AAggeenntt IInnffoorrmmeerr News stories of interest to Allstate Agency Owners published by the National Association of Professional Allstate Agents, Inc. This Special complimentary issue of Agent Informer is designed to acquaint

you with our email publications. NAPAA members received all of this news in their inbox over the last 4 weeks. You could also receive weekly news in the DirectExpress newsletter – exclusively for NAPAA Members.

September 16, 2010

Allstate launches local marketing blitz to win back marketshare on home turf August 23, 2010, By: Steve Daniels , Crain’s Chicago Business Allstate Corp. is pushing hard to reverse a sharp slide in Illinois auto-insurance sales with its first Chicago-focused ad campaign, which touts its hometown roots and encourages Chicagoans to expand their idea of “buying local” to car insurance. Northbrook-based Allstate, which last year lost ground in Illinois to archrival State Farm Insurance Cos. and other big insurers, is launching TV and radio spots in the next few weeks, plus ads on billboards and in bus shelters, train stations, shopping malls and Allstate Arena in northwest suburban Rosemont. The tag line for all the ads will be “Chicago's own good hands,” a spokeswoman says. The company, which employs about 9,000 in the Chicago area and made $4.2 million in local charitable contributions last year, wants to win points from local drivers for its presence here. “We're one of the largest companies in the area and one of the biggest corporate contributors,” the spokeswoman says. “We're very proud to have our headquarters here.” The marketing push follows Allstate's first auto rate cut in Illinois since 2005. The 4.3% drop in rates, which went into effect in May, marks a reversal from Allstate's recent bet that customers are less concerned with saving a few dollars on insurance than in getting good service and a broad set of options like accident forgiveness. Allstate's view that car insurance isn't a commodity collided with the reality of hard times, especially in Illinois. Its auto-liability premiums here fell 6% in 2009, to $317 million, a level Allstate hadn't seen since 2004, according to recently released figures from the Illinois Department of Insurance. Nationwide, Allstate's auto premiums dropped 1% in 2009. Meanwhile, State Farm posted a 10% increase in Illinois auto- liability premiums, to $1.02 billion. Allstate's 2009 Illinois marketshare dropped to 9.7%—its lowest since 2003—from 10.7% the year before; State Farm's share rose to 31.3% from 29.6%. Bloomington-based State Farm, the largest auto and home insurer in both Illinois and the United States, produced the big in-state gains even after raising auto rates in Illinois in August 2008, December 2008 and June 2009 by a collective 8%. State Farm wasn't the only car insurer gaining while second-place Allstate was losing: Direct marketers Geico and Progressive Corp. saw their Illinois auto-liability premiums rise by 18% and 7%, respectively, last year. The rate cuts and marketing push show how seriously Allstate is taking its poor results in Illinois, a crucial market because of its symbolic importance as the company's home and its status as the nation's fifth-largest state. Results of the new blitz will be an important test as the company moves to spur growth nationally in its long-stagnant but highly profitable auto-insurance business. One factor affecting results in Illinois is that Allstate's statewide salesforce is shrinking. The company's number of agents in Illinois has dropped to 567 from 621, or 9%, from the start of 2009, the Allstate spokeswoman

says. It's now recruiting agents in the Chicago area. The Illinois agent force for State Farm, meanwhile, has remained steady over the past two years, at 1,052, up slightly from two years ago, a State Farm spokesman says. The Allstate spokeswoman says the rate cuts are producing results, with new business coming in at the fastest rate in four years. She declines to provide 2010 numbers for new policies or premiums. The new radio ads, which already are airing, have actor and Allstate spokesman Dennis Haysbert saying, “Buying locally is in,” citing a renewed interest from consumers in purchasing local produce and patronizing neighborhood stores. He says Allstate is offering “new, lower rates just for its hometown.” State Farm hasn't responded with its own Illinois-centric ads, but the spokesman emphasizes its “pride in our 88-year-old Illinois heritage.” One ad executive questions whether “buy local” will work in selling auto insurance, especially since the nation's two largest auto insurers are based in Illinois. “It's a very unusual tack,” says Peter Krivkovich, CEO of Chicago ad agency Cramer-Krasselt. “It begs the question, what about State Farm? State Farm is local also.” Another adman says the local emphasis could work—so long as there's something in it for consumers. “It's probably a good thing to try,” says Jim Schmidt, partner at Downtown Partners, a Chicago ad agency that has done work for life insurers. “But if it wasn't combined with the special-rates part, I don't know that it would play. It's a very "what's in it for me' economy.”

