswho dutifully follow risk assessmentprocedures and inspection processes beheld accountable for their loss ratios? Byany measure, loss ratio management is animperfect science. Sure, there are agentsout there who abuse the system by enteringimproper PQB information, but it isthe company’s job to root them out anddiscipline them. These agents hurt everyoneand everything except themselves– until they’re exposed.The loss ratio issue puts agents in anunenviable position. If a customer has aloss, let’s say a stolen car, the agent hasto lend a sympathetic ear and put a smilein his voice and on his face in order toprovide some solace and comfort to hisclient. At the same time, he can’t helpbut wonder if this will be the claim thatdisqualifies him from earning the loss ratiobonus. And if so, just what did theagency do wrong to be penalized?Ironically, it wasn’t too long ago thatthe company was pushing sales managersto visit agencies in order to convinceagency owners to sell as much propertyinsurance as possible because it wouldhelp drive down loss ratios. And now,within three short years of that campaign,these same New Jersey agents canno longer write property insurance becausethe company fears it will negativelyaffect loss ratios.The other factor affecting the PerformanceBonus is PIF growth. Puttingnew policies on the books in New Jerseyis a tough nut to crack. Fierce competition,rate increases, a struggling economy,the abolishment of take-all-comersand the inability to write property insuranceon Allstate paper are huge barriersto overcome. The company obviouslyknows this, yet agents are still chargedwith increasing policy growth in a hostilebusiness environment. The questionis why PIF growth and not premiumgrowth? Is the company trying to impressWall Street by showing it somepolicy growth? The company’s push towrite more and more Emerging Businessseems more like grasping at straws thanit does thoughtful and prudent businessplanning. Given the business climate, itwould seem that any growth, includingpremium growth, should be consideredwhen calculating the growth bonus.Needless to say, many New Jerseyagents are having a difficult time increasingtheir policies in force. And if theydon’t grow by a pre-set figure, they standto lose that piece of the Performance Bonusstructure as well. It’s more than justretaining the policies you already have;it’s about adding to them.As one might expect, many, if notmost, agents in the Garden State will nothave a stellar income year. Factor in a fewbad claims, a tough year of growth and,suddenly, the possibility of earning 11.2%in total compensation is replaced with6.5%. Like any other business, the cost torun an agency increases year in and yearout. But unlike agency owners in the restof the country who are assured of at least10% commission, agents in New Jerseyhave to assume that all they’re going toearn is 6.5% because they can never counton receiving a bonus. Faced with operatingan agency at 6.5% commission meansagency owners must pare their expenses,including staffing, to the bone. One has towonder how a million dollar agency cansurvive without bonus money - $65,000before expenses simply isn’t enough tomake it.Hello countrywide Allstate agencyowners, I’m New Jersey’s Variable CompensationPlan – how do I sound so far?If the company has its way, I’ll be comingto a location near you soon.Winter 2008/2009 Exclusivefocus — 15

technologyConsolidating Agency Operationsfor Greater Savings, Increased Efficienciesand More ProductivityBY ALLSATE AGENT BEN RODRIGUEZCustomer and prospect informationpours in and out of our agencies everyday.The most successful agencies have foundways to collect and process all of this datain one centralized system. If you’re still usingpaper files and third-party comparativeraters, or if you’re running your office usinga hodgepodge of various programs fromdifferent vendors, you are distracting yourselffrom what you should be doing – sellinginsurance and servicing customers.Many agencies have yet to successfullycapitalize on the explosion of data in recentyears. For some, this information residesin separate IT systems or is spreadacross different business units. Bringingall your data together into one automatedagency management system helps identifyareas of opportunity, stops revenue leakageand adds value to your agency.Worried about the cost of operatingthe system? Cutting back on technologyinvestments, especially during a marketdownturn, is counterproductive. An automatedsystem allows you to maximizeyour time and efforts. Besides, without anautomated system, you may lack criticalcapabilities and never be able to catch upto your competition. Your agency managementsystem allows you to scan foropportunities such as improving the customerexperience, reducing lost opportunitiesand improving operating leverage.Here are three major benefits of havinga robust, complete agency managementsystem in our business:Better, faster customer serviceTechnology continues to make everythingfaster. Today we don’t even have tostop at toll booths, provided we have theright technology. Agencies that fail toembrace the latest efficiencies are not theones building bigger books of business.Bottom line: People do not want to wait.Agencies have countless customer interactionseveryday in the form of phonecalls, mail, e-mail, faxes, and in-personvisits. Customers with questions want answers.They don’t want to wait for you toget back to them, and most are willing topay more for quick answers and superiorservice. It’s critical to understand and segmentyour current clients and prospects ina fluid, easily accessible database.Every interaction with clients orprospects should result in some gatheringof information. Did they call for andreceive a quote? Did they want to make achange to a policy? How will you followup? Ensuring every customer encounteris tracked into a centralized database enablesmore effective interactions, providingaccurate information and the opportunityto mine more accurate customerdata. All of these activities strengthenrelationships and increase your return oncustomer investment.Paperless efficiencyThere are numerous reasons to moveyour agency toward a “paperless” operation.Assume it takes one of your CSRsa three-minute round trip to physicallyretrieve and replace a customer file. ThatCSR, working with 20 files in a day, hasspent 216 hours in a year (nearly 5.5 workweeks) simply walking to and from thefiling cabinets. At $15/hour, that’s morethan $3,200 annually. Now multiply thatby the number of CSRs in your office.Another burden of the “paper office”that I have experienced time and timeagain: You have a client with both anDon’t fall into the trap of trying topiece together and integratevarious technologies into yourown “Frankenstein” agencymanagement system.auto and homeowner’s policy. The homeowner’spolicy gets non-renewed andyou rewrite the policy with a differentcarrier. Do you create a separate folderfor the new policy because it’s with a differentcompany, or do you put the newpolicy in the existing folder?“Document management” and “paperless”are no longer industry buzzwords. What do you do with emails orfaxes received from clients? These communicationsare essential in providingproper service to your clients and pro-16 — Exclusivefocus Winter 2008/2009

viding you with records. Bar coding andfront-end/back-end scanning are functionsthat are built in to the documentmanagement process of our agency managementsystem. These tools give us accessto all customer correspondence witha few clicks of the mouse.There are numerous document managementand imaging solutions out there.But don’t fall into the trap of trying topiece together and integrate varioustechnologies into your own “Frankenstein”agency management system. If youchoose the right agency managementsystem, you’ll have document managementfunctionality already built in.Automatic, effective marketingMarketing is more than sending outmailers informing the neighborhoodabout you and your agency. Successfullymarketing your services and products iscrucial to agency growth.As your customer base grows, you needto work with existing clients to cultivate relationships,retain business and up-sell. Ourbusiness is driven by results. Processes notachieving the desired goals should be alteredor discontinued. When your agency interactswith a prospect, do you have the abilityto track effectiveness and follow up?Using a robust marketing programcan take the guess work out of your marketingstrategy. Our agency managementsystem allows us to run both non-automatedand automated marketing campaigns.In our non-automated marketingprograms, we can see how each prospectwas initially contacted and every point ofcontact thereafter. Reports can then begenerated to determine the end result ofthe agency’s activities. The system automaticallytracks customer outreach effortsand keeps sales conversion histories,making sales efforts more efficient.Automated marketing campaigns automaticallygenerate marketing lettersat specified intervals for selected clients.Where we used to have to keep an eye onthe calendar to be sure we sent a renewalletter as a policy neared expiration, theautomated marketing campaign generatesthose renewal letters automatically.In the past, our agency relied heavilyon manual, paper-based processes toidentify and distribute leads, customizeoffers and close deals. We needed toadopt a more systematic approach to winlegal issuesnew accounts and to improve cross-sellingto existing customers.By implementing an agency managementsystem with complete marketingfunctionality, we have increased our hitrate for sales leads. The system gives usa more centralized way of handling leadsfrom different sources. These improvementshave allowed us to convert suchleads more quickly and bring new revenueinto the agency.As a rule, agencies need to spendmore time creating a continuous pipelineof new prospects and drive businessto closure, while servicing and resolvingcustomer issues. Agency performancedepends on the speed and accuracy ofinformation. Today and in the future,having all workflows, functions and datain a central location is critical to agencysuccess and growth.Ben Rodriguez uses Applied SystemsTAMOnline® to run his Allstate office inBrentwood, New York. Ben formed a successfuluser group where members sharefeedback, set up workflows, and brainstormabout the best ways to use the technology inmanaging their businesses.Law Firm Seeking Assistance of Allstate AgentsIn 2007, Allstate settled class action claims brought onbehalf of minority P&C clients by the James-Hoyer lawfirm. These clients alleged they were discriminated againstin the form of higher premiums as a result of a biased credit-scoringalgorithm.Recently, the James-Hoyer firm was contacted bya number of Allstate agents who believe their ability towrite business for minority clients was adversely impactedby the flawed algorithm resulting in a loss of income oreven a loss of employment. In conjunction with an ongoinginvestigation, the James-Hoyer law firm is currentlyseeking to identify current and former Allstate agents whomay have knowledge of this matter.Responses and inquiries should be directed to chiefinvestigator, Al Scudieri of the James-Hoyer firm at 800-651-2502.Winter 2008/2009 Exclusivefocus — 17

usiness tipsMarketing for Agency Growth in 2009BY ALLSTATE AGENT BILL GOUGHIIf you ask 100 Allstate agency owners“What business are you in?” theoverwhelming answer would be “I'm inthe insurance business and I work withAllstate Insurance.” But with so manyAllstate agents out there, how can youdifferentiate yourself from other agentsin your market? The first challenge isto begin thinking differently about yourbusiness and your agency.Successful agents understand thatthey’re in the marketing business first andin the insurance business second. Fortunatelyfor us, the brand we sell is wellknown.The hard part for us is learninghow to market ourselves and our agencies.How can we distinguish ourselvesfrom other insurance agencies, especiallyother Allstate agencies?The idea of being a marketer is a conceptmany small business owners just don'tunderstand. But whether you own a nailsalon, an auto repair shop, or a restaurant,as a business owner you must be activelyand aggressively marketing your businessif you want to continue to grow.So, you are not in the insurance business,you are in the marketing business.You just happen to run an insuranceagency. Once you understand that, youcan begin to transform your business.What makes you stand out fromother agency owners if you don’t marketyour agency differently? Over the pastseveral years, thanks to Geico, Progressiveand the Internet, our clients, andconsumers in general, have been led tobelieve that insurance is just anothercommodity. Besieged by tantalizing offerson TV, the Internet and in print mediapromising significantly lower rates,it’s no wonder that customer loyalty hasbeen tested. It’s simple, call around andfind the cheapest price or, worse yet, doit-yourselfonline. This ongoing assaultpresents major challenges for both thecompany and the agent.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!”18 — Exclusivefocus Winter 2008/2009

Direct responseis action-orientedand has a hugeadvantage in thatit can be easilymeasured.It’s important to understand thatboth the agent and the company striveto accomplish very different things withtheir marketing strategies. For agents,it’s not all about the Allstate brand. It’smore about letting consumers know, overand over, who you are, what products yousell and where you’re located. The goalis to drive prospects to your agency, notto the Allstate agent across town. Therefore,it is imperative that agents developtheir own identity or brand awareness.This can be as simple as advertising yourname again and again until it almost becomesa household word. This is calledname recognition. Allstate has it and soshould you.The strategy on the corporate sideis significantly different. Sure, the companywants to attract new customers, butit is not concerned who, or which channel,gets the business. Allstate goes togreat lengths to make sure its marketingefforts deliver the message it wants consumersto hear. And they pay ad agencieshuge sums of money to accomplish this.In turn, the ad agencies strive to produceaward-winning ads to keep their contractsand to secure their reputation inthe advertising industry. The bottom linefor the company, however, is to promoteits brand using smart, effective ads.While agency owners can’t hope tocompete with the company’s marketingefforts, we can use other strategies, suchas direct response advertising, in conjunctionwith company-approved ads.There have been many times when I’verun company-approved co-op ads alongsidedirect response ads of my own.You might ask, “What is this direct responseadvertising, and why should I useit?” Direct response is action-oriented andhas a huge advantage in that it can be easilymeasured. Therefore, you know veryquickly what's working and what isn't soyou can make changes accordingly.For example, if it’s legal in your state,you could work a deal with your local pizzarestaurant wherein they agree to hand outa promotional flyer for your agency offeringa free pizza to their customers if theycall your office for a quote. There shouldbe a coupon or code on the flyer, so youcan measure your results.Many times you can work out a dealwith the restaurant owner whereby heagrees to only charge you his costs for thefree pizzas. So, instead of paying $9.00for each pizza, you might wind up paying$5.00 each. This kind of campaignalso works well with your current clients.They love it! We’ve had great successwith this type program.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.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 PMWinter 2008/2009 Exclusivefocus — 19

agent issuesMr. Wilson,“Tear Down This Wall”“NAPAA is a useless organizationmade up of a group of malcontentswho would be better flipping burgers atMickey D’s.” If you’re an Allstate agent,there’s a good chance that you have heardsomething like this, especially if you havean over-zealous manager who is bent onsheltering agents from any ideas that mayconflict with the official company line.Their jobs are much easier if agents intheir markets don’t think for themselvesor ask questions.Oft repeated mantras like the oneabove can eventually seem like reality.They are contrived to cast doubt, hopingagents will shun NAPAA and discouragethem from joining or participating. Andunless spoken in public by a famous person,politician or even a Hollywood actor,utterances like those above cannot beattributed to anyone for validation or, forthat matter, for repudiation. Much likefalse rumors kids start in high school,negative comments travel at the speedof light. Once part of our daily lexicon,they attain urban legend status and aredifficult to remove.I attended a Leaders Forum in Tucson,Arizona several years ago. We brokefor lunch and I was seated at Chuck Martin’stable with a few other agents. ChuckMartin was the National Sales Managerat the time. I don’t recall how it started,but the subject of NAPAA came up.Chuck looked around the table and saidsomething like, “Those agents [NAPAAmembers] never qualify for these events.They’re just a bunch of ankle biters.”The fact is that there were manyNAPAA members at that prestigiousevent. In fact, as I recall, there were fivepeople seated at our table, two seniormanagers, including Martin and RVPMike Clark, and three agents. Two of theagents were NAPAA members and thethird was “Marty,” a top property producerfrom California. Marty was oneof those agents who took pride in badmouthingNAPAA, so he, Martin andClark shared a guffaw or two. A few yearslater I heard that “Marty,” the big hitterfrom California, got terminated, allegedlyfor unethical business practices.The moral of the story is that ChuckMartin and Mike Clark didn’t know thatmy friend and I were NAPAA members.That’s because NAPAA members are adiscreet group and membership is confidential.Allstate managers don’t knowwho they are, unless the member happensto be on the NAPAA’s Board of Directors.This story also confirms that thedisparagement of NAPAA starts at thetop and trickles down to the lowest levelof management. It is clear that the companyactually believes that agents shouldnot have to think because it always knowswhat’s in the agents’ best interests.The First Amendment to the Constitutionguarantees the freedom of speech,a principal we assume translates to ourevery day lives, not just to protestors wavingsigns on street corners. Within anycompany’s work environment, communicationof ideas, product information, andeven opinions are sometimes precludedfrom occurring because of confidentialityreasons. Companies often restrict intracompanycommunication for other moreinsidious reasons, such as not wantingemployees to talk about disproportionateraises or bonuses. First Amendmentrights as such can be limited in the workplace, but not outside it.The NAPAA was founded in 1990as the National Neighborhood OfficeAgents Club, or NNOAC. The namewas later changed to the National Associationof Professional Allstate Agents.Its primary purpose was to provide agentswith a mechanism that would allow themto communicate with one another aboutworkplace and other issues affecting theirlivelihood. Agents were asking seriousquestions of Allstate and receiving verylittle by way of response. Rather thancommunicate in an open and respectful20 — Exclusivefocus Winter 2008/2009

