N.J. Rejects Allstate Agents' Complaint

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By Michael Ha

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July 3–Holly Bakke, banking and insurance commissionerfor New Jersey, said she has decided that Allstate New Jersey'smarketing and agent compensation practices do not violate herstate's “take-all-comers” rule, which requires the state's autoinsurers to cover all but the worst drivers.

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Allstate New Jersey's practices were the subject of a complaintfiled by 16 Allstate agents in late 2001. They claimed that thecompany tried to avoid urban businesses through its marketing andcompensation practices.

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The issue before Commissioner Bakke was whether Allstate NewJersey had violated the state's Fair Automobile Insurance Act.

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In their complaint, agents charged, among other things, thatAllstate linked bonuses to loss ratios, which sometimes hurt agentswith urban policies. The agents also said Allstate marketingstrategies targeted certain suburban areas and not urban ones,which, they argued, violates the Fair Automobile Insurance Act.

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Commissioner Bakke disagreed, stating instead that the“take-all-comers” provision does not prevent companies fromdeveloping a statewide business plan.

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“We know from our ample experience that a failure to balanceurban auto risks with suburban risks results in carriers beingunable to write any auto policies at all,” said Mary Caffrey,spokesperson for the New Jersey Department of Banking andInsurance.

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Besides, New Jersey has what it calls the “Urban EnterpriseZone” assignment system, an urban quota that auto insurers mustmeet, and Allstate New Jersey has been meeting its goal, she said.“Every carrier in New Jersey has the quota in urban assignments.Let's say you have five percent of the market in New Jersey, thenyou also have to have five percent in the urban market as well,”she said.

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She pointed out that Allstate New Jersey has been meeting itsurban assignment and that its share in the urban market is, infact, increasing.

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“Allstate New Jersey actually was doing a pretty good job,” shesaid.


Reproduced from National Underwriter Edition, July 14, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.


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