Allstate Agents Group Votes to Unionize

The relationship between Allstate Corp. and its agents may become more adversarial as more than 90 percent of the 1,200 members comprising the National Association of Professional Allstate Agents (NAPAA) voted yesterday to affiliate with a union.

NAPAA will align with the Office and Professional Employees International Union (OPEIU), a division of the AFL-CIO. Since Allstate classifies its agents as independent contractors, the move will not grant the group collective bargaining rights. Indeed, the NAPAA has complained in past that Allstate treats agents under contract as de facto employees, giving the company control over the agents while denying them the benefits employees receive.

Jim Fish, NAPAA executive director and a former Allstate agent, said in a news release that the group would move quickly to join OPEIU as a guild, meaning that if the two groups come to terms on an agreement, the association would formally become a guild, giving the group admittance into the nationwide AFL-CIO union.

Allstate downplayed the action in a statement, stating, "This group's vote to affiliate with the OPEIU would seem to be an internal issue for them. Their members include only a small number of Allstate's current agency owners."

It is not clear what percentage of Allstate's total agent force of 14,700 exclusive agencies and financial representatives the NAPAA actually represents. The group admits that not all of those members are actually Allstate agents, but stated they are "predominantly" so. Until the company switched to an independent contractor model for its agent force in 2000, it had more than 6,000 agents as employees.

Nonetheless, the vote comes amid signs of increasing tension between the insurer and its agents. In May the company spent $1 billion to acquire direct writer Esurance. In Febraury, INN reported that Allstate was considering the elimination of up to 3,300 existing Allstate agents within the next three years, as the carrier reviews and acts on those agents not meeting specified premium quotas.

In February Fish told Insurance Networking News, "we believe Allstate is planning to eliminate between 3,200 and 3,300 agents by 2013. When agencies are eliminated so is the agency staff, many of whom are also licensed. Therefore, the total number of existing jobs lost could top 9,000, depending on how many working spouses and staff members are affected."

Allstate's new agency targets include generating annual premiums of at least $4 million per location, having one licensed employee for every 1,000 policies, and reaching certain loyalty goals, Fish told the paper. "The company wants to get rid of agents who aren't actively producing new business," he said. "The ones taking care of customers and servicing the book—they're not interested in keeping those agents because they think they can service those policies at a call center."

Many agents on the target list are "older agents—50 to 60 years old—who might be servicing their book of business and maintaining high retention and loss ratios, but that isn't enough for Allstate," the Tribune quoted Fish as saying. In clarifying this statement with NAPAA, Fish told INN, "It’s clearly an “out with the old, in with the new” program, which seems to have age discrimination written all over it."

Like many insurers, Allstate is not unfamiliar with such claims. In 2010, a federal judge approved a $4.5 million settlement between the Equal Employment Opportunity Commission and Allstate Corp. to officially end allegations of age discrimination. 

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