manner with agents, Allstate chose insteadto restrict information. In the daysof the employee agent, it was not uncommonto find agents meeting outsideof Allstate’s purview to exchange ideasand or opinions. Sometimes meeting inrestaurants, agents gathered to discusseverything from underwriting guidelinesto expense report issues and Schedule Cfilings. It became clear that with severalcountrywide issues pressing upon agents,there had to be a more cohesive way tocommunicate.Reaching out, agents embraced theNNOAC and the national format it presented.Agents joined in large numbersthereby assuring at least the initial successfor the NNOAC. Agents were also eagerfor a representative voice in dealing withmanagement and sought to achieve anopen dialogue through the NNOAC. Thecompany, however, would have none ofthat, because it saw the association as fertileground for union development and anorganization over which they had no directcontrol. So, at the very moment thatAllstate recognized the depth and breadthof the NNOAC’s potential, it began effortsto dissuade agents from joining.Then when the agents did try tounionize in the mid 1990s, Allstatedid its best to tie the effort to the associationin the hope it would hasten theNNOAC’s demise. The company wasrelentless in its communications againstunionization and used every opportunityto connect the NNOAC to the unionizationattempt. Some agents bought intothe disinformation campaign and viewedthe unionization attempt as a NNOACissue, which it wasn’t, and viewed thefailed attempt as a NNOAC failure too.Gleeful Allstate managers werehigh-fiving themselves for days. Surelythey thought it would be the end of theNNOAC. But human beings are strangecreatures. We don’t always fall into neatpackages of predictability. More importantly,we don’t like being lied to. Wedon’t like being mistreated, and we don’tlike being disrespected. And so, with alesson learned, the NNOAC reorganizedand within a short time, re-emergedstronger and wiser and not too subtly,with a new name more befitting its stature:the National Association of ProfessionalAllstate Agents (NAPAA).With weekly communiqués to itsmembers and a quarterly magazine sentto virtually every agent, NAPAA hasestablished itself as a significant toolfor communication between agents andon issues that significantly impact theirbusiness operations.Mr. Wilson,“Tear Down this Wall”Allstate’s early success in frighteningagents from joining NAPAA still has residualeffects today. Some tenured agents,who privately voice their support for theNAPAA cause, are still reluctant to getinvolved because they fear that they willbe “outed” to management. The fact isthat nothing could be further from thetruth because NAPAA is fiercely protectiveof its member list.But now, after seeing what has happenedto Canadian agents over the pastyear and then seeing what the company isdoing to agents here in this country, wherehundreds, if not thousands, of agents havereceived letters warning them that theycould lose their contracts if they don’tmeet production quotas, NAPAA membershipis on the rise. It has become abundantlyclear, even among ardent companyaficionados, that the company is long pasttreating its agents with kid gloves.So far, Allstate has steadfastly refusedto communicate directly with theNAPAA. It’s not for lack of effort becauseover the years, NAPAA has reachedout, frequently with olive branch in handand occasionally with a spirited challenge.Although Allstate remains mum,it sometimes responds by taking actionas the need arises. Sometimes the actionis positive and sometimes it is negativeor punitive. Most recently it took the lattercourse, when it shut down the agents’ability to receive the NAPAA’s newslettersvia Outlook mail. This punitiveand retaliatory act suggests NAPAA hasstruck a nerve.On one hand it can be argued that ifNAPAA is a distraction and if it servesonly to rile its members with false propaganda,then why not allow it to have itsfun and let the truth be Allstate’s best defense?The NAPAA would soon fail froma lack of credibility or be overwhelmedby a plethora of libel lawsuits. Well, thishas not happened and NAPAA will sooncelebrate its 20th anniversary.Why is the company disinclined tocommunicate with NAPAA? Whatharm can there be in addressing issuesthat Allstate’s workforce has indicatedthere is a need to discuss? On the otherhand, Allstate would like nothing morethan for agents to believe that the NationalAdvisory Board (NAB) is sufficientto provide agents with the necessarysounding board to discuss any issue.If that’s the case, why have I and othersbeen told that many ‘hot button’ issuesfor agents are not open to discussion atthe NAB meetings? And if this is true,then it’s no wonder the NAB hasn’tbeen overly effective – they can’t discussthe issues that matter most to agents. Incontrast, the NAPAA does not pussyfootaround the issues. It tackles agentissues head-on for all to see, includingAllstate management.Agents should be allowed to receiveany email they wish. Quite often, thecontent in NAPAA emails contains pertinentinformation relating to the insuranceindustry as well as running an agency. IfAllstate agents are to operate a successfulagency, they should have access to any andall reference material that can help them.Restricting access to any form of emaildemonstrates employee-like controls.Allstate agents receive scores of emailsfrom Verizon and other vendors, repeatedspam from individual Websites or advertisers,and an untold number of emailsfrom hijacked email lists. Why is it thatAllstate chooses to shut down email fromthe NAPAA, but doesn’t do so for “unwanted”spam or junk emails? And thenwhen asked about it, why does OutlookSupport, part of Allstate’s PC SupportDepartment, claim they are unable to doso because we are independent contractorsand they cannot “filter” our mail. Instead,they tell agents to use the spam and junkemail controls on their PCs.Blocking the NAPAA’s emails is clearlyan effort by the company to control whatagents see and hear. I honestly believe thatif the company could find a way to preventagents from receiving Exclusivefocusmagazine, it would do so in a New Yorkminute. Thankfully, that’s not possible.Winter 2008/2009 Exclusivefocus — 21

The company needs to understandthat agents are adults, not grade schoolchildren. We are business people whoare interested in growing our businessesand, as such, we need every tool that caninform us and help us achieve our goals.NAPAA’s emails are newsletters. Theyprovide information that we don’t getfrom Gateway or other sources. They arenot spam or junk. One has to wonderif the company is blocking other emailsfrom reaching us.As I stated before, we are not children,we are business people who are supposed tobe independent contractors. Let us determinewhat we want to receive and what wedon’t – that’s why we have spam and junkemail controls. If we don’t want newslettersfrom the NAPAA, let us delete them ourselves.In this issue of Exclusivefocus magazineis a postcard to Tom Wilson imploringhim to lift the ban on emails from theNAPAA. Please take a moment to detachthe card and mail it in – all you have to dois add a 27 cent stamp.By comparison, Allstate’s Gatewayfrequently posts memos from managementto the agency force. Most notablyhas been its Leadership Message Forum. Idefy any agent to decipher the true meaningbehind these postings. As an example;ostensibly a program designed for agents,Allstate invented and rolled out RFG withsuch obfuscation that it would take a teamof lawyers to determine its true meaning.Then add the following to the list: ACT,Emerging Business and other programsthat Allstate wishes to “sell” to the agencyforce. There is a better way. Be honest withus. Don’t paint a rosy picture without tellingus the downside. Agents want to knowabout the potential pitfalls of companyprograms and initiatives before investingtheir time, effort and money in them. Ifwe knew about problem issues in advance,we could create marketing campaigns thatwork around them. Don’t just say “Go get‘em” and let us fall on our faces. Be truthful– is that too much to ask?Interestingly, the company’s dim viewof the NAPAA does have a peculiar limit.Earlier this year, after Allstate was foundto have been in violation of Florida lawand was shut down by the Florida Officeof Insurance Regulation, NAPAA filedan “amicus curiae” on Allstate’s behalf.Allstate could have chosen to oppose thebrief, but they didn’t. And then in a responsivebrief filed on August 12, 2008in the Romero v. Allstate case, Allstateacknowledges the NAPAA’s existenceand its apparent value to the agency forcewhen it wrote: “The Plaintiffs and otherterminated agents had approximately sixmonths, until June 1st, 2000, to consult(and did in fact consult) attorneys, accountants,personal advisors, EEOCrepresentatives, and their professionalassociation, the National Association ofProfessional Allstate Agents, regardingtheir decisions to sign the release.” PerhapsAllstate feels “The enemy of my enemyis my friend” is appropriate wheneverit can use the NAPAA to its advantage.The filing of the amicus brief in Floridaserves as proof that the NAPAA’s altruisticmotivations are the same today asthey were 19 years ago. NAPAA wantsonly what is best for the agent. Why can’tAllstate say the same?Employee or IndependentContractor?Allstate may argue the same altruisticmotivation for disallowing NAPAA’s involvementin agent relations, but it doesnot have the same latitude now as whenagents were employees. Certainly theunionization effort was a valid battlefieldfor Allstate to attempt to retain controlover its employees and it was well withinits rights to fight to keep its agency forceunion-free. Allstate controlled its agentsas employees then and had every legalright to do so.But, Allstate has since declared thatits agents are no longer employees, itnow calls them independent contractors.Restricting access to agent emails atthis juncture is not just a petty swipe atNAPAA, it is something more serious.If Allstate agents are truly “independentcontractors” then controlling theiremail is not allowed. If the company iswilling to step over the line of “control”in so many areas in its relationship withthe agents, then the email issue may verywell be a the last straw. Keep in mind,an independent contractor cannot becontrolled by the company they are contractedwith.Regardless of Allstate’s desire to controlthe type of information an agentreceives from non-Allstate sources, theyhave no legal right to interfere with theprocess. If an agent states they wantemail from NAPAA and Allstate saysno, then Allstate is controlling an agentin the performance of their job.Also, there are no technical reasons torestrict NAPAA’s email. There are no softwarelimitations. There are no mail boxlimitations either. NAPAA has formattedits emails to size and content limitationsthat are well below even the simplest solicitationsfrom Staples. If there still is atechnical issue, then all Allstate needs todo is send NAPAA the specifications andthe problem will be solved.When I began writing this article, Iintended to convey a message to inspirenonmembers to join NAPAA for onesimple reason, which is that Allstate isslowly, and deliberately, whittling awayat our “independent contractor” rights.My firm belief is that the company hasno right to dictate or place controls onour incoming email.But the larger issue is that there is aserious reason for Allstate’s refusal to allowthe NAPAA’s email. Allstate does notwant to lose control over its agent salesforce. If control were not an issue, thenAllstate would allow the email, open adialogue with NAPAA and aggressivelyaddress the rapidly dwindling agent morale.But in retaining and exerting controlover its agents, Allstate assures itself of theability to implement any changes it wishes.Further, it can do so with minimal interferencefrom organizations which mightoffer a contrary view, or from agents whowould like to challenge the legitimacy ofthe change in an open and non-Allstatecontrolled forum.Someone once said “knowledge ispower.” Without unrestricted access toany and all information, we will neverhave that equal footing. Without opencommunication between agents, they cannever know the whole story. Regardlessof agency size or agent tenure, the lack ofinformation only benefits Allstate.More than Just a Pretty FaceNAPAA is more than just a weeklyemail or quarterly magazine. Althoughmany agents do not know this, clearly22 — Exclusivefocus Winter 2008/2009

stated in this magazine are several otherbenefits of NAPAA membership. Monitoringlegislative and legal issues, maintainingan Action Fund to support issuespertinent to agents and their clients, andproviding agents with a distinct voice onissues that affect them, are just a few ofthe things NAPAA does for its members.When Saturday hours were mandated,NAPAA stepped in and providedthe platform to reverse the requirement.Allstate managers were reined in becauseof the NAPAA’s “Infractor Alert”program. The fact is every agent in thecountry benefits by the NAPAA’s intenseinformation gathering and thoughtfulanalysis of the many programs Allstatepresents to its agents.Reluctance to join an organizationthat has already “paid” so much to Allstateagents is simply not acceptable. Each ofus secretly gripes when we pay our owninsurance. We know our customers do.But when our customers complain abouttheir premiums, there isn’t an agent in theindustry that doesn’t look down their noseand say, “Don’t these people know whattheir insurance does for them? They payso little and get so much in return.”It’s the same thing when you join theNAPAA. You get so much in return forso little. There is absolutely no downsideto being a NAPAA member. The upsideis a stronger; more financially sound organizationthat can affect true reformson the agents’ behalf. Even without Allstate’sdirect influence, new agents, forexample, can’t see the forest for the treesbecause they are so caught up in reachingtheir sales quotas that they don’t realizehow much control Allstate exerts overthem. Then there are the more tenuredagents who look forward to the daywhen they can retire; not realizing howmuch Allstate controls the value of theirbooks of business by restricting buyerqualifications. Old or new, agents have aresponsibility to do all they can to educatethemselves, and then to protect theagency they worked so hard to build.And Now, the DisclaimerI am not now nor have I ever beena NAPAA employee. I am not a directoror officer of NAPAA. I am an agent.NAPAA did not solicit this article. I voluntarilysubmitted it because I am passionatelyopposed to Allstate telling mewhat I can and cannot do.Many articles have been printed inthis publication referring to the level ofcontrol Allstate exerts over its agents.Canadian Allstate agents know all toowell the outcome of a weak assemblage.With little or no bargaining power or influence,Canadian agents were kicked tothe curb. There probably wasn’t a singleU.S. agent who didn’t shake their headand utter a few thanks that it didn’t happenhere in the U.S.I don’t want to look out over theempty seats of my lifeboat and wish Ihad more oarsmen to help get us safely toshore. Instead, I want to know that everyable-bodied agent grabbed an oar andgot involved. I want to be able to go toa regional agent meeting (non-Allstatesponsored) and see the faces of thousandsof agents who cared enough to take responsibilityfor their future. Think aboutthis: yesterday was the day we failed toget involved, and now we have mandatedoffice hours, quotas, annual reviews,POSIS, call forwarding, and many otheremployee-like controls. If anyone thinksrestricting email is a small issue, theyare wrong. Go back and read this articleagain. If anyone thinks joining NAPAAis a waste of time and money, considerthis: had NAPAA membership includeda majority of agents in 1998, your current“employee” contract might look a lotmore like a true independent contractoragreement. And further, consider thevalue of your book of business when you“try” to sell. Every single agent believesthat the value they are building in theirbook of business is their retirement account.Newsflash! It’s not. It’s not, becauseagents do not control the value oftheir book, Allstate does. Newer agentshad better read the part of their contractthat says Allstate has the right to eliminateTPP. Allstate could care less whatyou get for your hard-earned book. Weall work hard to build our agencies. Whywould anyone want to give it all away?Thank you for listening. If I can offerone more piece of advice: Send thepostcard to Tom Wilson, even if you doso anonymously. We need to protect thefew freedoms we have left.Are you in touchwith your clients?Your competitors are.It’s no secret. Touching your clientsfrequently will improve retention andreferrals in your agency. Agent ContactWizard provides Allstate agents withcost-effective, agent-focusedmarketing solutions.Watch the video andsign up for your 30-day FREE trial atwww.AgentContactWizard.com.Winter 2008/2009 Exclusivefocus — 23

Why JoinNAPAA?NAPAA Acts as the Voice of theAllstate Agent:• We say the things that must be saidon behalf of the agent.• We take stands on issues that affectagents, such as RFG, IndependentContractor status, quotas and terminations(See examples in Exclusivefocusmagazine).• We are willing to meet with companyleaders, without fear.• We have demonstrated that we arewilling to take legal action whenwarranted.• NAPAA possesses “standing” underboth Florida law and Federallaw.National EA Conference:• Great Speakers, Legal and BusinessTips, Vendor Fair and muchmore.Free Member Benefits:• Useful tools to help Buy or Sell anagency• Sample Business Plan• Sample Letter Agreement• Sample Asset PurchaseAgreement• Non-disclosure Agreement forCSRP• Quick Reference Guide to Buyingand Selling Allstate agencies• Agency for Sale listing on NAPAAWebsite and in Exclusivefocusmagazine• One-on-one consultations with HQstaff familiar with sale process• Access to “Member’s Only” sectionon NAPAA WebsiteFree NAPAA Communications:• Subscription to NAPAA Forum,our online discussion group.• Subscription to DirectExpressweekly email newsletter• Subscription to Exclusivefocus magazine(While the magazine is currentlybeing sent out to all Allstateagents, this could change at anytime).Free Customer Transfer-in/Transfer-outService:• We locate NAPAA member agentsfor customers transferring from stateto state• As a member, you become immediatelyeligible to receive customertransfers to your areaFree Leads from the “Get aQuote” Page on the NAPAAWebsite• When a consumer requests a quote,we provide the lead to a NAPAAmember in the area.Special Offers and Discounts• Free membership if payroll is processedtwice a month with E-chx• Access to Dental, Group Health,401K, Section 125 Plan availableto members through a PEO planonly available to NAPAA members.For details contact: GerryFlores at (563) 564-1800 or byemail at gerbear_61@hotmail.comNAPAA Resource Center• NAPAA HQ has extensive resourcesto help agents locate hardto find informationExpert Assistance from Staff atNAPAA Headquarters• HQ staff has more than 50 yearscombined experience in and aroundAllstate• Most times, company managers actin their own self-interest – NAPAAacts in your best interests all thetime.• NAPAA members get straight,no-nonsense help on a wide rangeof issues from the knowledgeable,experienced staff at NAPAA HQ.These include such issues as buyingand selling agencies, staffing,marketing, HO security investigationsand terminations.“Legislate for Success” Program• NAPAA sponsors and supports legislationfavorable to Allstate agentsHelping you Succeed• NAPAA acts as a support systemfor our members if and when theyneed helpFree Mentoring Program• Assist newer agent members bygiving them access to an experiencedagent who can provide solid,sensible advice and direction• Help members sort through companyprograms and initiativesThe Board of Directors• Board members are uncompensatedvolunteers who have your interestsat heart.• Our current board has more than150 years of combined experiencein and around Allstate.24 — Exclusivefocus Winter 2008/2009

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 ____________(12/08 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

