Allstate Faces Suit for Wrongful Termination of Agents
A former agent under contract to Allstate Insurance Co. has initiated a lawsuit against the insurer alleging it violated a Minnesota statute when the company terminated him for failing to meet life insurance quotas.
Jerry Deleski, an Allstate agent for 39 years, and his attorney, Chris Daniels of Daniels & Kibort PLLC, are working with the National Association of Professional Allstate Agents Inc. (NAPAA), a nonprofit organization representing former and current agents under contract with Allstate, to determine whether Allstate violated state laws when the company terminated Deleski and other Allstate agents in Minnesota.
A spokeswoman for the Minnesota Department of Commerce confirmed that it investigated Allstate's dismissal of Deleski and charged the company with violating the statute as well as second that required Allstate to inform Deleski of his right to a hearing before a review board. The Minnesota Department of Commerce also confirmed that in November 2012, Allstate agreed to pay a $5,000 civil penalty to the state in lieu of facing formal proceedings on the charges.
“Allstate cooperated fully with the Minnesota Department of Commerce’s investigation of Deleski’s claims, which the company resolved amicably with the department,” said an Allstate spokesman. “The company believes Deleski’s lawsuit is meritless, and the company intends to defend against it vigorously. Allstate continues to position agency owners to best serve our customers and grow the business. We are committed to helping prepare and protect our customers for all of life's uncertainties.”
Allstate instituted a quota system in 2006 that required agents to meet specific sales goals, NAPAA said, and agents were instructed that failure to attain their quotas could result in the loss of their contracts.
"While we know nearly 4,000 agents have parted ways with Allstate – many of them involuntarily – the company has been replacing them with new, but often less experienced, individuals," said Jim Fish, executive director for NAPAA. "We believe the firings were not only ill-advised, but have accelerated the company's fall from second to third place among top auto insurers."
NAPAA said the number of Allstate agents nationally has declined nearly 30 percent, to 9,300 from 13,200 since 2007, according to Allstate’s SEC filings. The organization estimated that in Minnesota there are 84 exclusive Allstate agents under contract today, compared to 158 in 2007.