http://www.capitalresources.com/

Allstate Subsidiary to Limit Homeowner Exposure in FL September 15, 2010, NAPAA Headquarters, Gulfport, MS

Reports from Florida town hall agent meetings this week suggest that Allstate’s Florida property subsidiary, Castle Key, will stop writing new homeowner policies in Florida once the company reaches the 50,000 residential homeowners policies it agreed to write as the result of a settlement between Allstate and the Florida Office of Insurance Regulation in 2008 after a contentious spat over the company’s refusal to provide rate-related documents to the department.

According to agent attendees at the meetings, Bonnie Gill, Allstate Assistant Vice President of Product Operations, stated that the company would cushion the total number of policies written by an additional 5,000 policies to make up for any non-renewals, capping the number of policies at 55,000. Agents were also informed that the maximum dwelling coverage going forward on Castle Key policies will be $600,000. Inferring that the Castle Key unit is a money-loser, company officials suggested it would be penny-wise and pound-foolish to continue writing new policies, especially when approvals for adequate rate increases are hard to come by.

Letters to NAPAA It is NAPAA's editorial policy to publish letters submitted by our readers. Just because we publish a letter, does not mean the NAPAA Board agrees with, supports or endorses the letter's content or the writer's opinion. Also, NAPAA reserves the right to edit any material submitted for offensive or inappropriate language, length, tone and civility.

Take the Agent Relationship Survey, but before you do' Submitted anonymously As agents try to bear up under the latest employee directives from Allstate, most are beginning to receive emails inviting them to respond to the new Agency Relationship Survey. Yup, it’s that time of the year again. But this year, because Allstate has ramped up its misclassification scheme to a particularly high level, and has terminated hundreds, if not thousands of Allstate agents, we should all be keenly interested in providing our honest opinions regarding our relationship with the company. After dismal results in recent years, the company has been hyping up agent participation in this year’s survey. Could this be because so many of the older, resistor-type agents have been replaced with newbies who don’t yet know the truth, or because the company has a new strategy? In either case, timing is everything, and the company may have just stepped in a big pile of dog-doo in some parts of the country, such as Florida. On the heels of its efforts to talk agents into taking the survey, the Florida Region delivered its best one-liner to date: “All agencies are now required to complete a Serious Auto Quote with ALL new Homeowner business.” It appears that somebody at the regional level was eager to exert more employee-like controls over the Florida agency force. In this case, they didn’t even bother to camouflage their blatant directive, which went on to direct agents to “Please follow the process below.” The company email instructs agents to follow a specific employee-like process when quoting Expanded Market homeowner policies in order to document that they have satisfied the new “Serious Auto Quote” requirement. Agents are now being compelled to copy each Expanded Market application, quote the auto, whether the customer wants a quote or not, and maintain special files matching up quotes with the corresponding Expanded Market applications just so management can evaluate individual compliance and performance statistics in accordance with their new directive. Aside from the fact that the State of Florida frowns on “tie-in” sales, this “trifecta” violates IRS rules by putting the employee directive in writing, requiring a specific process to be followed, and requiring a report to be generated. So once again, the company thumbs its nose at state and federal edicts that are designed to protect consumers and ‘independent contractors.’ If any agents ever doubted they were misclassified as independent, this last little maneuver should just about wrap things up. Regardless whether you are an agent in Billings, Montana or Orlando, Florida, you are being directly affected by Allstate’s misclassification scheme. We all have mandatory office hours, mandatory work week schedules, quotas, annual reviews and more. Hopefully, every agent will take the time to complete the Agency Relationship Survey. You will note that it is devoid of specific questions regarding your satisfaction with Home Office management. Instead, the survey tries to focus on local management, whose individual managers are much more likely to earn better marks from agents than are the folks from Northbrook. Both the senior staff and local management are pinning their hopes on the success of this strategy. Don’t fall for this gimmick. Where the question asks about your local manager, replace it with “Allstate management” or just “Allstate” and then answer the question. I am proud to say that I have completed the survey more than a dozen times. I have included additional comments, including specific references to the IRS and Allstate’s misclassification of me as an independent contractor. I have included even more frank and specific comments about my manager and not once have I feared any form of retribution. This is your chance to let management know how you feel. Don’t pass it up!