OtechnologyMobile Broadband Connection CardsTake your Business on the goOperating in the most efficient, mostcost-effective way is critical to your successin the highly competitive propertyand casualty insurance industry.Leading auto and home insurancecarriers are currently taking advantageof Mobile Broadband in the claims environment,but now any Allstate agent canbenefit from those same advantages.Ensuring Data Security forAllstate AgentsAllstate agents can now access theInternet through Virtual Private Networksor VPNs. These Virtual PrivateNetworks are designed for agents whoconduct business both inside and outsideof the office and who have a need tosecurely access information over a wirelessnetwork. VPNs successfully protectagent networks from unauthorizedusers. Not only do unauthorized usersslow down VPNs, they compromise thesecurity of the network. Unfortunately,VPNs can be time-consuming and canrequire troubleshooting, especially ifyou are working from a client’s wirelessnetwork. However, when accessing theInternet with a Mobile Broadband card,you have the same reliable experience everytime you access the Internet.Firewalls are used to regulate unlawfulusage by mandating authenticitycodes and passwords. From timeto-timeagents encounter client firewallrestrictions when working from a Wi-Fisignal or from a client’s network, leavingthem unable to access critical informationwhen they need it. Agents alsoperiodically experience trouble accessingapplications during visits to their clients’or prospects’ place of business because oftheir firewalls.Mobile Broadband cards offer agentsthe data security needed to protect their clientsand operate their businesses. Informationsecurity allows agents to safely protectclient records, financial documents, reportsand other confidential information.Expanding Your Clients’Allstate Portfolio ServicesThanks to mobile broadband connectionsyou’ll waste no time tracking downan Internet connection when you’re onthe move outside of the office. In fact,mobile broadband speeds can increaseyour productivity by allowing you to stayconnected to your business and personaldata no matter where you are.Agents with Mobile Broadband cardsin their laptops can look up their email,calendar and tasks on the fly as easily asif they were on their desktop computersat the office. This accessibility is a provenasset to both Allstate agents and theircustomers. With Allstate moving to enablemany of their software systems to aWeb-based environment, Mobile Broadbandshows great promise in assisting theAllstate agent in completing tasks outsidethe office.When looking into mobile broadband,most people think of a card that slidesinto a slot or USB port on a laptop, butwireless broadband also comes in otherforms. Most BlackBerry and PDA devicesthat operate on a Mobile BroadbandNetwork can be connected to a laptop andserve as a secure broadband modem. Thisprovides extra value in that an agent canhave a single device that functions as aphone, a wireless broadband modem andeven a GPS navigation system. Make surethat you ask your carrier if there are anyadditional charges for using the device asa modem as some providers may tack onadditional fees. You should also make surethat the plan you select with your advisoris truly unlimited if it says it’s unlimited.Many carriers have limits that are onlymentioned in the fine print.Key Facts about MobileBroadband• It's fast: With a Mobile Broadbandcard you get average download speeds of600 Kbps with bursts of up to 1.4 Mbpson your laptop. That's similar to DSLand about ten times faster than using adial-up modem.• It’s seamless: You get coverage almostanywhere on the Mobile BroadbandNetwork, not just within rangeof sporadic Wi-Fi hot spots.• It’s in a lot of places: Carriers providemobile broadband service in morethan 13,000 cities and over 870 airportsin the US, although coverage and speedscan vary between mobile wireless carriers.Interested inLearning More?To access additional informationabout Mobile Broadband cards or plans,call an experienced representative tollfreeat 888.503.5060 ex. 3020 or emailallstateagent.support@alwaysBEthere.com. Find additional details at www.allstateagent.callsprint.com26 — Exclusivefocus Winter 2008/2009

Winter 2008/2009 Exclusivefocus — 27

2009 NationalExclusive Agent Conference“It’s Your Business:Chart Your Course to Success”Indulge Yourself – You’ve Earned It!By the time you read this issue of Exclusivefocus, 2008 will be drawing to a close.It was a year fraught with many challenges for our agencies, our personal lives and ourcountry. Almost certainly, the events of the past year have tested each of us in ways wenever dreamed possible. And as we enter a new year and a new era, we hope that ourbrightest days are ahead of us.Agency owners have been under great stress in many regions of the country and not allof it has come from the economic downturn. As an example, the company has not eased upon AFS quotas despite the fact that many consumers are scared to death about losing theirhome and life savings.People deal with stress in many ways, but one of the best ways is to plan a getawayweekend or a vacation. Escaping to someplace new is almost always an exhilarating andfulfilling experience. People find these experiences rejuvenating and refreshing because,in part, they are reminded about what is truly important in life, such as marriage andfamily. Then when it’s over, they return home with fresh perspectives and, maybe, somenew ideas.As most of our readers know, NAPAA has traditionally held its national conference inLas Vegas. This year, however, we’re doing something special. We’ve chosen a destinationthat’s both romantic and historical. Destination: Savannah, Georgia.The best part about our conferences is that agents don’t have to achieve any awardsto attend. If you’re an Allstate agency owner you qualify. So, stop fretting about thefact that you missed earning Inner Circle this year. Come to Savannah where you’llmeet incredible people, hear exciting speakers and learn valuable business tips.Springtime in Savannah – step back in timeNAPAA has negotiated a special room rate at the elegant Mansion onForsyth Park, a “magnificently restored 1888 Victorian mansion set in Savannah’slegendary Historic District.” The Mansion, which opened in 2005, hasearned a four-diamond rating from AAA, and is on the Conde Traveler GoldList as well as their Reader’s Choice Top 100 hotels. It features lavish guestrooms and many amenities, perfect for a getaway. The Mansion also featuresthe Poseidon Spa, the 700 Cooking School, 700 Drayton Restaurant, Casimir’sLounge, and the Grand Bohemian Gallery with over 400 rare works ofart. And just outside is the lush setting of Forsyth Park.If your travel preference is to experience the very best, this is your chanceto enjoy the essence of Southern comfort and hospitality.28 — Exclusivefocus Winter 2008/2009

Everyone wants to go to SavannahIf you’ve visited before, you already know why. The oldest city in Georgia, thedowntown Savannah Historic District is the largest National Historic Landmark inthe country. Shaded squares, cobblestone streets and ornate mansions set on 2.5 squaremiles along the Savannah River, it is best enjoyed on foot. There’s no need to rent acar; simply catch a trolley tour or a horse-drawn carriage instead. Stroll along historic,antebellum River Street, where the former cotton warehouses that line the SavannahRiver have been transformed into shops, boutiques, restaurants and nightclubs. Don’tmiss the candy makers at the Candy Kitchen or the City Market, known as the “TheArt and Soul of Savannah,” and be sure to shop the SCAD Gallery, featuring the creativework of students, staff and alumni of the Savannah College of Art & Design.Walking, trolley and riverboat tour choices are endless and offer a range of themes,such as land and sea, historical and movies. Suprised? More than 70 movies have beenfilmed in Savannah since 1915. One of the most popular tours is based on the book andmovie Midnight in the Garden of Good and Evil, in which the city was the backdrop forthe story. One of the best ways to tour the historic mansions, including the Pirate Houseor the Sorrel Weed House, is to take one of the many Ghost Tours. You may even wantto take in the Savannah Murder Mystery Dinner Theater for an evening of entertainment.Getting down to Business...and playThis year’s conference will be one of the best ever. We’ll be featuring alineup of topics and speakers that you won’t want to miss. Our goal is notonly to inspire and inform you, but to provide you with ideas that can helpimprove your revenues and increase cash flow.So this year, why not enjoy a first-class destination as you gather up newmarketing concepts and sound advice? Exchange ideas with other agents onthe golf course, at our Welcome Reception or on your free time. You’ll returnto your office relaxed and motivated, with strategies and solutions in hand.Now that bonus dollars are scarce, and many top-producing agents are nolonger winning company award trips because of the RFG formula, it may betime to reward yourself. When you decide how your business funds are bestallocated, put the 2009 National Exclusive Agent Conference on the top ofyour list and remember, it’s tax deductible as an ordinary business expense.Dale Revels receiving the covetedJim Fish AwardTroy McDonald explains some of hissecrets of successByrd Baggett wows the crowd withmotivation and inspirationNAPAA President Bob Isacsen listensto attendee’s commentWinter 2008/2009 Exclusivefocus — 29

Here’s Your To Do list:1. Book your flight or Google your driving directions.2. Reserve your room: Call the Mansion on Forsyth Park at 888-711-5114 between9-6 M-F. Ask for group reservation code: “Agent Meeting.”3. Fax or mail your conference registration form. (Still only $99 per person)Visit todaywww.NAPAAUSA.ORGfor more information.See you in Savannah!• Getting to Savannah is convenient; it’s an easy drive for many East Coast agents.If you’re flying, the hotel is a short taxi ride from the Savannah/Hilton HeadInternational Airport.• Take advantage of the great hotel rates - Combine your trip with a family vacation,a romantic getaway, or attend with a fellow agent.• Stay a little longer and take in Tybee Island, Beaufort, Hilton Head Island orOld Fort Jackson.The Schedule:Wednesday, April 15All Day Board of Directors meeting – attendees welcome.Evening Get Acquainted Cocktail Hour for Early Bird arrivalsThursday, April 16Morning Scramble Golf Tournament or Historic Trolley TourAfternoon Vendor Fair, Treasure Hunt and Door Prize DrawingEvening Welcome Reception sponsored by Capital Resources, LLCFriday, April 17 “It’s Your Business - Chart Your Course to Success”All day Conference Event and Guest Speakers - Lunch includedThe Hotel: The Mansion on Forsyth Park• 700 Drayton Street, Savannah, GA 31404• Special NAPAA rate: $189+tax (these rooms are regularly $349 to $399)• Hotel Reservations: Call 888-711-5114 between 9-6 M-F.Ask for group reservation code: “Agent Meeting.” Deposit required.• Limited number of rooms available at special rate - expires on March 15, 2009• Preview of this year’s Four-Diamond Award hotel destination atwww.MansiononForsythPark.com.Conference Line up: It’s Your Business - Chart Your Course to Success• Tips to increase sales in today’s market from Top-Producing Agent Bill Gough• Canadian agent gives you the latest update on the Canadian Experiment• Make the most of your EFS relationship – Top EFS tells you how• Update on the Romero vs. Allstate Lawsuit – what happened?• Back by popular demand – our panel of experts - do’s and don’ts of Selling your Agency• Professional Speaker - TBAScramble Golf Tournament: Don’t miss the funConference attendees are invited to our third annual Scramble Golf Tournament.The Club at Savannah Harbor is the home of the PGA’s “Liberty Mutual Legends ofGolf ” Tour, which it will host April 20 - 26, 2009. This 18-hole championship course,designed by Robert Cupp and Sam Snead, offers excitement for both novice and experiencedplayers—even golf champions. The fee will be $149, and will include rangeballs, carts and refreshments. Club rentals separate.GOLFERS MUST BE REGISTERED FOR THE CONFERENCE BYMARCH 15, 2009Not golfing? We’ve arranged an informative 90 minute Historic Trolley Tour foryou on Thursday morning, departing directly from the hotel.30 — Exclusivefocus Winter 2008/2009

2009 National Exclusive Agent ConferenceThe Mansion on Forsyth Park, Savannah, GA - April 15 – 17Registration Form_________________________________________________________________________________________________First Name M.I. Last_________________________________________________________________________________________________Address_________________________________________________________________________________________________City State Zip_________________________________________________________________________________________________Daytime Phone Cell FaxE-mail: __________________________________________________________________________________________Name preferred for conference ID Badge: ___________________________________________________________Additional Attendee Name(s): ______________________________________________________________________❑ Sign me up for Golf! (Spouses or guests welcome)Total Number of players _________________________Handicap Player #1___ Handicap player # 2 ___ Handicap player #3 ___ Handicap player #4 ___ConferencAgent _____________Spouse or Non-Agent guest $99.00 x ______ = _____________Golf Tournament $149.00 x ______ = _____________Trolley Tour (non-Golfers only) $25.00 x ______ = _____________Method of Payment:otal $ _____________To register online, go to www.napaausa.org and click on the “EVENTS” tab at the left side of the page.❑ Check enclosed for the total amount due: $_____________ (Payable to NAPAA)❑ Credit Card: __ VISA __ MC__ AMEX __ DISCName on Account:________________________________________________ Amount to charge: $ _____________Account Number: _______________________________________ Expiration (mm/yy): ______________________Billing Address (numerals only) ___________________________________________Zip Code __________________Authorization Signature: ________________________________________________ Security Code _____________Fax Registration Form to: (866) 627-2232 or Mail to: NAPAA – P O Box 7666, Gulfport, MS 39506Questions? Call toll free: (877) 627-2248Hotel Reservations:*Call The Mansion 1-888-711-5114 from 9-6 M-F, ask for Group Reservation code: Agent Meeting*Deposit required at time of reservation.Cancellations must be made 72 hours prior to arrival date, or forfeit deposit.*Special Group Room Rate $189 – Limited number of rooms at this rateReservations must be made by March 15, 2009Winter 2008/2009 Exclusivefocus — 31

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featureDeliberately Misclassified?What Allstate Has In Common With FedExW“When employers hire a work force,a fundamental preliminary decision withserious economic repercussions must bemade: Are workers employees or independentcontractors?” This opening statementis from a Dec. 14, 2007 Law.com articlewritten by Carla Rozycki and DarrenMungerson entitled “Misclassification ofIndependent Contractors and EmployeesCan Be Expensive.”The focus of the Law.com articleis the legal battle being waged againstFedEx by its “independent contractor”Ground/Home Delivery drivers. At issueis a class action lawsuit encompassingapproximately 14,000 current FedExGround/Home Delivery drivers andpossibly as high as 10,000 former drivers.The case revolves around whether ornot Ground and Home Delivery driversare independent contractors as labeled byFedEx, or employees disguised as independentcontractors. As we will see, thiscontentious issue has produced a seesawbattle with a final outcome yet to be determined.With its genesis in 1999, current andformer independent contractor FedExdrivers banded together to file a classaction lawsuit against their parent companydemanding treatment equal to thatof their employee counterparts. In theensuing years of litigation, several legalmilestones have been passed, but nonewas more important to the drivers thanthe ruling in 2007. On October 15, 2007,Judge Robert Miller from the U.S. DistrictCourt of Northern Indiana finallycertified the class giving FedEx its mostserious legal setback concerning the caseup to that point.Subsequent to the certification ofthe class action lawsuit, Lynn RossmanFaris, the lead counsel representing theFedEx drivers, quickly issued the followingstatement, “This is a landmarkdecision for workers everywhere servingunder sham independent contractor arrangementssuch as the one exploited byFedEx.” FedEx responded by saying itwould appeal the ruling.Then on December 22, 2007, theU.S. Internal Revenue Service handedFedEx a second, more serious blowwhen it levied $319 million in fines andpenalties related to FedEx’s scheme ofmisclassifying its Ground and HomeDelivery drivers as independent contractorsinstead of employees. The IRS audit,which concluded in late 2007, stated that“FedEx Ground’s pick-up-and-deliveryowner-operators should be reclassifiedas employees for federal employment taxpurposes.” FedEx’s subsequent filing withthe Securities and Exchange Commission(SEC) acknowledged that, althoughthe initial ruling was related to the 2002tax year, the IRS is looking at the nextseveral years as well. Industry analystsclose to FedEx estimate a potential IRSfine of over $1 billion. FedEx continuesto state that it feels an IRS sanction willbe ultimately reversed but, interestingly,began to make changes to its Groundand Home delivery operations in California.The following is a statement postedby attorneys for the class action lawsuiton its Website: Fedexdriverslawsuit.com:34 — Exclusivefocus Winter 2008/2009

“FedEx’s practice of avoiding tax liabilitiesand foisting its operating costs ontoits drivers has been under continuousattack at the state and federal level forseveral years.” According to the lawsuit,if you are a Ground or Home Deliverydriver for FedEx, you are required tomeet certain quotas for delivery of packages,you are told how to maintain yourtruck, you are told who you can hire tohelp you and even how to dress. FedExchanges quotas annually and implementschanges to “Payment per stop” as well asoverall “core zone settlement payments.”FedEx drivers must pay for all truck operationand maintenance expenses as wellas all other business operation expenses.Drivers do not have 401Ks, health insurance,pensions, and are not protectedby any state or federal regulations foremployees such as Workers Compensation,unemployment benefits and familymedical leave. The independent contractordrivers for FedEx were initially happywith their arrangement, but became increasinglyaware of the lack of differencebetween their operational requirementsand that of their employee counterparts.When the same controls exerted on employeedrivers migrated over to the independentdrivers, they began their effortsto gain employee status.In contrast to their independent contractorcounterparts, FedEx employeedrivers operate typically in major metropolitanareas. FedEx employee driversreceive many standard employee benefitsas well as all the government protectionsafforded employee status. Employeedrivers must meet quotas for pickup anddelivery times. They are compensatedhourly, but can also earn more via a “bonus”structure. By implementing bothemployee and independent contractordelivery methods, FedEx retains theprofitability of using employee drivers indensely populated areas and the ability tocost-shift expenses to the independentrural drivers. Clearly the ability to avoidexpenses like payroll taxes, employeebenefits and profit sharing aids FedExin retaining its competitive edge in areaswhere paying employee expenses couldcause it to be uncompetitive. Accordingto the lawsuit and the IRS ruling, theproblem for FedEx is that it’s reaping thebenefits of treating certain drivers as independentfor tax purposes but controllingthese same drivers as employees.The news got even worse for FedExwhen the California Supreme Court upheldan appeal for a similar complaintin Estrada vs. FedEx Ground. There thecourt found that FedEx drivers wereindeed misclassified as independentcontractors stating that FedEx Ground“purposefully created controls of an employeenature” and in summary stated,“We affirm the finding that the driversare employees.” This latest ruling alsobuttresses decisions from Massachusettsand the National Labor Relations Board,each finding FedEx in violation for misclassificationof its independent contractordrivers. In their December 14, 2007Law.com article, Ms. Rozycki and Mr.Mungerson summarize the ruling furtherwhen they state: “Notwithstandingthat FedEx drivers executed a non-negotiablePick-up and Delivery ContractorOperating Agreement, which identifiedthe driver as an ‘independent contractor’and not as an ‘employee’ for any purpose,the trial court found the drivers wereemployees and therefore had the right tobe reimbursed for their expenses.” Thecourt’s ruling was intended to send thefollowing message to FedEx: Just becauseyou classify a worker as “independent” itdoesn’t make it so unless you treat themas “independent.”A Trickle Before the Flood?On October 21, 2008, retired stateSuperior Court Judge William Cahill,acting as a court appointed official,awarded about 200 California FedExdrivers $14.4 million in their quest to bereimbursed for “employee style” expenseswhile being misclassified as independentcontractors. These expenses, suchas uniforms, fuel and truck maintenance,had long been reimbursable to employeedrivers, but not to the independentcontractor drivers. FedEx stated itwould review the ruling and had initiallyobjected to $1 million of the expenses.Cahill stated that only $32,000 of thatobjected amount would be denied. Thenon December 5, 2008, FedEx agreed tosettle the California dispute for a whopping$26.8 million. FedEx spokesmanMaury Lane stated that the settlementwould not affect the company’s relationshipwith its California network of independentcontractors and that FedEx was“pleased to put the matter behind us.”The 203 drivers involved in the case willreceive monetary damages ranging from$2,000 to $280,000.Because this case is directly related tothe larger class action case, completion ofthe California settlement and the resultingmomentum should have a significantimpact on future settlements. Interest isextraordinarily high at this point, withfewer than 150 drivers opting out of thenationwide action. This is extraordinaryconsidering more than 27,000 currentand former drivers have been notified.IRS Changes Its Mindon FedEx FineOn October 23, 2008, the IRS announcedthe withdrawal of its initial $319million assessment for back taxes for the2002 tax year, but is continuing to auditFedEx for years 2004 through 2006.While the withdrawal of the fine wasinitially thought to bolster management’sclaim that its drivers are indeed independent,the subsequent $26.8 million settlementin California appears to suggest otherwise.However, while the merits of thecase are substantive and could affect similarlawsuits, the IRS may be disinclinedto fine FedEx so long as it is workingto resolve the issue. Similar IRS rulingswhere a fine is levied and then retractedare not uncommon. This is frequently thecase with publicly traded companies so asnot to affect the value of innocent shareholders’stock. In especially egregious cases,however, fines are imposed in spite ofshareholder concerns.FedEx’s Slight of HandIn light of the overwhelming evidenceto the contrary, one must ask the questionof why FedEx thinks it can treat independentcontractors as employees andget away with it. FedEx officials contendthat it previewed its independent contractormodel with the IRS and receivedapproval to implement the program.Companies often seek rulings from theIRS called “Private Letter Rulings” inorder to affirm consistency with IRSWinter 2008/2009 Exclusivefocus — 35

