CHICAGO, Illinois – On Tuesday, the National Association of Professional Allstate Agents, Inc. (“NAPAA”) and several former Allstate agents filed a federal lawsuit against Allstate Insurance Company.
The lawsuit alleges that the insurance giant breached its contract with its NAPAA member agents and the individual agents in several significant ways: (1) making it difficult for agents to sell their books of business by refusing to consider current agents as buyers; (2) allowing independent agents to sell in territories covered by exclusive agents; (3) “poaching” customers from agents via Allstate's phone and internet portals; (4) requiring agents to purchase Allstate's phone system; (5) interfering in agents' negotiations for the sale of their books of business; (6) interfering in bad faith in agents' negotiations for the sale of their books of business; and (7) unjustly terminating agents' contracts for cause.
Regarding the claim that Allstate made it difficult for agents to sell their book of business, exclusive agents with Allstate have the ability to build a “book of business” that can be sold at a future date. Many Allstate agents view the future ability to sell their book of business as a key component to their retirement nest egg. The Allstate agency contract gives Allstate broad power to deny or approve of such a sale, but requires Allstate to consider such sales. Many times, a current Allstate agent is interested in purchasing an existing book of business. These agents are often objectively qualified to buy a book of business, but Allstate has told many agents that it will not even consider a current Allstate agent for a purchase. NAPAA asserts that this “blanket policy” of refusing to consider current Allstate agents has harmed its member agents and is a breach of contract.
As to the claim regarding independent agents, Allstate publicized that it will only authorize “independent agents” (agents who can also sell non-Allstate policies) to sell in areas not served by its “exclusive agents” (agents who can only sell Allstate policies). However, Allstate has authorized many independent agents to sell in areas that are currently being served by exclusive agents. NAPAA asserts that this practice has harmed its member agents and is a breach of contract.
Regarding the “poaching” claim, NAPAA also alleges Allstate has harmed its members and breached the contract by binding policies from agents after hours and on weekends via Allstate's corporate phone and internet portals after the agents had already had extensive conversations with the customer. Allstate then later “assigns” these poached policies back to the agent for a significantly reduced commission. As to the phone system claim, Allstate has recently introduced a new phone system it is requiring agents to use. This requirement breaches the agents' contract because the terms of the contract specify the agents are to supply and maintain their own phone system.
Several former Allstate exclusive agents joined NAPAA in this suit. These agents were top producers for Allstate. In some cases, Allstate interfered with the agent's negotiations to sell his book of business, in direct breach of contract. In other cases, Allstate acted in bad faith by interfering in negotiations by trying to direct the sale of an agency to benefit someone who was a personal friend. In still other cases, Allstate unjustly terminated agents' business “for cause.”
“Allstate's brutal tactics fly in the face of what it promotes to potential agents,” said James Bopp, Jr., who serves as lead counsel in the lawsuit. “Contracts are supposed to represent the interests and intentions of both parties. By wielding outsize control over its contract and then not following the provisions it included, Allstate has breached this contract and hurt people's livelihoods in serious ways.” Ted Paris, NAPAA's Executive Director states, “NAPAA is dedicated to the success of Allstate Exclusive Agents. NAPAA is pleased to bring this action against Allstate in order to advocate for the rights of its members.”