News from NAPAA

The Big Nasty – Agents Browbeaten in Florida Meetings August 25, 2010, NAPAA Headquarters, Gulfport, MS

A series of agent meetings across the state last week resulted in what several agents described as an infuriating, arrogant display by FL leadership. Managers were quick to insinuate that agents are to blame for the deteriorating results in Florida. The new auto company is taking yet another rate increase, and the region is attempting to reintroduce mandatory, but illegal, auto tie-in quotas in order for agents to keep their Expanded Markets binding authority. This perennial maneuver by the company has been thwarted in past attempts chiefly because NAPAA, armed with written proof, reported the company’s actions to key individuals at the Florida Office of Insurance Regulation. This time around, however, the company hasn’t put the requirements in writing. Instead, company managers announced it during the recent meetings. In a nutshell, agents must write .7 autos for every brokered property policy they write in the Expanded Market program. If they fail to achieve the .7 to 1 ratio, they will lose their ability to write new brokered property policies for up to six months at a time. Florida agents should forward any pertinent documents to NAPAA if they become available. If that wasn’t already enough, the agents were given even more bad news. Here are a few more property-related requirements the company will now impose on Florida agents:

• Every property application must have an auto quote attached to it and in the file for audit purposes. Proof of the auto quote must be produced upon request, along with the reason the sale was not made.

• If the prospect qualifies for a Castle Key property policy, the agent must not sell an Expanded Market property policy, even if the premium is lower.

• In another troubling development, agents were asked to give up a list of their non-Allstate property customers so that the company can “mail them an auto letter for you.” WARNING: The company has no access to policies written through Citizens, so agents should be wary of giving up any information that the company can later use against them.

“Downright nasty,” said one agent of the meeting he attended. “There were agents there who were so disgusted and infuriated, they got up and walked out in the middle of the meeting.” NAPAA has received several reports from agents stating that the managers in attendance berated them and treated them like children. In other Florida news: Agents and staff are being instructed to quote package deals every time they give an auto quote. Since Allstate auto rates are notoriously high in Florida, at least some FL managers are telling agents to supplement Allstate auto quotes with Citizens’ property quotes and to give their prospects a combined rate or a “package price.” The hope is that by combining Allstate’s high auto rates with Citizens’ comparatively low property rates, the overall package will be competitive with the likes of State Farm or other carriers. The agent is instructed not to quote the property or auto policies separately, but as a package price. In management’s mind, it is a way to hide the cost of the auto insurance from the customer. The company calls this practice “Bundling.” Obviously, this tactic is pretty deceitful on so many levels.

Visit NAPAA online at www.napaausa.org

Check out the market place – NEW listings appearing every week! Go to Buy or

Sell Agency listings to list your agency for sale, or find someone interested in buying an

agency! This service is free to NAPAA Members.