egulations. It is important to understandthat while Private Letter Rulings are notfiled by companies anonymously, theyare reported anonymously. Althoughnot legal rulings in the sense that theycome from the government, Private LetterRulings aid businesses in interpretingtax law as it applies to a specific situation.FedEx received what it thoughtwas a tacit approval and implemented amammoth change to its delivery system.Failing to realize just how “independent”its independent contractor drivers had tobe treated, FedEx immediately began toimplement many of the same controls itused with its employee drivers. Certainlyit was important for FedEx to retain controlover its delivery system, but it failedto realize that in doing so, it immediatelyconverted its independent contractorsback to employee status.Central to FedEx’s or any other company’sability to direct the outcome of itsbusiness operations, are the controls it institutes.With an employee-based business,directives (controls) are conveyed throughemployment contracts, memos, contractchanges from corporate officers, and writtenor verbal orders from managers. Employeesare subjected to reviews and theirperformances are compared to expectedgoals. FedEx employees submit daily deliverysheets, driver logs, fuel receipts, inspectionand shipping reports and other reportsas required from time to time.With an independent contractor-basedbusiness, controls may not be used for anyaspect of the worker’s day including, butnot limited to; processes employed toaccomplish assigned tasks, tools (unlessspecific to the product being produced),requirements to produce reports, submissionto performance reviews, when to performtasks, where to perform tasks, andrequirements to meet quotas.FedEx’s independent contractor driverswere required to submit substantiallythe same type and quantity of reportsas employee drivers. Simply put, FedExwanted the benefits of control withoutthe associated costs. FedEx’s eagerness touse independent contractors is also basedin part by its unwillingness to recognizethat it was doing something wrong. Inhis article of April 14, 2008, CNSNews.com commentator Chuck Muth summedit up this way: “But like an alcoholic whocan’t come to grips with the reality of hisproblem, FedEx remains in serious denialover this matter.”FedEx Ground and Home Deliverydrivers initially embraced their employmentmodel and gladly operated theirbusinesses as independent contractors.However, the economic advantages enjoyedby the employee drivers combinedwith the employee-like controls that werefoisted upon them, was simply too muchto take for the independent contractordrivers. After all, they took all the risks,made less money, received fewer, if any,benefits and yet still weren’t allowed torun their business as they saw fit. It wasfor these reasons the independent contractordrivers sought employee status.The New, Improved IRSTackles ViolatorsEmployers reap great benefits throughthe classification and use of independentcontractors. Direct financial benefits includesavings of state and federal taxes,health insurance costs, pensions, unemploymentbenefits, 401Ks, operating expensesand costs associated with humanresources departments and other supportpersonnel. Other financial benefits includecost savings associated with reductionof management positions, reductionof advertising expenses, and eliminationof operating expenses like rent, electricity,phones and computers. Companieswho use independent contractors retaina huge financial advantage over theircompetitors who do not. The dangerous“flip-side” of using independent contractorsis improper classification, which exposesboth the company and the workerto potential state and federal fines forfailure to properly file tax returns. Thisfact is not lost on the IRS as well as theU.S. Senate. Last year, the U.S. Senateintroduced the Independent ContractorProper Classification Act of 2007(ICPCA). Both the U.S. Senate and theIRS recognize the severity of the problemand are working with various statesto implement statutes aimed at catchingcompanies who improperly classify independentcontractors.Misclassification of employees as independentcontractors is not a new issueto the IRS. In the past, individual workershave had the ability to receive an IRSruling on their employment status bysubmitting the form SS8. But the biggerproblem being addressed by the FedExruling has to do with corporations knowinglymisclassifying an entire independentcontractor workforce or using anindependent contractor model that violatesfederal and or state regulations. IRSofficials acknowledge that this problemhas been given new emphasis and willbe a seminal issue going forward. Onesuch example of this new thinking at theIRS is a program which began last year.In November 2007, the IRS and 29 stategovernment agencies began implementingthe Questionable Employment TaxPractice (QETP). The following quoteis from the IRS Website: “The QETPinitiative is a collaborative, nationwideprogram seeking to identify employmenttax schemes and illegal practices and increasevoluntary compliance with employmenttax rules and regulations.”Kathy Petronchak, Commissioner forthe IRS Small business/Self EmployedDivision, stated: “Combining resourceswill help the IRS and the states reducefraudulent filings, uncover employmenttax avoidance schemes and ensure properworker classification.” At hand are billionsof dollars in lost tax revenues andsimultaneous billions of dollars in questionableprofits for the companies thatmisclassify their workers. Looking at eitherside of the equation one can easilysee the IRS’s motivation.Meet FedEx’s Big Brother:AllstateBack in the year 2000 when Allstateconverted the vast majority of its entiresales force from employee to independentcontractor status, it did so as a resultof a series of events, both external andinternal. Notwithstanding an immenselogistical process, Allstate apparently accomplishedthe transition in record time,taking only about two years from start tofinish. When Allstate held countrywidemeetings rolling out the conversion process,agents were barely able to catch theirbreath after hearing the announcementthat they were going to be independentcontractors. Allstate openly reminded36 — Exclusivefocus Winter 2008/2009

agents that they would be independentcontractors and no longer have managers.Agents were congratulated on theirnew career path as agency owners andurged to immediately begin acting likethe entrepreneurs Allstate knew theycould be. The company even cautionedits newly-forged business owners not torely upon their “old” managers for businessdecisions. Now that agents wereindependent, their new point of contactwould be a Market Business Consultant(MBC) who could only offer “assistance”to them. Armed with this new prospective,agents returned to their offices tobegin a new chapter in their careers.At first glance, there appeared to be asharp contrast between their former jobsas employee agents and their future as independentcontractor Exclusive Agents.But the lines of demarcation fadedquickly. Today, tenured agents complainthat they are treated more like employeesthan they were before the conversion.“It’s worse,” said one agent, “back thenwe had a pension plan and, if the companywanted to fire you, there was an agentreview board process in place. Now, theycan fire you with or without reason. Ourbooks of business were supposed to replaceour pensions, but managers havestarted to interfere in the sale process,which has lowered the value of our agencies.This isn’t fair because for many ofus, our book of business is the most importantretirement asset we have.”With the devolution of their statuscomplete, Allstate Exclusive Agentsquickly became independent contractorsin name only. New productionquotas were introduced and routinelyincreased year after year. Other quotaswere introduced as well. Minimum officehours were mandated. Reports thatagents previously completed and faxedto their managers were now automatedand provided for management’s instantreview. Agents began receiving emailsurging them to sell certain quantities oflife insurance and financial products. Notonly were these quotas bigger than everbefore, they have steadily grown by leapsand bounds on a regular basis. Agentswere assimilated into groups in sales territoriesand began to receive emails frommanagement alternately decrying theirpoor performance or praising them forbeing “district” leaders.When it came time for agents to have“checkpoint” meetings with their MarketBusiness Consultants, they were surprisedto learn they were required to submit tofull-blown annual performance reviews.Confused by this, many agents attemptedto refuse to sign the reviews, stating theirrefusal was because they were now independentcontractors. There have beenreports that agents in some markets weregiven a choice: either comply with the reviewand sign it or be fired.In the case of the FedEx Ground andHome Delivery drivers, the key issue isthat drivers are suing to regain employeestatus. For these drivers it is easy to seewhy they would so aggressively pursueattainment of employee status. Their employeecounterparts receive higher overallcompensation, do not have to pay outof-pocketfor business-related expenses,and enjoy all the benefits associated withbeing an employee. The IRS position isthat FedEx maintains an illegal employmentscheme by cost-shifting operationalexpenses to what amounts to an employeein independent contractor clothing whileit avoids millions in taxes.The situation for Allstate agents isquite different. The vast majority do notwant to be employees. All they want isfor Allstate to uphold its promise thatthey be treated as true independent contractors.Whether by design or a changinglegal landscape, it was ultimately Allstatethat chose to move away from anemployee-based distribution system toone that promised complete freedom forits agents as independent contractors.If it Quacks Like a Duck, It’sProbably a Duck, So Says the IRSAlthough not implemented untilseveral years later, the groundwork forAllstate’s conversion to an independentcontractor agent model began in Novemberof 1988 when it submitted a requestfor a Private Letter Ruling (PLR) fromthe IRS. The IRS responded via PLR8925018, dated March 23, 1989 withJames L Brokaw responding for the Officeof the Assistant, Chief Counsel IRS.The entire ruling is available for reviewon NAPAA’s Website. Readers shouldbear in mind that since Private LetterRulings are reported anonymously, anylanguage that identifies the companyrequesting the ruling is redacted fromthe document. So, while the PLR thatis posted on the NAPAA Website doesnot specifically identify Allstate, it hasbeen widely believed for years that Allstateinitiated the request. Allstate agentswho have examined the document havesaid there can be little doubt about whichcompany it is. To see for yourself, visitwww.napaausa.org.But even skeptics should realize that,if by some small chance that the PLRwas not requested by Allstate, its keypoints are undeniably applicable to anycorporation when determining independentcontractor status. After all, the IRSdoesn’t make up different rules for differentcorporations.Listed below, starting with the openingstatement and progressing to thebody of the PLR, are excerpts from theIRS ruling. Note: Some of the identifyingterminology has been redacted by theIRS pursuant to its rules.“This is in response to your ruling requestdated November [sic] 1988, submittedon behalf of Insurer, in which rulings wererequested concerning the federal employmenttax status of insurance salespersons under anew program to be instituted by Insurer.”“The Program will begin with an employeephase that will last for [illegible] fullmonths.”“While employees, the agents will be supervisedand controlled by Insurer in theirdaily activities and compensated in a mannerthat is intended to tide them over untilthey can be established as independentagents.Those agents who successfully completethe employee phase of the Program and showoutstanding entrepreneurial abilities will beoffered the opportunity to participate in theindependent contractor phase of the Program.Agents in the independent contractorphase will be free to run their agencies invirtually any manner they choose with nodirection from Insurer.”“Current agents who have shown anability to operate independently will be allowedto participate in the Program withouthaving to complete the employee phase.”The opening statement of the rulingWinter 2008/2009 Exclusivefocus — 37

was intended to address the conversionprocess as well as potential new hires intothe Allstate Exclusive Agent IndependentContractor program. Tenured agentswill recall a nearly identical statementwas read to them during the conversionmeetings held in 1999. This was no coincidencebecause, as is typical with mostPLR’s, the requesting company usuallyprovides an outline of the proposed programand the IRS then reworks it intoits response. Agents will remember thechief concern at that time was whetheror not existing agents would be requiredto submit to some form of probationaryperiod or be required to qualify in orderto transition to the new contract. Subsequently,written documentation was providedto agents in their conversion packagesconfirming that they did not haveto “qualify” to become an independentcontractor agent.Mr. Brokaw continues his openingstatement by specifying in no uncertainterms, several key issues to which Allstatemust adhere:“However, the contracts will stipulatethat agents in the IC phase will be free ofIC’s direction, supervision and control andpermitted to perform their services in virtuallyany manner they deem appropriate.They will also be allowed to work for othercompanies as long as they do not sell insuranceproducts of Insurer’s competitors withoutInsurer’s consent.”“Agents will be free to run their agenciesaccording to their own professionaljudgment. They generally will have completecontrol over the hours they work andthe hours during which their offices remainopen. No reports will be required of theagents except for remittance reports used totransmit premiums and other funds they receivethat belong to Insurer. Insurer will notimpose minimum production requirementson the agents during the IC phase.”“In the IC phase agent contracts will notbe terminable at will.”Intended to leave no doubt as to theruling, the body of the PLR reinforcesseveral aspects of the introduction. Eachof these key issues is a benchmark test forindependent contractors. Keep in mind;it is not necessary for a company to actuallyexert control or employ the use of allof the elements listed below. Accordingto the IRS, it is often sufficient that onlyone element is present. Going further,the IRS states that even if the “possibility”of control exists, it could be groundsfor an IRS challenge.To make the following excerpts fromPrivate Letter Ruling #8925018 easier tounderstand, remember to substitute thename of the insurance company each timeyou encounter “[redacted]” in the text.“Hours. [redacted] Agents will have completecontrol over the hours which they workand the hours during which their [redacted] officesare kept open to the public for business. Theywill, however, be required to remain “activelyinvolved” in the operations of their offices.”Clearly, Allstate agents do not havethe freedoms described by the IRS above.Agents are required to adhere to companyvacation schedules and to keep theiroffices open a minimum of 44 hours perweek. Additionally, agents are mandatedto “call forward” their office phones after5:00 PM, thereby establishing a minimumdaily work schedule. Agents whodon’t forward their calls are reprimandedand warned that further non-compliancecould “jeopardize” their relationshipwith Allstate. To make matters worse,the company is now controlling the flowof information agents receive via theirallstate.com email addresses by blockingcertain newsletters and other correspondencefrom NAPAA.“Supervision. As noted above, the principalpurpose of the [redacted] Agent programis to provide increased incentives to[redacted] agents by allowing them to operateas entrepreneurs. Accordingly, [redacted]Agents will be free to run their agenciesaccording to their own professional judgment.A new management position will beestablished to coordinate the program. Thesemanagers will be available to the [redacted]Agents as a resource for consultation andadvice during the independent contractorphase of the program, but the [redacted]Agents will not be required to follow anyadvice which may be given.Reports. No reports of any kind will berequired or expected of [redacted] Agentsduring the independent contractor phase ofthe program, except for remittance reportsused to transmit premiums and other fundsreceived by the agents which belong to [redacted].”It is important to note that not onlydo Allstate managers give advice totheir agents; they expect them to followit. Case in point is the plethora ofemails urging agents to contact customersabout everything from life insuranceto “Emerging Business” products.Managers in Florida and elsewhere haveorganized “Call-a Thons” for life insuranceand have inundated agents withemails suggesting specific methods forselling financial service products. Theyhave also gone to great lengths to forceagents to attend mandatory meetings toincrease sales. In some markets, agentshave been grouped into “Teams,” receivepeer statistics and are strongly urged toperform to company-imposed standards.Agents are inundated with emails andphone calls detailing all of this and more.By definition, consultation is a processinitiated by the person or company requiringinput. Unsolicited verbal contact,email, regular mail, and faxes constitutesupervision. Independent contractors areneither members of teams nor are theyin need of supervision. These are mostdefinitely employee controls.In an effort to manage and control itsagents, Allstate produces daily, weeklyand monthly reports. And while managementmaintains that the primaryfunction of these reports is to benefitagents, they are used extensively by managementto evaluate agent sales performance,overall performance, progresstoward quotas, adherence to complianceissues and more. Agents who don’t meetcertain criteria, especially when they failto meet their quotas, are oftentimes intimidatedor terminated.“Smart Reports” provide access tothe CSRP, RFG, List 60 and AGY 250reports. Each of these reports furnishescompany managers with detailed informationabout each agent’s performance.This information is then used as a toolto compare individual results with otheragents, the results of which are oftentimesused to goad agents into producingmore sales or to harass or intimidatethem. The company also uses a reportcalled POSIS to determine an agent’ssuccess in meeting additional quotasrelated to Good Student Discounts, AlternateBind and PQB changes submit-38 — Exclusivefocus Winter 2008/2009

