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.
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