Loss Of Trust Prompts Agents To Go Rogue

After being elected president of the association a few months ago, Dale Revels told National Underwriter in July that he and the association would strive for a more harmonious relationship with Allstate. "As an association, we have had our battles with Allstate," he conceded. "We do not want to be in the battle businesswe want to be a business association group. That is where we want to take this association."

"The focus of the company is back on the agent," he continued. "Up to three years ago, we felt the company was not focused on the agents, but the relationship has improved. We are working on generating more business and being more successful."

However, a recent NAPAA newsletter puts the association at war again with its members' carrier.

Allstate created a program in Florida where agents could go to managing general agents to place property risks. Under the system, if an agent sells a set amount of financial services business, he or she can place property insurance business with MGAs approved by Allstate. The property market is tough in Florida (look at Hurricanes Charley, Frances and now Ivan if you're wondering why) and, in most cases, an Allstate agent's only option is to turn to the assigned risk market when their sole carrier won't write the business.

Allstate, according to NAPAA, has created a dilemma for its agents with this program. MGAs give them an alternative, but Rod Guilmette, NAPAA's executive vice president, calls it a quota system and says it sets a dangerous precedent.

"To hold a p-c agent to a quota in financial services is wrong," he said. He reasoned that it is too much work for a p-c agent to keep up on the continuingly changing nature of financial services and life and health insurance products.

Another concern, said Mr. Guilmette, is that an agent pressured to sell financial services can harm the customer. Selling life or health products a customer doesn't need, or can't use, can do real financial harm, especially if the agent is not well versed in the products. The agent may have the necessary financial services licenses, but the pressure to sell such products to get a property brokering break could be too much for anyone's good.

"Quotas should be negotiated one on one," said Mr. Guilmette.

Allstate needs to seek ways to increase sales volume, he admitted, and finding a formula to accomplish this goal is "a real dilemma" for any carrier, but he called this approach simply a bad idea.

In a subsequent NAPAA newsletter, the association seemed to admit there are some contrary views to its criticism. It produced one letterwriter unidentified, as are most letters in its pages, which is understandable under the circumstanceswho said the brokering program should be a reward for the high-producing agents, especially in Florida's difficult p-c market.

Give credit to NAPAA for allowing a contrary view into its newsletter.

Domingo Bravo, an Allstate agent in Miami for 17 years, told National Underwriter he supported the program. Allstate agents now have the outside options they have sought for years. As for a quota, he called the requirements "very, very minimal."

"I thought they should have been three times what they are," remarked Mr. Bravo. Agents without a financial services license, he noted, who refer clients to an agent who has such a license, earn credit toward the brokering services quota.

"It is very easy to meet the requirements," he said. "I can't picture how any agent who wants to sell our whole brand of products, how they would not want to participate in this program."

Some bad blood still remains between agents who thought they were promised one standard of living and retirement benefits and a company that they perceived has gone back on its word.

"We didn't go looking for trouble," Mr. Guilmette said, "butAllstate is pushing it."

Allstate has referred to the dissenting agentscurrent and formeras a renegade lot. Maybe they have gone rogue. But it is a very embittered group who feel betrayed. They would like to have a less acrimonious relationship with Allstate, but they simply don't trust the company. And loss of trust is huge in a business built on promises.

Today, when businesses demand increased productivity but offer little security for the future, when corporations lay off hundreds of workers at a clip or a carrier drops an independent agent's appointment because of what seems to be a capricious change in its minimum premium volume, leaving the agent with fewer replacement market options, can companies expect any less than not to be trusted?

A little more trust might be the biggest booster of sales volume an agent-friendly carrier will ever see.

Mark Ruquet is NUs agent/broker editor. He may be reached at mruquet@nuco.com.

Reproduced from National Underwriter Edition, September 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.