ted as well as Banking Exceptions andLegal Trailing Document Compliance.The fact that Allstate produces these andother reports for agents is unimportant.Allstate may be entitled to gather all theinformation it wishes, it just can’t use itpunitively against the agent as it relatesto quotas and annual reviews.“Quotas. (redacted) will not impose anyminimum production requirements on (redacted)Agents during the independent contractorphase of the program.”This area of control is perhaps notonly the easiest to identify, it is also themost contentious. Allstate has implementeda quota system it calls “ExpectedResults.” These quotas are ever-changingand have been used to terminate contractsfor “failure to meet Expected Results.”Allstate cannot equivocate on thisviolation of IRS rules any more than anyof the others, and has recently embeddedthis quota requirement into another,more complex agent control systemcalled RFG, or Resources for Growth.Whereas an independent contractorprovides a single purposeful service forhis benefactor, and may not be directed,Allstate agents provide their services onepolicy at a time. The following descriptioncan be found under the heading “IndependentContractor” in the small businesssection on the IRS Website (www.irs.gov): “The general rule is that anindividual is an independent contractorif you, the person for whom the servicesare performed, have the right to controlor direct only the result of the work andnot the means and methods of accomplishingthe result.”An Allstate agent’s work consists ofthe singular event of writing a single insurancepolicy. Agents must complete thesale to a level of quality “expected” by Allstateand to adhere to underwriting standardssupplied by them. This means theymust use Allstate approved underwritingguidelines and complete their work taskin a professional and ethical manner.An Allstate agent’s work is not theaccumulation of a series of events, or thecompilation of a series of events, such asselling enough policies to meet a yearlongquota. Therefore, Allstate only hasthe right to direct the quality of the salevia its underwriting guidelines, therebyinstituting an “expected result” whichcan only be measured one policy at atime. Allstate cannot combine individualsales events into a connected work package.Each sale must stand alone. However,Allstate agents have seen firsthandhow the company has capriciously riddenroughshod over the precepts that definetheir independent contractor status. Justin the past twelve months hundreds, ifnot thousands of Allstate agents havereceived letters warning them to maketheir quotas or else.While some managers avoid talkingabout quotas during the year, they openlyand aggressively do so during the “FallLife Promotion.” Coinciding with the terminusof the sales year, this sales contestallows managers the opportunity to sendagents threatening letters that detail theirperformance shortcomings and remindsthem that they are still “responsible” formeeting their Expected Results (quotas).Rules for EveryoneExcept Allstate?The opening of this article cites afundamental decision that every companyfaces when hiring a work force. Oncea company makes a decision to hire independentcontractors, it forever relinquishesa defined amount of control. IRSrules, as cited in Allstate’s PLR, explainwhat constitutes control for any company,not just Allstate. Regardless of howAllstate responds to this article, the IRSruling applies to any and all insurancecompanies using independent contractors.The rules do not change just becausea different name might be positioned inthe header. The following excerpts fromthe Allstate PLR lists several factors theIRS uses to determine if a worker is anemployee or independent contractor.Even a brief examination will reveal thatAllstate agents are misclassified.“Factors taken into consideration bythe courts and Service when determiningwhether the requisite control exists whichare relevant to the present situation includethe following:Training. The right on the part of the insurerto train the agent shows control. (MFAMutual Insurance Company v. UnitedStates. 314 F.2d 590 (W.D. Mo. 1970))Hours. The right on the part of the insurerto require the agent to work full-timeor a set number of hours shows control. (Rev.Rul. 69-287, 1969-1 C.B. 257)Supervision. The right on the part ofthe insurer to supervise and direct the agentas to the time, place and manner of sellinginsurance shows control. (Kershner v. Commissioner,14 T.C. 168 (1950))Reports. The right on the part of the insurerto require the agent to submit detailedreports reflecting his or her sales activitiesshows control. (Rev. Rul. 58-176, 1958-1C. B 349)Mandatory Attendance at Meetings.The right on the part of the insurer to requirethe agent to attend scheduled meetingsshows control. (Ellison v. Commissioner. 55T.C. 142 (1970))Quotas. The right on the part of theinsurer to impose sales quotas on the agentshows control. (Zipser v. Ewing. 197 F. 2d728 (2nd Cir. 1952))Discharge. The right on the part of the insurerto discharge the agent at will shows control.(Rev. Rul. 58-177, 1958-1 C.B. 351)Obviously the more control factors whichare present in a relationship, the more likelythe agent will be treated as an employee,rather than an independent contractor.”With So Many Infractions, canthe IRS Be Far Behind?Likely, some readers are incredulousover why a large corporation such as Allstatewould act counter to an extremelydetailed ruling in response to a PLR itsought from the IRS. Speculation wouldrange from innocent miscommunicationto outright flaunting of the law. For FedEx,it clearly centered on lowering operationalcosts in order to gain a competitiveedge. The independent contractordrivers, on the other hand, would thenbe saddled with operational costs andhave no benefits while the company stilltreated them like employees.Either FedEx failed to recognize theseverity of its control over its Groundand Home Delivery drivers or it figuredit would capitalize on the drivers’ naiveté.But if it thought the drivers wouldn’tknow any better, it was dead wrong. Indeed,the drivers did recognize it andwere able to organize with legal andWinter 2008/2009 Exclusivefocus — 39

union representation. For its part, theIRS makes no distinction for the reasonof the activity, it simply requires adherenceto the law.It would seem that Allstate agentswere never intended to be allowed to betruly independent. From the beginningof the transition process, the companyincorporated an open-ended unilateralcontract with a “supplement” that couldbe altered with little or no notice. Muchlike with FedEx’s drivers, Allstate’s motivationfor its conversion from employeesto independent contractor agents ismultifaceted. The final impetus for Allstateconverting its employee agents waslikely due to a combination of potentialinroads by its competition and multiplelawsuits relating to the tax status of employeeagents, many of whom were filingSchedule C’s with their tax returns.Then recently hired president Ed Liddyhad previewed his management styleat Sears when he terminated tenured employeesand hired them back as part-timers.This move alone saved Sears millionsof dollars in health insurance, pensions,401k plans and associated employee perks.Mr. Liddy chose to duplicate his prior effortsat Sears and rolled out an employeeto-independentcontractor conversion justas soon as he could.While this move assured shareholdersof a leaner overhead, it left some Allstatemanagers with doubts about the efficacy ofthis new agency model. Clearly, the companydid not want 13,000 newly mintedindependent contractor agents runningamok. Ed Liddy was confident the outcomewould be otherwise and for goodreason. Perhaps he was cunning enough tounderstand that he could ultimately keepemployee-like controls in place by retainingthe company’s huge arsenal of managersto administer the company’s edicts. Ifthat was the case, he succeeded.Ultimately therefore, one must assumeit is the overwhelming necessityfor control that overcame Allstate’s corporatesensibilities. Because the agentemployees’ controls were so deeply embedded,the company had no desire toconvert its long-standing corporate cultureto accommodate an independentcontractor model. Also endemic to Allstate’squandary is its frighteningly shortEmployee vs.Independent ContractorHow much controlis acceptable?Here’s a short list ofcontrols Allstate wieldsover its independentcontractor agents:1. Quotas, also known at Allstate as Expected Results. Potentialterminable offense.2. Mandatory office hours. Monitored and reported to your manager.Potential terminable offense.3. Mandatory call forwarding. Also monitored for non-complianceby management. Potential terminable offense.4. Mandatory meetings and training sessions.5. Blocking agents from receiving email from their professionaltrade association.6. Ever-changing standards for approvals to purchase books of business,as well as changing criteria for mergers, or satellites.7. Denying buyer approval without providing a reason.hiring process and a certain fear that anewly hired agent might not be capableof living up to its expectations. As employees,agents can be easily terminatedfor failure to perform. As IRS approvedindependent contractors, a different setof standards for expectations and terminationprocesses precludes Allstate’s previousmanagement style. Additionally,Allstate never fully transitioned its managersaway from their hands-on, controllingstyle of management. Simply put,Allstate was mandated to change, but itcould never abandon what for them wasthe only thing it knew. And as of today,managers are even more brazen.Where Do Agents Go from Here?Understanding that there is a problemis part of implementing a solution. Likely,there are members of Allstate managementshaking their heads in denialover this article. And just as surely, thereare agents who may doubt the extent of40 — Exclusivefocus Winter 2008/2009

the problem. Make no mistake about it;the level of control FedEx exerts over itsdrivers is a pale shade of gray comparedto controls Allstate exerts over its agents.FedEx drivers have their issues to be certain.But virtually every aspect of an Allstateagent’s job has been converted backto the days of employee status. Certainlythe IRS will be evaluating many corporationsin the coming months, Allstateincluded. Allstate agents can become involvedby simply retaining emails frommanagers. Agents should become moreinformed by reviewing the IRS guidelinesfor independent contractors. Froma non-Allstate computer, agents can doa GOOGLE search on such topics as“IRS fines FedEx”, “FedEx drivers’ lawsuit”and “IRS independent contractor.”Such searches will yield a large amountof information. Naturally, the companywould prefer that agents don’t see it. Butas always, knowledge is power. Use it.Agents should demand a true independentcontractor agreement like theState Farm contract. Their contract isbilateral, stapled, devoid of quotas, officehour requirements and conforms to IRSstandards. Unless and until the unilateralcontract is eliminated, agents will not betruly independent. Agents may also wishto contact the IRS on their own. On thestate level, agents can inquire with theattorney general’s office to determine ifthere are special rules or laws pertainingto independent contractors and if theirstate uses the Questionable EmploymentTax Practice (QETP).Pursuing a legal remedy is nevereasy, but it is a process that can be won.If enough pressure is brought to bear,if enough light is shed on this issue, ifenough agents stand up for their rights,then change can occur. Above all else,agents need to communicate with oneanother, share experiences, share information,and document everything Allstatemanagement sends to them.In order to be independent, agentsmust act independent and be treated asindependent. The next time you get awarning letter, or the next time a manageremails you about your year-to-dateperformance, remember that you are notindependent. The next time you sit downfor your annual review, or get an emailreminding you that you must keep youroffice open the day after Thanksgivingor on Christmas Eve, or get an emailreminding you to forward your phones,you are not independent.Independent contractors do not havemandated office hours, quotas, or mandatorysales meetings. Independent contractorsare not grouped into teams, anddo not have to sell insurance products inorder to help managers make bonuses.In conclusion, I leave you with a finaldirect quote from the IRS Private LetterRuling to Allstate:“Part IVApplication of the Law to the (redacted)Agent ProgramIn contrast, (redacted) Agents in the independentcontractor phase of the programwill not be subject to (redacted) supervisionor review, nor will they be required to follow(redacted) instructions, attend meetingsor meet any quotas. Rather, the detailsof their daily activities will be left entirelywithin the scope of their own professionaljudgment-- a factor crucial to the finding ofan independent contractor status.”Winter 2008/2009 Exclusivefocus — 41

technologyThink ThinRecently, Allstate made the decisionto shift all the responsibility for agencytechnology needs to you, the individualagent. Now a multitude of IT vendorsare vying for your business by eitherselling or leasing computer equipmentto you. Some may even offer costlymonthly service contracts. A viablealternative to this expensive endeavoris “thin client” computing utilizing ahosted virtual server.A thin client workstation contains nomoving parts such as fans or hard drives.It does not store any of the data locally –it is very thin in features and functionality– hence the term “thin client.” A standardcomputer has a lot of moving partswhile a thin client only has a few. Fewerparts mean fewer things can go wrong.The thin client contains enough informationto start up and connect to the server;the server provides the rest of the computinghorsepower. The user of the thinclient sees all the data, tools and featuresthey would on a standard PC. The reasonssomeone might use a thin client includereduced cost, ease of maintenance, ease ofuse and security. Because thin clients arerelatively simple, it is much easier to diagnoseproblems and repair them.Agents who are not computer savvywill have an easier time using a thinclient than a standard computer. Thinclients are also relatively easy to secure.Agency principals have the ability torestrict employee access to confidentialprograms or files.Server-based computing is the mostOverflowing inboxes? Files piling up? File cabinets everywhere?It’s the perfect time to go paperless.eBridge Solutions is the only Allstate approved,web-based document storage system. Quicklyand easily, you can transform all of your paperfiles into secure electronic images. With eBridgeSolutions, you can:• Access scanned or imaged filesfrom anywhere, any time• Virtually eliminate paper files and file cabinets• Decrease operating costs• Increase staff efficiency and productivity• Provide for disaster recoveryand business continuity• Increase compliance measures• Increase resource conservationAll of eBridge Solutions’ low-cost start-up and monthly maintenance fees can be chargedto your Executive Advantage card. Call eBridge Solutions today to set up ademo and see for yourself why now is the perfect time to go paperless!www.ebridge-solutions.com 877.676.6067efficient, flexible and cost-effective systemfor application, delivery and administrationof agency data. It offers the followingadvantages:• Reduces desktop hardware investment• Significantly reduces desktopmaintenance costs• All applications are available to allusers anytime and anywhere there is anInternet connection• Reduces risk of data loss since datais centralized and can be more easilybacked up• Reduces user downtime, such aswaiting for help desk response• Reduces system downtime throughbetter redundancy and disaster recoverycapabilities• Enables standardization of agencydocuments• Helps prevent theft of companydata• Virtually removes the need fordesktop upgrades• Removes desktop software applicationupgrades• Removes desktop operating systemupgrades• Removes viruses from the desktopA virtual server provides you peace ofmind knowing that experienced professionalsare responsible for the managementof your information. Thin clientcomputing is the best solution for Allstateagents at all levels of technologicalunderstanding. It provides the securityagents have become accustomed to withAllstate’s current support and the freedomand flexibility to grow your businessto new levels.Data-Tech is a full service IT company. Formore information regarding this article callSales at 800.473.1537 or visit them on theWeb at http://www.allstateconnect.com.42 — Exclusivefocus Winter 2008/2009

Expansionis tough.Cash flowis easy.Put your TPPto work for you!866 866Oak Streetis the Bridge.Fast. Easy. Done.»Loans and lines of creditfrom $25 thousand to$3.5 million»Loans funded in as littleas two weeks»Buy an agency or a bookof business»Upgrade your technologyNeed cash to grow your business and pay down debt?Don’t let you TPP just sit there, put it to work for younow and really watch your business grow! The cashyou’re looking for is literally at your fingertips. It’s in yourbusiness. A loan from Oak Street Funding unlocks thatasset allowing you to grow today.Why borrow against your personal assets when usingyour TPP is the answer?Start growing today.Contact me for your FREENo-Obligation Consultation.» Joe McCaslin 866-625-3863» joe.mccaslin@oakstreetfunding.comWinter »Target2008/2009new marketsExclusivefocus — 43

usiness tipsDefined Benefit Plansfor Small (and All) BusinessThe Best Annual Tax Deduction that’s Still OverlookedTThe old joke goes like this: “A pensionactuary is someone who wanted tobe an accountant, but lacked the charisma.”Maybe that explains why DefinedPension Plans (DB Plans) are so misunderstoodand underutilized.In his New York Times article, Benefitsin a Pension, for Now and Beyond, CharlesDelafuente wrote: “For a long time, ownersof small businesses have been able toput more income into a pension plan thansalaried employees can, deferring tens ofthousands of dollars in taxes. Gradualchanges in the tax law and the advent ofsimpler ways to maximize contributionshave sweetened that perk, especially forsmall-business owners who can afford todivert more of what they make into pensions.”Delafuente then adds: “One toolthat well-off business people can use is adefined-benefit pension plan authorizedby Section 415 of the tax code.”In spite of this, many accountants, financialadvisors and business owners aresurprisingly unaware of the benefits ofpensions, specifically DBs. They think ofthem as what teachers or police officershave. You work for 25 years and retire at50% of your final pay, which is correct.What they are unaware of is this: a oneperson company (real estate agents, dentists,electricians or insurance agents) canhave a DB plan too.And what’s so great about that? Well,instead of a tax-deductible contribution toa profit-sharing or 401K Plan capped at$46,000 ($51,000 if you’re over 50), a DBplan allows a business owner to contributea tax-deductible contribution of well over$150,000* annually! And the contributionlevels can be substantially “tweaked” eachyear if desired. The monies are invested bybusiness owners into investment vehiclesof their choice - and the entire amount isTAX-DEDUCTIBLE.Business owners with employees tellus, “It’s not viable; we have too many employees.The plan’s contribution will beskewed towards my employees. I don’twant to get a $200,000 tax deduction andhave to give $80,000 to my staff.” It’s avery valid point, but most often incorrect.Custom-designed DB plans that tierthe benefit formula have been around fordecades. They were generally utilized bylarger law firms who had better access tothe knowledge that these designs were IRSapproved, but many other businesses havenow become aware that this ability exists.Our firm has clients with anywherefrom 5 employees to 400 who contributeup to $1,000,000 annually into a DBplan and garner 88% of that tax deduct-Example: Perry O. Dontal Gum Surgery LLC Defined Benefit Pension Plan- Plan 1 Defined Benefit Plan Scenario 1EmployeeNameGenderDate ofBirthDate ofHire2008 % ofCompensation OwnershipProjectedMonthlyBenefitContributionCharles M 1/8/47 10/10/98 268,268.00 33.33% 5,103.00 113,672.00John M 6/22/53 10/10/98 268,268.00 33.33% 6,945.00 110,742.00Tom M 2/9/61 10/10/98 268,268.00 33.33% 11,274.00 85,148.00Ron M 9/7/81 2/21/08 32,500.00Cindy F 2/9/61 6/1/08 10,400.00Pamela 10/5/54 6/10/05 20,250.00 304.00 3,445.00Joe 1/26/64 3/7/03 21,300.00 1,491.00 9,704.00Sue 7/11/57 4/18/03 20,900.00 348.00 3,064.00Ronald 10/17/62 3/13/98 20,900.00 1,463.00 9,993.00Pete 2/20/48 6/9/06 21,700.00 181.00 4,115.00Mike 1/16/52 6/8/07 12,400.00 124.00 2,460.00Gene 9/6/46 3/30/05 17,500.00 146.00 3,229.00Victor 1/7/68 3/18/94 25,650.00 1,795.00 9,631.00Sal 6/30/56 8/1/97 21,225.00 354.00 3,378.00Vince 6/4/49 3/2/07 15,925.00 159.00 3,165.00Paul 3/20/52 6/9/06 13,500.00 135.00 2,695.00Steve 12/17/59 11/15/00 22,950.00 1,606.00 12,778.00John 3/12/50 8/15/96 23,520.00 Excludable 0George 9/15/54 1/6/85 28,200.00 Excludable 0Steven 2/11/46 7/5/02 23,625.00 Excludable 0Ivan 6/11/50 8/1/03 22,100.00 Excludable 0Kathleen 9/7/61 1/1/08 29,700.00 Excludable 0Alex 8/20/55 3/28/08 13,000.00 Excludable 0Total 1,222,049.00 100.00% 377,219.00Partners' Share of the Contribution 309,562.00Partners' Share of the Contribution as a % 82.06%44 — Exclusivefocus Winter 2008/2009