Allstate, Florida Agents At Odds Over Auto, Property Production Sept. 3, 2010, By Chad Hemenway, NU Online News Service Allstate agents in Florida said the insurance company is attempting to reintroduce auto insurance-related quotas in order for agents to keep their ability to place property policies with other companies. In meetings held throughout Florida, company managers allegedly said agents “must write 0.7 autos for every brokered property policy they write in the expanded market program,” according to an e-mail newsletter from the National Association of Professional Allstate Agents (NAPAA). Because Allstate has not written new property policies in Florida, Allstate agents were permitted to place business with third-party insurance companies, said NAPAA President Bob Isacsen. “Now [Allstate is] saying, ‘You’re not allowed to do that anymore unless you give us business, too,’” said Mr. Isacsen. If agents fail at maintaining the ratio of auto policies to property policies, “they will lose their ability to write new brokered property policies for up to six months at a time,” the newsletter said. Problems arise for agents because Allstate auto insurance rates are high, so the customer walks away, NAPAA said. NAPAA alleged that Allstate has required Florida agents to attach an auto quote to every property application and provide a reason if the sale is not made. Agents were asked to give up a list of non-Allstate property customers so that the insurer could mail them an auto insurance letter on behalf of the agent. Additionally, if the property of a prospective customer qualifies for a policy from Allstate Florida subsidiary Castle Key Insurance, the agent must not sell an expanded market policy even if the premium is lower, NAPAA alleged. Allstate disputes the allegations and said there is no requirement for an agent to sell an auto policy with a homeowners policy, but “we do require agencies to maintain a balance between their auto and property production, and in order to do this, they are encouraged to give an auto quote along with a property quote,” said spokeswoman Kathy Thomas in an e-mail. Ms. Thomas described the ability to write policies through the expanded market program as “a privilege” to support agents’ core Allstate business, but to keep the privilege, agents must maintain an auto-property insurance balance. “The expanded market opportunities that have been provided for the Florida agencies are not intended to provide competition for products offered by the Allstate group of companies,” Ms. Thomas said. Allstate’s Castle Key companies are currently seeking rate increases—33 percent increase for Castle Key Insurance and 18 percent increase for Castle Key Indemnity, the subsidiary writing new business in Florida. In August 2008, Allstate and Florida regulators reached an agreement to end a long spat over regulators’ request for documents from the company related to a past rate request. For a short time the insurer was suspended. Allstate Corp. agreed to pay a $5 million fine to resolve legal issues stemming from the argument. The insurer also agreed to lower homeowners insurance rates by 5.6 percent and it was to write 100,000 new policies in Florida by November 2011. Allstate has said Castle Key Indemnity is “more than halfway” to the goal of 100,000 new policies. The insurer is now writing new policies on homes one mile and farther from the coastline—changed from a previous distance of five miles—so long as homes meet Castle Key’s other underwriting guidelines. Castle Key Indemnity is also considering taking policies from the state’s residual market, Citizens Property Insurance Co., Allstate has said.

