It's been nearly two years since Allstate Insurance announced its direct-sales strategy that officially is known as the "Good Hands Network." At the time, industry experts predicted that carriers would closely watch Allstate's multichannel strategy of integrating call centers, agents and the Internet to support sales and service.And while it's true that the technical aspects of the program are of interest to insurance executives, industry observers correctly predicted in November 1999 that rival CEOs would focus on Allstate's plan to convert its 6,400 employee agents to independent agents. That aspect of the program is now making headlines, instead of reports that Allstate is moving toward reaching its original goal of slashing $600 million in expenses. In fact, Allstate has declined to say how much money the program has saved, or how many policies have been sold online.

Allstate is now facing a federal class-action lawsuit filed by 27 current and former employees, charging Allstate with nine violations, including breach of contract, intentional age discrimination and retaliation in violation of federal laws (see Newsline, page 8). Allstate offered all of its employee agents enhanced severance packages and the option of converting to independent contractors if they agreed to sign a waiver and release of all claims.

The company believes that its actions were legal and necessary to remain competitive. However, the Equal Employment Opportunity Commission and the U.S. Department of Labor are investigating complaints from agents that they were singled out because of their age, and that Allstate intended to slash its costs by eliminating their benefits-a potential violation of the Employee Retirement Income Security Act.

It's too early to tell whether Allstate's huge investment in the Good Hands Network-initially the company stated the costs would total $1 billion-will eventually pay off, or how the company's legal troubles will be resolved. But I can tell you this: We've written several articles about the Good Hands Network and never had a problem finding industry experts to comment on the strategy. However, only one of several analysts contacted for this issue's news story bothered to pick up the phone and discuss the situation with Managing Editor Therese Rutkowski.

In the past, analysts were quick to praise the strategy. Why are they so quiet now?

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