ible contribution for themselves. And,of course, these plans get IRS approvalletters confirming they pass all non-discriminationtesting in the Internal RevenueCode.Business owners interested in seekingmore information about DB Plansshould look for an experienced firmthat can design, install and do the annualadministration of Qualified PensionPlans. Also, in order to avoid an inherentconflict of interest, it would be wise tochoose a firm that does not sell or recommendinvestment vehicles.Depending on which pension actuarialfirm you chose, this expertise may only bean email away. And for savvy financial advisors,adding this service has proven to bea new weapon in their arsenal. Now whenthey sit down with a business owner, theycan offer them another choice. Whetherit’s a sole practitioner or an owner with500 employees, the EFS/financial advisorcan offer to provide them with a PensionProposal Study, which, depending on thepension actuarial firm preparing it, is normallyfree of charge. Then, if the businessowner is a candidate for a DB plan, or hasa poorly designed plan, guess who getscredit for the assets and annual contributions?Yup, it’s the EFS/financial advisorwho brought the deal to the pension actuarialfirm. It’s a win-win for the client, theEFS/financial advisor and for the pensionactuarial firm.*A 40 year old can contribute $74,001 annuallyA 45 year old can contribute $98,656 annuallyA 50 year old can contribute $131,527 annuallyA 55 year old can contribute $167,861 annuallyEven in these challenging financialtimes, our firm is still seeing business ownerscoming to us for these DB plans. Maybeit’s because the times call for more prudentplanning or simply because the crisis hasprompted many business owners to seriouslystart saving more for retirement andget a large tax deduction at the same time.Whatever the reason, it’s a good time forfinancial advisors to put this option on thetable for their business clients.Stan Lipton, a former mathematician forNASA’s Apollo 14 moon mission, foundedIntegrated Pension Design, Inc. more than25 years ago. His company is a pension actuarialconsulting firm specializing in thedesign and administration of QualifiedDefined Benefit, Profit Sharing and 401kPlans. For more information, visit www.intpen.com or call (800) 842-0581.Winter 2008/2009 Exclusivefocus — 45

usiness tipsHow to Keep Your HeadAbove Water in This EconomyBY DAVID NEUENSCHWANDERWWhen I was young I played baseball.I remember one game when we had thebases loaded and I had just come up tobat. It was a hot, sunny day in Houstonand the pitcher had his back to the sunso I was squinting just to see him. Justbefore he pitched, my coach shoutedsomething that became a life lesson forme, “Keep Your Eye on the Ball!”Now for my own pride, I’m not goingto tell you how that game played out, butI will tell you what brought that memoryto mind. In a consultation the other daywith a long-time client, I stumbled acrossan interesting discovery that joggedmy memory. As he and I were workingthrough a few of the issues in his agency,we inevitably got into a conversationabout the economy.We talked quite a bit about all of therecent moves in the financial industry andabout how it would affect things at Allstate,not just for the company as a wholebut, more importantly, for the agents onthe street who work their tails off for aliving. These hard working agents, however,don’t have unlimited resources nordo they have the energy to continuouslyspin their wheels. It’s like trying to pusha boulder uphill. How will they be affectedby the current economy?As my client and I talked, we came upwith a few answers, but one in particularkept popping up: in a slowdown, it’s incrediblyeasy for all of us as entrepreneursto fall into the same old business-asusual,survival mentality. There are evenmore distractions to take our focus off ofgrowing a hugely successful agency.Now, this might not seem like a majordiscovery, but it was amazing to learn that“taking your eye off the ball” happens inevery field and industry, not just in thebatter’s box. The response I’ve seen frommy most successful clients has been thesame: they implement better processes toget and keep clients and they stop wastingmoney on things that don’t work.Here are the top marketing tips theseagents have used:1. If you have a few small ads you use,print them on postcards and mail themout. Put a good headline at the top todemand the prospects’ attention. A goodpostcard can generate a flood of sales leadsat a small cost and, as a bonus, you can mailthe same number of different postcards todetermine which ad works best. This allowsyou to get new leads and spend yourprint ad dollars more effectively.2. Send a second offer to new clientsright away. One classy way this can bedone is with a thank you call or handwrittenthank you note giving them the opportunityto meet with you or your EFSfor a financial review. If it’s legal in yourstate, offer them a small Starbucks giftcard in exchange for the appointment.3. Newsletters. It costs up to six timesmore to make a sale to a new client thanto an existing one. If you use newslettersto help cement your relationship withyour clients, it becomes easier for you tosend them an occasional sales letter tocross-sell other lines or to upgrade theirexisting policies. This process can havea huge impact on your profit per clientand can increase customer longevity aswell. Print newsletters are the best butat a minimum e-newsletters are a must.4. Seminars and Open Houses have longbeen a staple of the traditional financialservices industry. Nearly all financialplanners grow their practices this way.An event is a great way to gain face timewith clients to keep your retention high.They can also be used as an opportunityto meet new prospects that you have developedthrough referrals or marketingefforts. Also, if there is a compelling reasonfor your clients to want to come, youcan ask them to bring a friend.Limit seating and make people RSVPto give the impression of value. “Comeand Go as You Please” doesn’t positionyou well and often limits turnout.David Neuenschwander is a nationallyknownmarketing consultant, specializingin helping Allstate agents grow theirbooks. For a FREE copy of his special report:“Massive RFG: How to Hit 5.5 in90 Days” visit www.MassiveRFG.com.This report reveals little-known secrets thatcan help Allstate agents have more fun andmake more money.46 — Exclusivefocus Winter 2008/2009

agent issuesAllstate’s Brief of August 12, 2008in EEOC vs. Allstate and Other Corporate Behavioral Issues ©BY RICHARD C LARKIN, CLUI have just finished reading the Allstatebrief of August 8, 2008 filed in Pennsylvania’s3rd Circuit Court of Appeals, inEEOC vs. Allstate. Readers should goto www.allstatecase.com, download thebrief, and read it in its entirety.In the brief, Allstate claims it offeredterminated employee agents four options,one being a base severance packagewhich did not require the terminatedemployee sign the release form.Requiring the execution of the releasewas “Option 1 (“Independent Contractor Option”):The terminated employee agent couldbecome an independent contractor in Allstate’sExclusive Agent program without meetingvarious requirements and restrictions, as wellas receive other benefits from Allstate, includinga transferable economic interest in thebook of business (10) written by the employeeagentfor Allstate, a bonus payment of at least$5,000, and higher commissions.” 1No mention is made concerning lossof pension, health insurance or otherbenefits. Nor did the company indicatethat the Office Expense Allowance(OEA) would vanish; no more wouldAllstate reimburse agents for any of theirbusiness expenses.Allstate claims that “The terminatedemployee is obviously better off having thesechoices, i.e., being permitted to choose the formof future income best suited to that employee’sindividual circumstances.” 2 “Obviously betteroff ” is a claim that could be vigorouslydebated by those the company allegeswould be so, but this is not up for discussionin this article.This author makes no claim to be alegal expert and has had no legal trainingor legal education, but I do claim to beknowledgeable in Allstate’s Machiavellianways and its talent for taking awaywhat it claims to have given.It is true that EAs may sell their economicinterest in their book of business, subjectto Allstate’s approval. It is equally true thatthe EA agreement between the companyand the agency owner gives Allstate the“exclusive judgment to approve or disapprovesales. The Agreement also incorporates the EAManual, which permits [Allstate] to amend thepurchaser requirements. As the Court previouslydiscussed in its analysis of Count I, the Agreement– which was signed by every agent – supersedesany prior written or oral representationand clearly states that any buyer of an agency isalways subject to final Company approval andthat the Company may approve or disapprovea buyer in the Company’s ‘exclusive judgment,’even if the proposed buyer otherwise satisfies thebasis requirements. Thus, [Allstate’s] decision tomodify the requirements for transfers of books ofbusiness was in accordance with its rights underthe Agreement.” 3So it appears that in this case ofNAPAA vs. Allstate, in which the courtruled in favor of Allstate, the company mayat any time, for any reason, arbitrarily butlegally, change the rules to approve or disapprovethe sale of an economic interest ina book of business. That being so, the benefitsclaimed by Allstate appear to be oneswhich it can provide or prohibit at will.It goes without saying that all agencyowners who are in a position where the proceedsfrom the sale of their agency may bea material and significant part of their retirementare in a vulnerable position. Thegreater this vulnerability is, the less an agencyowner may be inclined to voice their dis-Independent AgentsDon’t Want You to See ThisFREE Special Report Details How to Level the Playing Field With IndependentAgents, Stop Getting Beat Up Over Price Objections, and Blast Your RFG to 5.5 in 90Days or Less Guaranteed. Call Our 24 Hour Free Recorded Message To Request YourFREE Copy. (866) 595-0617 x. 6272 or visitwww.MassiveRFG.comWinter 2008/2009 Exclusivefocus — 47

pleasure over the conduct of the company.In the mind of this author, consideringthe harsh realities emerging aboutthe contractual relationship between thecompany and its agency owners, and factoringin what David J. Berardinelli haswritten about Allstate’s claim practices inhis book From Good Hands To BoxingGloves, I believe a strong argument maybe made that what is being witnessed isa form of economic terrorism practicedagainst agency owners and the insuringpublic disguised as a corporation’s obligationto maximize shareholder value.One particular group of shareholdershas benefited handsomely, and it does notrequire much imagination to guess whothe elite members of this group are. Anexamination of Insider Trading at Allstate,for the period of July 2003 throughAugust 26, 2008, the SEC reports thatthere were $2,572,431 total buys and$202,648,266 in total sales. 4 The insiders:senior executives and members of theboard of directors. The average annualamount this elite group of shareholdersreceived was $40,015,167.Readers are encouraged to visit www.auditintegrity.com. Here you will findthat in March 2008, The Allstate Corporationreceived a rating of 38 out of apossible 100. “This places them in the 8thpercentile among all companies, indicatinghigher accounting and governance risk than92% of companies. [Explaining its calculation,Audit Integrity states] ... score rangesfrom 0 - 100, with corresponding ratingsfrom Very Aggressive to Conservative.Companies rated Very Aggressive or Aggressivehave proven to be much more likely toface class action litigation and restatements,and to suffer severe equity loss. 5Serendipitously, two months earlier, inJanuary, a shareholder derivative class actionlawsuit was filed against Allstate andits board of directors, charging “breachesof fiduciary duties, abuse of control, grossmismanagement, and waste of corporate assetsthat are occurring. Defendants’ wrongfulcourse of conduct, as described herein, hasexposed the Company to regulatory liability,judicial fines and caused substantial losses toAllstate and other damages, such as to its reputationand good will.” 6To all agency owners who feel themselvesat risk while powerless to do anythingabout it, we do understand. If youare fearful of becoming a member ofNAPAA, join anonymously. Or simplypledge to make an anonymous annualcontribution equal to annual dues. We allshare a common goal: to make Allstatethe best insurance company in America.Join us and help NAPAA help you.1U.S. 3rd Circuit Court of Appeals, EasternDistrict of Pennsylvania, No. 01-7042. August12, 2008. 10. [Unlike an employee agent, anEA] has an economic interest in Allstate’s bookof business that can be sold subject to Allstate’sapproval.” Page 14-15.2Ibid. Page 2.3U.S. District Court Middle District ofFlorida, Tampa Division. Case No. 8:01-ev-2137-T-24 MSS. NAPAA vs. Allstate. April20, 2003. Page 26.4www.secform4.com/insider-trading5www.auditintegrity.com.6Fojas, Derivatively On Behalf of AllstateCorp., v Allstate. US District Court for theNorthern District of Illinois, Eastern Division.Filed January 18, 2008. Page 1.ADVERTISEMENTTired of High Premiums Driving Hot Prospects Out Your Door?As you know, in recent years gettingbeat up about the premium priceof the Allstate product seems to havejust become part of our business. Youget all the way to the close after a policyreview and the prospect is with you thewhole way, right up until they hear theprice and then the wheels fall off.“Can’t I find this cheaper online?”“I’d like to call the discounter downthe street.”Between that and the less thanagent-friendly changes at the HomeOffice it’s incredibly frustrating, andsometimes it’s enough to make youthink that maybe the insurance businessmay not be for you after all.It’s easy to feel that way with everythinggoing on in the economy and withinthe company. Well, you’re not alone.BY DAVID NEUENSCHWANDEREvery agent I’ve worked with in the pastfelt the same way at some point. The answerthey’ve found is astounding.The Leads And MarketingMost Allstate Agents UseBring Them Prospects That ArePredisposed To Reject Them BasedOn Price.Why is this so? Just take a look atthe TV commercials and TaG lettersgiven to agents to “help” them growtheir agencies. Most of these eithertalk about the affordability of Allstateproducts or don’t address it at all. Theyin no way prepare the prospect that theproduct is premium priced, therebysetting you up to have a dismal closingrate and constantly getting beat upabout price (not to mention the attritionthat rate hikes cause).Ok, so what’s the answer? Well,there are three.1. Attract Clients Differently ThanYou Have In the Past. The days of justgetting referrals, cold calling, and yourbook growing automatically are over.2. Quit Marketing Like Every OtherAllstate Agent. When you follow theherd you usually end up at the butcher.3. Open Your Mind to New AnswersFrom New Locations. Doingthe same old things in the same oldways will get you the same old results.The future is bright for those agentswho decide to press forward wiselywith new strategies. You can get moredetailed (and FREE) help to beat backthe price objection designed exclusivelyfor Allstate agents in a special reportavailable at www.MassiveRFG.com.48 — Exclusivefocus Winter 2008/2009

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.comWinter 2008/2009 Exclusivefocus — 49

usiness tipsHow Not to ClearIcy WindshieldsWWith the onset of unstable winterweather, impatient drivers will discovercreative ways to break their vehicles’windshield glass while removing ice beforetheir fingers go numb.Now is a good time to warn yourcustomers not to try these ideas at home:• Pour hot water on the windshieldand windows to melt the ice. Make sureit melts the ice completely so the frozenglass will shatter due to the extreme temperaturechange.• Tap the ice with a hammer to breakthe ice into pieces to pick off the glass. Ifthat doesn’t work, hammer on a screwdriveror ice pick. This usually results inan impact hole or a large crack.• Scrape the ice off with a metalscraper, key, spatula, utility knife orcrowbar. The metal either scratches orcuts grooves in the glass.• Use a credit card to scrape the iceoff the glass. The credit card doesn’t damagethe glass, but it could break, which isanother problem altogether.• Use a propane torch to melt the ice.Not only is this dangerous to the torchbearer,but this also can unintentionallymelt the glass.• Pour a mixture of vinegar and wateron the windshield so that it freezesto the glass before the rain does, therebypreventing ice. Unfortunately, vinegareats pits into the windshield glass.These ideas may be creative, but theycan be hazardous. Here’s a better processfor safely removing ice from vehicleglass: gradually heat the glass from theinside while scraping and brushing icefrom the outside.Following are some additionalwinter weather tips:1. Check to make sure no ice or snowis obstructing the vehicle’s tailpipe. If it iscovered, the ice or snow must be removedto prevent the possibility of carbon monoxidepoisoning inside the vehicle.2. If the car door is frozen shut withice, pour cool water to melt the ice anduse a plastic ice scraper to carefully chip acrack in the ice around the door seal andthe lock. Do not try to “unseal” the doorby using a hair dryer, cigarette lighter, icepick, screwdriver, propane torch or portableheater.3. Start the vehicle and use the defrostersetting on a medium setting togradually warm the glass. Wait at least fiveminutes for the car to start to warm up.4. Use a plastic ice scraper and a softplastic bristle brush or broom to clear theice. A squeegee also helps.There are de-icing products on themarket that may shorten the time it takesto melt the ice, but they have mixed results.The most important thing is to plansome extra time to remove the ice beforetraveling. If a windshield is chippedor pitted, it may be able to be repairedrather than replaced. Windshield chiprepairs save customers money and saveagents claims because they can preventfull cracks.If the windshield does need to be replaceddue to a crack, consider installingan original equipment (OEM) qualitywindshield. OEM windshields will fitand seal properly with the factory-recommendedadhesive. Leaky windshieldsthat freeze can crack at the edges, resultingin another replacement. That coulddouble the claim, not to mention upsetyour customer. Also ask if the glass shopguarantees the replacement windshieldfor a year against future road hazarddamage. There’s nothing like replacing awindshield only to get a crack from flyingrocks after the icy roads melt.Dan Mock is Vice President of Operationsfor Glass Doctor, the nation’s largest fullserviceglass repair and replacement companyfor home, auto and business. For moreinformation about the Glass Doctor G12windshield replacement guarantee, contactDan at 1-800-280-9959 or Daniel.mock@glassdoctor.com.50 — Exclusivefocus Winter 2008/2009

