Free the Oppressed Allstate Insurance Agents!
American companies have made an art form out of cutting employee salaries while making them work longer and harder. Insurers are not immune. A recent survey by Claims magazine showed that "stunted wages, heftier workloads and shriveling benefits" continue to plague its members.
But occasionally these Les Miserables mount the barricades and revolt. That's what's happening at venerable Allstate Corp., where the normally good-natured good-hands insurance agents are taking on the country's largest publicly traded home insurer.
The National Association of Professional Allstate Agents has published and distributed a petition to the Internal Revenue Service questioning whether Allstate lived up to its side of the bargain since it converted the majority of its sales force from employee to independent contractor status back in 2000. According to Insurance Journal the NAPAA represents about 10 percent of Allstate's agency force, which is about 14,700 exclusive agents under contract.
The move to turn some of Allstate's sales force into independent contractors was the brainchild of then CEO Ed Liddy, who is best remembered for his uncharismatic performance before Congress earlier this year as CEO of American International Group. Some could argue that the berating he took was vindication for what he did in 2000 at Allstate, while others would say it wasn't nearly enough.
By renaming these Allstate agents "independent contractors," Liddy effectively took away their pensions, 401k plans and health insurance, while at the same time giving Allstate a tax-advantaged status, according to NAPAA. This move made the property insurer more profitable, thereby enhancing Liddy's bonus.
But Allstate didn't exactly kick its worker bees out of the hive, says the NAPAA. In essence Allstate still controls these so-called independent agents by setting mandatory office hours and sales quotas, giving warnings for not meeting the quotas, doing annual performance reviews, and threatening termination.
In other words, "Allstate gets to have its cake and eat it too," complains Jim Fish, NAPAA executive director and a former Allstate agent; it gets favored tax status, but total control.
Sure sounds like those agents still work for Allstate. Wonder what the IRS would think? One doesn't have to wonder what the workers think. Looking in from the outside, it would appear that Allstate is not a happy company.