“Frank’s Take” ----An Independent Viewpoint of Current Issues----

August 18, 2010, by Frank DeMayo

Connecting the dots Allstate Corp. announced on Wednesday, August 4, that its net income fell sharply in the second quarter as a result of investment losses. For the three months ending on June 30, the company earned $145 million or 27 cents per share. That compares to a profit of $389 million or 72 cents per share a year ago. The investment losses pushed Allstate's quarterly revenue down to $7.66 billion from $8.49 billion in the second quarter of 2009. The losses were produced by derivatives which Allstate used to hedge against risks such as interest rate fluctuations. No mention was made whether these losses were related to the subprime mess of last year. Everybody in the financial business is having a problem with low interest rates. And it seems like a good idea to "hedge" these risks with financial instruments. But the boys at Northbrook got the hedge wrong too, lost some more money, and conveniently left out the details of the transaction. This is not the first time the investment dept has been a loss leader. In addition, Allstate has been reducing its geographic risk since 1996 in earthquake and high-risk areas, including New York, according to Allstate CEO Tom Wilson on a recent conference call. Responding to questions asked by an analyst from Queens, New York, whose policy had been cancelled, he added that the company is “getting smaller around the coast and will continue to get smaller around the coast." The bad news for agents is that it appears that Allstate has not finished cutting its geographic exposure risks. The initiative has already reduced the policy count by a million policies. The chairman had recently boasted that Allstate will soon grow boldly and surpass the premium size of both GEICO and Progressive and that it was poised to take over industry-leading State Farm in ten years. But with a declining policy count, a combined loss ratio for homeowners of 104.4 for the quarter, some more premium increases and tighter underwriting standards......where will this increase in business come from? Might be pretty tough to do if the rate increases continue. “When you raise the average homeowner premium by 6.1% and then have a 4% decline in policies in force, it doesn’t bode well for growing the company,” said one agent. Hey guys, is there anybody there in Northbrook who’s connecting the dots? F J DEMAYO F. J. DeMayo has been in the insurance business for 48 yrs. He has held positions as an underwriter, Executive Manager, Director, Broker, and Consultant. Frank has been employed by the Travelers, American Intl. Undw., Chubb, Resolute Reinsurance, and the R.J. Isacsen Agency. He resides in East Northport, N.Y. with his wife. If you have a comment for the author, please email him at elbahome@optimum.net.

News from NAPAA

When the Actions of a Few Affect the Lives of Many August 25, 2010, NAPAA Headquarters, Gulfport, MS NAPAA has heard from several sources that New York Region has unearthed a fraudulent new business scheme practiced by numerous agents across the state to increase their new business writings. Apparently, a glitch in the system failed to flag certain auto policies that would normally require verification. As many as 136 agents may have participated in writing improper policies, which has ravaged the auto book of business in the state. Losses for this group of agents, who make up about 15% of the agency force, account for approximately 70% of the claim dollars paid over the last three years. Under normal circumstances, this fraudulent application process would result in the immediate termination of the agents, but that’s not what’s happening. Is this because the company feels a smidgen of culpability because of the failure of its computer system, or because they can’t afford to lose 136 agents in one fell swoop? Regardless of the reason, the agents still have their jobs, but have been given strict new pre-binding approval requirements and their auto renewal books will be closely scrutinized. In a statement, the company offered the following comment, “Our most important objective is to put these agencies on a path to profitability and ensure a long successful relationship with Allstate.” Considering that this group of agents has inflicted so much pain on Allstate customers, on their fellow agents and on the NY rate structure, the company’s stance seems overly-lenient and forgiving. Obviously, the company will find it necessary to take steps to eliminate certain groups of policyholders through payment plan changes, such as doing away with payment plan options, or other harsh measures, which will likely affect the customers of other agents who were written legitimately and are correctly classified. And what about the other 85% of the agency force that always does everything by the book? How many of them have been threatened or terminated for not meeting their P&C numbers? Were their careers imperiled because the region kept raising the production bar for everyone while these con artists were busy racking up mind-boggling, off the chart sales numbers? And we haven’t even mentioned the number of lost policies and revenues that will affect all or most of the agents in New York because of the unconscionable antics of a few bad apples. Many agents maintain that Allstate is good at making liars out of honest agents. Regrettably, there is some truth to it. The temptation to cheat is real when RFG bonus dollars can go from zero to thousands by writing a few more renters policies – or when an agent cannot find a few more legitimate life apps that can save him from termination.