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usiness tipsUnderstanding Online MarketingThe Search for OptimizationBY LORI REEDThe insurance industry has not beenknown for its impetuous nature or forbeing on the leading edge of technology.That has been especially true from an Internetor Web technology point of view,until recently. The Internet StandardsAssessment Report (ISAR) concludedthat the insurance industry was “underperforming”online, citing the conservativenature of the industry and a generallack of innovation. But the time has finallycome as the industry embraces theInternet and all it can do for insuranceagents, agencies and carriers. As the Webevolves, so has the marketing end of theInternet and recent developments havemade it more important than ever forinsurance professionals to leverage theInternet for marketing purposes.Everyone knows Internet usage hasskyrocketed, but the statistics answer thequestion “Why should I care?” Well, onereason is because 210,080,067 Americansare online today. According to Jupiter Research,72% of auto insurance shoppersuse the Web to find a policy. In April of2008, comScore reported that 80% of newauto insurance policyholders used the Internetto find insurance. The good newsis the same report indicated that purchasingfrom a local agent has always been,and still remains, the primary method bywhich people purchase insurance.Internet shoppers are spending hundredsof billions of dollars online so it’sno surprise that marketers in all industriesare compelled to get involved. Andthey are spending billions to reach theseInternet shoppers. With an estimatedtwo-thirds of all consumers using the Internetto get information, the insurancecarriers and agents have much to gain bybuilding a Web presence and attractingconsumers who are looking for insuranceinformation, quotes, and more.The best defense is frequently a goodoffense. To advance your agency’s business,you need to understand and useonline marketing wisely. The focus ofyour online marketing dollars should beto send more good prospects your way(not necessarily to become famous onthe Web). One way to accomplish thisis to utilize Web-based ‘search engines’to best represent your agency and get theright customers to your site. There areother great ways to leverage the Internet,like using companies that provide leadsor actually buying Internet advertisingspace, but the focus here is helping youget prospects to your own Website.Marketing and AdvertisingOnlineSearch Engine Marketing (SEM) isthe term and process used for this particularsegment of online marketing; ingeneral, it means using the power of thesearch engines to get the consumer’s attention.It is not necessarily new, butthere is no question it has become a keypart of most marketing programs. Over80% of Web traffic comes through searchengines (rather than from someone specificallyentering a Web site address).Search engines are the beginning pointfor most Internet users, especially whensomeone is researching a topic, like insurance.People no longer bother to remembera specific Website address when it is givento them. They know they can easily find itwith Google or Yahoo, so why should theymemorize something if they don’t haveto? In a recent Yahoo survey, 75% of therespondents said they turned to a searchengine because they couldn’t remember aURL from a TV ad. It is also likely thatthe consumers are so distracted by countlessresults that they never bother to findthe original site they were looking for. Thismay make life a bit more exciting for theconsumer, but much more complicated forthe advertiser.Understanding Search EnginesTo understand how to use the Webto increase your sales, it’s important tolearn the basic framework of a search engineand understand the results. All mostpeople need is a basic primer on searchengines, just enough to understand howthey work. Most of us should not aspireto master them. (The experts spend alltheir time trying to outsmart Google, oreven just appease Google, so don’t expectto do this yourself ).Popular search applications likeGoogle and Yahoo have programs thatsearch, review and catalog every Websitethey can find -- these programs are calledrobots or spiders and the process is called‘crawling’ through a Website.When a consumer enters a search requestsuch as “home insurance quotes,”these crawler-based search engines operateas follows:• The search engine program crawlsthough the Internet, searching for pagesthat match the user’s request. ( i.e. homeinsurance quotes)• When the search engine programfinds a Website or page, it studies thecontent of the page and follows all thelinks to other pages that are within thesite, looking for information that matchesthe search term.• The search engine program selectsall relevant pages and files them into aWeb Rolodex of sorts, which stores allthe pages the spider has read and foundas a match.• The search engine software then re-52 — Exclusivefocus Winter 2008/2009

views these pages, puts them in an orderof ‘best match’ (ranking) using a complex— and top secret — algorithm.• In just a matter of seconds, thesearch engine displays its results to theuser on a “results page”.In the early days of search engines, allthey displayed was a short list of matches.These lists, called natural or ‘organic’listings, are found on the left-hand sideof the results page. The results are rankedby the search engine based on the relevancyof the page to the search term. Soif you have a Website named the JaneSmith Insurance Agency of Your HomeTown, anyone who searches those wordsshould find your Website. And in yearspast, they probably would have. It is notguaranteed anymore. Web savvy individualsadjust their Websites to communicateto the search engines and influencethe search engines to place them high inthe rankings. Some Websites do this betterthan others. This adjustment is called“search engine optimization.” The optimizedWebsites are placed in a higherposition than other Websites, simplybecause the search engines understandthem better.It is essential to have a Website set upso important key words aren’t missed bythe search engine. Remember: someonewith Web development and search engineoptimization skills should help youset up your Website accordingly.Paid SearchAs more businesses focused on searchengines, the search engines became morecommercial. Now, a business will pay thesearch engines to display a Website addressif someone searches on key wordsthe business bid on and paid for. These‘paid search’ results are listed separately,but are located on the same results page;they are commonly found at the topand on the right-hand side of the page,and are essentially Web advertisements.These advertisements (paid search listings)are also ranked using a variety offactors, including price and the searchengine’s own special algorithm.General GuidelinesNo one is suggesting that you shouldtry to figure out the search engine’s algorithm,but there are some key actions youcan take to help your agency appear inthe results. Take note here: your agencyis just not going to compete on such keywords as auto insurance or home insurance.(There are 30 million matchesfor the key word ‘auto insurance’). Youshould aspire to have your Website appearif someone types in your name,your location, and your type of insurancecoverage. And to accomplish that, youshould have a Web designer help you.There are a few general guidelines tosetting up a Website:• The title of each page should reflectyour key words and probably yourcompany name. (That title shows up inthe top blue line of your browser).• Too many graphics on your pagemakes it difficult for the search enginesto understand your business.• You want to have about 250-300words on a page, using key words appropriately,but don’t ‘key word stuff ’.(Key word stuff means using a key wordrepetitively just to get the attention ofthe search engines. It doesn’t work. YourWebsite will be ranked lower if you use aword too many times).• Put links on some of your Webpages to other pages on your Website.(Links and a hierarchy to your Websiteare good).These are simple first steps in a Websiteoptimized for search engines. But thepoint is use a master at this; you are theinsurance agent, not the Web developeror SEO manager.ConclusionTo leverage the ROI on your marketingdollars, be aware that search enginemarketing is becoming increasingly importantand that most Internet researchstarts with a search engine. Your Websiteneeds to be optimized for this environment–and– Website optimization is notfor the amateur. Insurance agents sell insurancebetter than anyone else, and thatis what they should focus on. Search engineoptimization and Internet marketingis best in the hands of a professional.But now you know the right questions toask about search engine optimization.Lori Reed is Director of Marketing for InsureMe.InsureMe, a Bankrate company,helps millions of consumers find the rightinsurance, while providing thousands ofinsurance agents with high-quality, realtimeleads. For more information, check outwww.insureme.com or the daily updates onthe InsureMe Agent Blog at www.insuremeblog.com.Winter 2008/2009 Exclusivefocus — 53

letters to NAPAAContinued from page 12Nancy:Just got off the phone with you andreally enjoyed the conversation. Enclosedis my application for NAPAA and a smallcheck to the Action Fund. The donationto the Action Fund is something I thinkI can contribute as a permanent monthlyexpense just like my IRA. It’s small, butwill continue. Rest assured I will try torecruit some members…I think Allstatemay be helping your cause with its currentpath.Here’s what’s happening in my area:• On July 1, 2008, a 20 year agentwas allowed to buy out his office mateand merge the two books. They hadshared the office for 20 years. The dealwas originally denied when he presentedthe forms to the TDL. When he appealedto the RVP, he pointed to his performancefor the past few years and thefact that the selling agent had no 6 & 63.When it was all said and done, the RVPapproved it.• This past summer an outside buyerbought 3 books on the west side of townand was allowed to merge them into onelocation. Note: the “outside” buyer ismarried to an MDL.• A former MDL bought a bookearly in 2008. On November 1, 2008 hebought another book as a satellite. Its located80 miles away.• A local agent made a deal to sell hisbook to an outside buyer. The buyer hadno insurance background. He obtainedhis Life and P&C licenses, his 6 & 63,and attended the two schools. He was allset to go, but he lost his funding due tothe credit crunch. The book is back onthe market.Editor’s note: NAPAA has heard numerousstories across the country about sales fallingthrough after financing is denied.I am writing to just say that I havetaken the TPP for not meeting the Standardsrequired by Allstate. I started myagency from scratch in May of 1998. Myson and I have been here from the beginning.Unfortunately, I was not able tosecure a buyer earlier this year and musttake the TPP effective 12/31/2008.A strange little twist occurred in Octoberthough. An agent who had lookedat buying my agency earlier in the year,stopped to see me again the first weekin October. He stated that he did notwant me to get the wrong idea, but hewas opening a scratch agency in our cityJanuary, 2009. He wanted to rent myspace, use the same phone numbers, andpurchase my furniture. In other words,he pretty much wanted to keep the operationgoing without an interruption.Now I have found out that he is beingseeded my accounts from Allstate. Itsounds a little fishy to me. But, that's theworld of corporate life at Allstate.I just wanted to advise NAPAA aboutanother Allstate agent going the route ofthe TPP.Editor’s response: Thanks for letting usknow. Sounds like management made a dealwith the new agent. Since they knew youwere for sale, they may have promised thathe would inherit accounts from your agency,which would be interfering with your effortsto sell your agency. If you could proveit, you might have a legal case.I have been a long time member. I amwriting because I think I need to knowwhat my rights are in case Allstate terminatesmy contract. What is my legalrecourse?NAPAA response: Unfortunately, yourAllstate contract has a clause that specificallygives Allstate the right to terminate yourcontract without reason simply by providingyou with a 90 day notice. This clause is verydifficult to fight – in fact, we know of noagent that has ever successfully won a caseagainst the company for having the R3001contract terminated.Hi Nancy,I read such wonderful things aboutyou. I hope that one of these days ourpaths will cross. It is people like you andJim that do so much for agents and getso little in return. I am just one little guyout here, in a little town, in a little state,desperately trying to make a living. But,I’m also a guy who wants to express hissincerest gratitude for what you do.THANK YOU NANCY FISH!!!Dear Bob Isacsen:Thanks for your timely President’s messagedescribing the daily struggle for agents.I started as support staff for my dad in1985 and then bought his book in 2001when he retired. I always assumed I wasa "lifer," and would sell to one of my kidssomeday. But the pressures of today aremounting, and it gets harder to make aliving. I have been aware of these issuesfor some time and every year the companycreates a new program to reduce agentincome or increase agent expenses. Theyseem intent on making us pay more andmore to stay in business. The question remains- what can we do about it? I ama dues-paying member and look forwardto your publication, but am not sure thatwe can affect any change. The culture isfor the company to feather its own nest. Ithas been that way for so long that I don'tthink they have any interest in listening.Yesterday, I watched the 3rd quarterreport the company put on Gateway. Iwas stunned to hear that the company islosing 5000 clients per day. I know I took54 — Exclusivefocus Winter 2008/2009

letters to NAPAAeight cancellations this week. I encouragemy staff to be the best darn agency intown. But even after writing over 1000policies this year, I am not making theRFG grade. It's depressing. I try to beoptimistic, but it's getting harder everyday.What can we do? Suggest some actionand I will try it! Thanks.I have never communicated with youbefore, but I want to express my thankfulnessfor your organization. I reallyappreciate the information contained inyour magazine and the efforts you aremaking on behalf of me and my fellowAllstate agents.I am going to join NAPAA as soon as Ican afford it. Unfortunately, I just experienceda 32% loss of income in one monthdue to the commission chargebacks weare experiencing here in California. Myincome is now the same as it was in 1999when I was a one-year agent.I used to be a “large” agency, but amnow a “medium” agency and I’m on paceto earn Inner Circle. Yet, in spite of this,I am struggling. Once I get my bonus itwill help erase my debts and allow me topay my income taxes. Hopefully, thingswill get better and I won’t have had tolayoff any of my wonderful staff.I am a 20 year agent. I started out underthe R1500 Agreement and now, ofcourse, I am an EA. I have done well inmy small town and have high retentionand a low loss ratio. I have been loyal andworked hard for Allstate. I even madeChampions Gold in 2007. This year, myRFG has suffered because of some personalissues in my life. My father passedaway last spring and I have had to devotea lot of time to my family. My MDL iscold, uncaring, not helpful in any capacity,and threatens "termination" at everyturn. We now call him “hatchet man.”Anyway, I need to weigh all my optionsas I don't know if he is bluffing ornot. Even if he is, I am not sure I cancontinue to work with a company thatallows its managers to get away withsuch treatment.I am looking for resources or guidancein how to start the process, valuation, andwho needs to know at Allstate. There isnot much information on the NAPAAsite or on Allstate's site. I don't want togo in blind. This needs careful researchand thought. Thanks for any help, pleaserespond by email for now.Editor’s response: NAPAA has resourcesthat are available to help members sortthrough such issues. This includes one-ononeconsultations with experienced NAPAAboard members as well as our staff atNAPAA headquarters. Plus, there are additionalresources available in the “MembersOnly” section on our Website.Like anything else today, selling anagency can be difficult. First, there are a lotof agencies for sale and, second, it is harderfor buyers to obtain financing than it wasa few years ago. In spite of this, some desirableagencies have sold for top dollar inthe past year. Aside from all the usual sellingfeatures, such as a great location, and goodloss and retention ratios, finding a qualified,motivated buyer is essential.In my recent email, I forgot to ask ifNAPAA has received a copy of the newAllstate booklet, “Reinvent - The AllstateAgency Guide to the Future.” Afterreading all of the articles about Canada, Ijust about lost my cookies when I startedglancing through this new publication. Itwas passed out to all of the CA agentsat the recent mandatory meetings theycalled to roll out the Your Choice Autoand motorcycle products.If you didn't get a copy and wouldlike one, I'll be happy to mail you mine.However, I recommend you read it on anempty stomach.I admit that my husband and I hadbeen part of the “NAPAA LeechesGroup” – the silent folks who gainedinformation from Exclusivefocus andbenefited from NAPAA's efforts buthadn't paid for the privilege by joiningNAPAA. When we moved our officeearlier this year and I sent you a changeof address request, you very courteouslyreminded me of our nonmember status.I’m so glad you did. We immediately sentin our membership dues and are now sosorry we procrastinated so long.I read each issue cover to cover. Since wework in such an isolated little cocoon, it’s a bitoverwhelming to get all the data on what'sgoing on in the bigger Allstate picture. It’spretty scary. Thank you for your diligent effortsto promote and protect the endangeredvoice of the Allstate agent. We're so glad wefinally joined the team.Please withhold my name - for obviousreasons – if you choose to print anypart of this in the “Letters” portion.Book of business purchases are happeningin my state, but mostly to outsidebuyers. One of the top agents in thecountry is from this area and made InnerCircle last year. Earlier this year she wasable to buy a second book with a secondlocation. Recently, I asked her how itwas going. She told me she is completelyoverwhelmed and barely able to makepayroll or pay her rent. Between staffingissues and commuting between the twooffices she is practically killing herself tokeep up.I also know of one agent who wasable to merge two books into one location.In this case, the wife was the agentand her husband was staff. He becamean agent, bought a book and was allowedto keep it at the same location ashis wife. I wish I could get my husbandto do the same thing!Winter 2008/2009 Exclusivefocus — 55

Management has been on a pushto "grow with who you know" and getagents to start a satellite location. Notmany are biting due to high quotas andexpenses to run two locations. Plus, it’shard to sell in this environment. Ourauto rates are not competitive at all, realestate is not selling, and prospects areafraid to change companies with all thetrouble with the economy.I'm sure you have heard all this, butjust in case, I thought I would let youknow what's going on in our area.Thanks for all you do. I look forwardto getting your emails and hearing allsides of the story. Have a great day!I received a letter last spring that informedme that I must be “on pace” by theend of June 2008. Later, I was sent a newletter stating that I had until 10/01/08 toget on pace. Then at the end of August,my manager called and told me that Ididn’t make it and that the company hadsome buyers I should talk to about sellingmy agency. I explained that accordingto the second letter I received, I haduntil 10/01/2008 to get on pace – thismade him angry and he insisted that Iwas wrong. Soon after, he called to tellme that I had until the end of September,but that I should consider talking tosomeone about buying my agency.Mine is a “medium” agency and twoof four of the results are being met. Asfar as I can tell, I am meeting my AFgoals, but for some reason, my reportsdon’t reflect it. We’re in a hard marketand several agents have already left thecompany this year and two others, whowere located near me, just walked away.Who does the company think it can hireto replace us and do any better?Editor’s response: NAPAA has recentlyletters to NAPAAreceived dozens of calls from agents whohave been issued letters threatening terminationif they don't meet their Expected Resultsquotas by year end. The termination ofcontracts has been ongoing throughout 2008and, based on the number of calls we'vereceived, it appears that a good number ofagents will be terminated in the first quarterof 2009.It is very disturbing to receive a faxstating that Allstate is blocking the e-mail delivery of your newsletter. Do theyhave something to hide?I will check your Website out immediately.Nancy,Thank you for the agent-to-agent referral.Tell Jim that I said to give you araise!I just received your magazine and thereading was interesting. I believe AllstateCanada has lost around 120 senioragents. They have either retired or havemoved on to the broker system. A lot ofthe remaining staff are positioning themselvesto work in the banking system.Also, I have talked to some of the Allstateagents in Kingston [Ontario]. Theycollected their first paycheck without renewalcomp and they are in shock…Regards,Jim DoreyNote: Jim Dorey is a former AllstateCanada agent and NHL star. He is oneof many agents who have left the companysince the announcement of its new Canadiandistribution model in July 2007. He isnow co-owner of an independent brokeragefirm in Kingston, Ontario. His NHL careerincluded stints with the Toronto MapleLeafs and the New York Rangers.Do you know what the status of theclass action lawsuit is with Allstate Canada?I can’t call or email other agents inOntario because the company listens toour conversations and reads our emails.My real question is, do we have tocontact anybody to be included in thelawsuit or are we automatically part ofthe class? It has been a long time and Ihaven’t heard anything.NAPAA response: Following is the “officialstatement” that was provided to us byEsther Kafka, a plaintiff in the case:"A Class Proceedings Judge has been appointedto our case.Our Class Action attorneys are finalizingthe motion materials which will be used toseek an order certifying the action as a classproceeding. Once completed, the materialswill be served upon the defendants throughtheir counsel and filed with the Court.At that point, the Designated ClassProceedings Judge will set a date for theargument of the certification motion and aschedule for other filings and interim stepsleading up to the argument of the motion.It is not necessary for any agent to doanything in order to be included in the lawsuit.The Class Proceedings Act is by defaultinclusive, rather than exclusive. This meansthat all agents will automatically be includedin the lawsuit, subject to their right toopt-out and exclude themselves, if the Courtcertifies the action as a class proceeding andprovided agents fall within the Class as definedby the Court.Specific information pertaining to theclaim is available at www.classactionlaw.ca. The Website information will be updatedregularly as developments occur. Agents areencouraged to check-in on a regular basis."56 — Exclusivefocus Winter 2008/2009

Winter 2008/2009 Exclusivefocus — 57

the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleCALIFORNIALos 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. Lease$1375/mo. Agent will stay 1year for transition. Approvedbuyers with approved financingonly.ChatsworthMike KrupkaMikekrupka@allstate.com888-457-8752Asking Price: Will discussPIF: 6,900 Premium: $8,000,000Number of Staff: 5 (4 lic)Large Agency! 25 yr agent,same location, 17 yrs InnerCircle. Agency generates$1,050,000 from Allstate alone.Keeping Blue Cross book. 5 yrretention 92%, LR. 44%. Lease$1900/mo.PetalumaJohn FeerickJohnFeerick@allstate.com707-763-2238Asking Price: $540,000PIF: 1,700 Premium: $1,800,000Number of Licensed Staff: 2Great location 22+years. Agentretiring after 38+ years, staffwill stay. Cell: (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 - long termlease available. Retention 88.39.LR 38.41CONNECTICUTNorwalkRonald 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.FLORIDADeltonaDenise Whitedwhiteco@gmail.com386-532-1206Asking Price: $150,000PIF: 700 Premium: $734,000Number of Licensed Staff: 23 year agency, qualifies fornew agency bonus. Listed inall phone books. Includes F&F,800sf, $1500/mo. Allstate bookonly $300,000 in prem. price$90,000.JupiterDebbie Coppoladebbiecoppola@allstate.com561-603-5006Asking Price: $750,000PIF: 1,450 Premium: $1,900,000Number of Licensed Staff: 2Price includes Citizen’s, RoyalPalm, St. John's, etc. Call forinfo on gross agency revenue.Retiring after 30 yrs due tohealth reasonsSaint Lucie CountyJohn G Gaffneyjgaffney312@aol.com772-828-0008Asking Price: $1,350,000PIF: 3,750 Premium: $5,000,000Number of Licensed Staff: 52 locations in Saint LucieCounty. Combined = PIF count3,751 & $5mil GWP. 2007 NationalConference, 5 figure RFGBonus. 100% funding required.Approved buyers onlyMiamiEduardo Aljureeakpea@comcast.net305-785-7082Asking Price: $180,000PIF: 313 Premium: $701,645Number of Licensed Staff: 13 yr agent. Fully furnished andequipped. No owner-financingavailable. Qualifies for newagency bonusFort MyersAlberta LewisALEWIS@EMBARQMAIL.COM239-560-3732Asking Price: $250,000PIF: 650 Allstate, 500 BrokeredPremium: $900,000Number of Licensed Staff: 1Qualifies for new agent bonusesJacksonvilleTony Hasserttonyhassert@allstate.com904-744-0098Asking Price: $650,000PIF: 1,600+ Premium: $1,850,000+Number of Staff: 1.5 (1 lic)Retention 90.55%, LR 43.77%On main, 5 lane Blvd, bestlocation in Jacksonville area!KissimmeeLarry 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, turnkeyKissimmeeDale Revelsdalerevels@gmail.com407-924-5336Asking Price: $850,000PIF: 1,100 Premium: $2,200,000Number of Licensed Staff: 121 year agent. Paperless office- over 19,000 documentsscanned. Close associationwith Allstate Hall of Fame LifeSpecialist. Low overhead.OrlandoJerry ZanfardinoA082639@Allstate.com407-351-7040Asking Price: $900,000PIF: 1,900 Premium: $2,750,000Number of Licensed Staff: 2Great lease, $1600/mo, 950sf.Companies: Allstate, RoyalPalm, St. Johns, Universal,Citizens. TPP 310,000, LR 41%.Approved financing only.Palm BayRichard Youngermrrgy@earthlink.net321-591-2225Asking Price: $2,500,000PIF: 4,500 Premium: $5,600,000Number of Staff: 4 (2 lic)Turnkey. 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 5 room office,downtown, tastefully furnished.Turnkey. Will assistin transition. Talented EFS.TPP $140,000. Call 9AM-11AMAloha time58 — Exclusivefocus Winter 2008/2009

the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleIDAHOMoscowNadine Belieunadine@allstate.com208-882-8000Asking Price: $380,000PIF: 1,800 Premium: $1,400,000Number of Licensed Staff: 119 yr agent, retiring. Retention89%, LR 23%. Lease:1330sf, $770/month. Will helpwith transition. Beautiful area- hunting, fishing, recreation.ILLINOISDecaturGaylan Turnergaylanturner@allstate.com217-422-7600Asking Price: $300,000PIF: 1,284 Premium: $1,059,000Number of Licensed Staff: 19 year agency. Qualifies for enhancedcommission program.Owner selling due to health.Community of approx 80,000with little Allstate competition.LyonsJim Reinharda086138@allstate.com708-447-8000Asking Price: Open to offersPIF: 1,383 Premium: $1,354,637Number of Licensed Staff: 187.8% retention, same location30yrs, motivated to sell.E MolineRosales Agencysrosales1@mchsi.com309-737-1688Asking Price: Will discussPIF: 2,650 Premium: Just over2 millionNumber of Staff: 2 (1 lic)20 year agent, ready to retire.Licensed in IL and IA. Establishedlocation w/low-overhead,long-term assumablelease. Will assist in transition,staff willing to stay.RoscoeGuy Jangguyjang@allstate.com815-623-7131Asking Price: $150,000PIF: 850 Premium: $700,000Number of Staff: 0Qualifies for enhanced incentiveprogram for new agent/satellite. Growing suburb ofRockford. Priced for quicksale.GurneeMark GrahamAllstate85@aol.com847-217-9189Asking Price: NegotiablePIF: 3,500 Premium: $3,800,000SALEPENDING!ChicagoP. A. Hill & Associates CoPatricia1811@sbcglobal.net773-241-6040Asking Price: Will DiscussPIF: 1,400 Premium: $1,500,000Number of Licensed Staff: 1Established agency, samecommunity for 20 years. GoodLR and retention. Buyers musthave financing.ChicagoRob Anderson, seller repfinancialforum@sbcglobal.net773-213-0010Asking Price: $1,100,000PIF: 3,400 Premium: $3,400,000Number of Licensed Staff: 325 year agency, 89% retention,40% LR. All staff have P&C /Life license and over 5 yearsexperience.ChicagoBert Gazmenegazmensr@sbcglobal.net847-977-7685Asking Price: $560,000PIF: 1,617 Premium: $1,799,213Number of Licensed Staff: 2Confidential. Scratch agency,>4 years young. Willing totrain. Provide your best offer(Jefferson Park)Buffalo GroveSandy Joungsandyjoung@allstate.com847-537-3355Asking Price: $550,000PIF: 1,550 Premium: $1,780,000Number of Staff: 2 (1 lic)Same location 20+yrs. Competitiverates, Priced for quick saleMAINEAugustaAndrew PerryAndrewPerry@allstate.com207-623-1394Asking Price: $195,000PIF: 1,120 Premium: $900,000Number of Staff: 1 (0 lic)90.3% renewal ratio, 12 moLR 37.61%, 24 mo LR 47.80%.Atlantic Ocean to the east,mountains to the west, greatplace to live. Agency qualifiesfor new production bonuses.MARYLANDFruitlandJack Thomasjackthomas@allstate.com410-341-0805Asking Price: $250,000PIF: 980 Premium: $1,094,000Number of Licensed Staff: 1Same low cost location beautifulEast Shore since 1998. LR36.3%. AFS PC $38K in 07. LifePIF=218. Great satellite opportunity.I'll be 62 in Dec, retiringafter 22 years.MICHIGANSouth HavenJason PageJasonPage@allstate.com269-214-8086Asking Price: NegotiablePIF: 557 Premium: $500,000Number of Licensed Staff: 1LR 38.99%. Retention 82.34%.Growing area. Qualifies forenhanced incentive underESA/new agent program.Reasonable, negotiable officespace. Currently partneredwith EFS.MONTANAMissoulaNicole SchreckendgustSchreck@allstate.com406-728-6336Asking Price: Will DiscussPIF: 1250 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: 2, (1 lic)Clean book. Agency established21 years. LR 40%, retention89%.Las VegasCarolyn Haywoodchaywood@allstate.com702-648-0166Asking Price: $175,000PIF: 655 Premium: $780,144Number of Licensed Staff: 1Las VegasBill Brennanbillbrennan@allstate.com702-233-6700Asking Price: NegotiablePIF: 1,400 Premium: $1,900,000Number of Licensed Staff: 2Winter 2008/2009 Exclusivefocus — 59

the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleLas VegasMary Ann ConnollyMAConnolly@allstate.com702-604-0732Asking Price: NegotiablePIF: 1,270 Premium: $1,595,000Number of Licensed Staff: 210 year agency, great location.83.63% Retention, LR 42.41%.Turnkey. Serious inquires only.NEW JERSEYNew ListingPoets 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, Turnkey. Rumoredto be the nicest office in NJ.Build out was over 150K.NEW MEXICOLas CrucesMark A Vincemarkvince@hughes.net575-640-7345Asking Price: $780,000PIF: 5458 Premium: $3,100,000Number of Staff: 2.5 (2 lic)Confidential, do not call office.25 yr agent, multiple awardwinner. Highly visible location22 years. Retention 88%, LR34%. Seasoned, bilingual staffstaying. Positive cash flow!NEW YORKAstoriaEd Rodriguezerod1@prodigy.net718-274-1004Asking Price: $749,000PIF: 2,500 Premium: $2,500,000Number of Staff: 2 (1 lic)New YorkCentral ManhattanAgency, Inc.bisacsen@optonline.net917-553-6404Asking Price: $450,000PIF: 1,900 Premium: $1,700,000Number of Licensed Staff: 1Seller Rep – Bob Isacsen. Callor Email bisacsen@optonline.net, and 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.OREGONBendStan Stiebenstanstieben@allstate.com541-318-8536Asking Price: NegotiablePIF: 1,274 Premium: $1,000,005Number of Licensed Staff: 1Same location 10 years. Fastgrowing, highly desirablearea. LR 31.57%, Retention L10,88.60%, L70, 91.94%. Ownerretiring, will work as consultantif desired.TENNESSEEKnoxvilleConfidential listingprest222@yahoo.com865-691-0000Asking Price: NegotiablePIF: 1,200 Premium: $900,000Number of Licensed Staff: 1Affluent area, long time agent,high renewal ratio, LR under20%, low overhead, willing tosplit to

National Association of Professional Allstate AgentsP.O. Box 7666 Gulfport, MS 39506 Phone Toll Free: 877.627.2248December 20, 2008Re: NAPAA announcement of exciting new afffiliation with Protection OneDear Allstate Agents:We are pleased to announce that NAPAA and Protection One, one of the largest security companiesin America, have teamed up to offer advanced, professionally-monitored security services foryour offices. As part of this affiliation, your office will now qualify for preferred pricing on a customizedsecurity system.As part of its due diligence, NAPAA sought a partner it could trust to handle the needs of agencyowners and their customers. We believe Protection One shares our commitment to Allstate agenciesby offering first-class products and services at competitive prices. In March 2008, ProtectionOne was the only security company named as one of America’s Most Trustworthy Companies byForbes.com.With the massive technology conversion underway in Allstate agencies throughout the U.S., thetiming couldn’t be better to launch this alliance. And since agents will now own the equipment,many will want to protect their investment. Investing in new technology provides formidable riskexposure to the potential loss of equipment containing valuable customer data. We believe ProtectionOne’s unique products and services will help avoid and mitigate losses.As a leading provider of monitored security, Protection One offers agents a broad range of advancedsecurity solutions from electronic security systems to the latest in video surveillance. Oneof the many reasons we chose Protection One was their ability to deliver leading-edge technologysuch as e-Secure, a feature that enables remote access of your office security system from a computer,PDA, or cell phone.As the readers of Exclusivefocus know, NAPAA is totally committed to the Allstate agent. As such,we seek trusted partners who are willing to provide special pricing on the products or services theyoffer. We are enthusiastic about our partnership with Protection One. For more information, pleasecall (866) 754-5840 and be sure to mention NAPAA to receive preferred pricing.Wishing you and your family a happy and healthy holiday season.Sincerely,Bob IsacsenBob IsacsenPresidentP.S. We are also working with Protection One on an exciting program for 2009 to increase clientretention, reduce your client’s risk of loss, and provide you with additional income potential.Winter 2008/2009 Exclusivefocus — 61

the NAPAA market placeAgencies for Sale Agencies for Sale Agencies for Sale Agencies for SaleAustinEllen Ryanellenryan@allstate.com512-751-1204Asking Price: NegotiablePIF: 2,100 Premium: $2,100,000Number of Licensed Staff: 212 yr agency. LR 49.65, Ret86.96. Lender advises this isviable book. Seller will payrent until expiration of lease.F&E included. Will assist intransition.GarlandCal Nunnallycnunnally@allstate.com972-494-0097Asking Price: NegotiablePIF: 1,006 Premium: $1,000,120Number of Staff: 2 (1 lic)WASHINGTONVancouverBill Davisbilly5648@comcast.net360-749-3037Asking Price: $230,000PIF: 1,257 Premium: $1,102,000Number of Licensed Staff: 1Retention avg 88-89%. LR38-40%. Great metro area. Canbe split for new agency bonus.Book over 20 years old. Nearly99% preferred policies.LongviewBill Davisbilly5648@comcast.net360-749-3037Asking Price: $240,000PIF: 1,207 Premium: $1,245,000Number of Licensed Staff: 1WISCONSINMilwaukeeTiffany Grattongratton821@aol.com773-817-8433Asking Price: $120,000PIF: 1,029 Premium: $620,888Number of Licensed Staff: 1Highly motivated seller!!! 2+yr scratch agency. Stellar newbusiness success. Modernoffice, tastefully furnished, lowoverhead. Will assist in transition.Talented EFS. Qualifies fornew agent/satellite incentiveprogram. Priced for quick sale.Contract Terminated?If you have been terminated by the company, NAPAAwants to help. We will post your agency for sale on ourWebsite at no charge. Just fax or email a copy of yourtermination letter to 866-627-2232, or hq@napaausa.org.After forwarding your termination letter to us, go tothe Sell Agency Listing page at www.napaausa.org and fillout the information you want included in your ad. Important:Be sure to click “NAPAA Member – No Charge”before sending. We will post your listing for free.Near downtown, same location15 years. 95% preferredbusiness. Great LR & retentionfor new hire or ESA purchase.Will assist in transition for 2months. 1000sf leased spaceVIRGINIABristolOsborne Insurancedonrosborne@yahoo.com423-968-5492Asking Price: NegotiablePIF: 4,900 Premium: $2,710,064Number of Licensed Staff: 330+ year agency. Licensed inVA & TN. 92.10% retentionand 41.77% LRQualifies to be split for the newagency program. Book over20 years old. Retention avg88-89+, LR 40-47%.SeattleApex Insurance and FinancialServicestranthai@allstate.com206-725-1887Asking Price: $70,000PIF: 285 Premium: $297,168Number of Staff: 2 (1 lic)Heavy traffic strip mall. Allstateoffice design, favorablelease termThe 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.Advertising IndexAT&T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Agent Contact Wizard . . . . . . . . . . . . . . . . . . . . . . . . . 23AMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 33Applied Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5BGI Marketing Systems . . . . . . . . . . . . . . . . . . . . . . . . 18Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Data-Tech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Dell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13eBridge Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42E-chx, Inc. Payroll Solutions . . . . . . . . . . . . . . . . . . . . . 11Glass Doctor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Integrated Pension Design . . . . . . . . . . . . . . . . . . . . . . 45International Card Establishment (ICE) . . . . . . Back CoverMassiveRFG.com . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,48Oak Street Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Professional Practice Capital . . . . . . . . . . . . . . . . . . . . 49SIAA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Smart Choice . . . . . . . . . . . . . . . . . . . .Inside Front CoverSpencer Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Sprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27TWFG Insurance Services . . . . . . . . . . . Inside Back CoverValpak . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Wright Penning & Beamer . . . . . . . . . . . . . . . . . . . . . . 5362 — Exclusivefocus Winter 2008/2009