http://www.twfg.net/

When the Actions of a Few Affect the Lives of Many: A follow up' September 8, 2010, NAPAA Headquarters, Gulfport, MS Two week weeks ago, DirectExpress published an article titled When the Actions of a Few Affect the Lives of Many. As expected, the story prompted a slew of responses from agents across the country. The overwhelming sentiment of the agents is that the company should have a zero tolerance policy for any fraudulent application activity, regardless of the number of agents involved. Two respondents were offended because they thought we painted the entire 136 agent group with the same brush, causing us to realize that we may have inadvertently presented the information in a manner that could be misleading or misinterpreted. This was certainly unintentional and we concur there may be some agents in the group of 136 that did not partake in the new business scheme that has wreaked havoc on the auto loss ratio in New York. The group of 136 agents we cited in the article have been identified by the company and will be subject to review. A communiqué from the NY Region indicated these agencies would be notified, brought in for small group agent meetings and would begin a rigorous review process on their auto renewal book starting August 9th. In addition, they will be required to follow “pre-bind approval requirements on new business.” Our initial story should have pointed out that the review of the renewal book would likely reveal those agents guilty of deliberately gaming the system by writing policies or discounts that did not qualify. Presumably, some of the agents will be exonerated by producing the documents required by the audits. We all know that any agent can suffer a loss ratio problem. All it takes is a few large losses. Undoubtedly, there will be some of the selected agents who fall into this category. These agents should be removed from any pre-bind authorization restrictions. At the same time, the audit process will immediately identify the offenders who consistently produced policies without the proper verification/documentation as required by the company. Verifying and substantiating prior insurance, garaging address, drivers in the household, home ownership and insurable interest in the covered vehicles is ultimately the responsibility of the agent. The audit process will uncover any intentional misinformation, leaving the company to determine the fate of the wrongdoers. We regret any false impressions that may have been presumed as a result of our initial story, and apologize to those agents have been, or will be, cleared of wrongdoing. Following are some of the many responses we have received:

Letters to NAPAA It is NAPAA's editorial policy to publish letters submitted by our readers. Just because we publish a letter, does not mean the NAPAA Board agrees with, supports or endorses the letter's content or the writer's opinion. Also, NAPAA reserves the right to edit any material submitted for offensive or inappropriate language, length, tone and civility.

Regarding New York Auto Loss Ratio agents I personally think the agents should have been terminated. As a 16 yr agent (3+ with Allstate), it makes me angry when agents feel they can cheat or be fraudulent. I lose sleep over not making my AFS numbers, but would never do anything dishonest to further myself. I have seen this happen at other companies, and agree that it unfairly raises the expected production numbers for the rest of us and hurts the company and its customers as well. __________________________ This is the result of the company’s quest for auto new business and the endless threats from managers. This is dishonest and a personal choice of the agents involved. I cannot see ever putting myself in this situation, but I do see what the pressure from the company does and it is not right. The company will likely look the other way, as it is still auto production that they crave. They are all about production and the mighty RFG. This is what happens when a company is run by belligerence and greed.

________________________ What a surpriseX. agents who have been fair with the company have seen this for over three years. I brought it to my FSL several times, but they won’t bite the hand that writes the apps, no matter how they are acquired. Sad day for managementX they just got caught! _______________________ Considering Allstate fired a large number of agents in Arkansas in 2009 for creatively generating EB items, I think their actions in New York are OUTRAGEOUS. What the Arkansas agents did by adding non-owned auto endorsements and writing future effective renters policies at the direction of their managers, certainly did not justify termination. However, when Tom Wilson got his panties in a wad over it, the company took a hard line and the agents were fired. The proper action would have been to reprimand the agents and reduce their bonuses accordingly. From what I understand, the Arkansas Insurance Department was not happy about it either, but it lacked any authority to do anything. Inconsistency in decision-making and company policy is just one of the many problems with Allstate. I will say that the company has been very consistent in one regard during the last ten years or so, which is that executive management has been very consistent in making bad business decisions and setting agent policies. One good thing that came from Allstate’s actions in Arkansas was that it motivated me to make the long-debated decision to fire Allstate and become an independent agent. After almost a year as an independent agent, I can honestly say it was the smartest decision I’ve ever made. I should have done it much sooner. ___________________________ I cannot condone that type of activity even if it means survival. You do not automatically get terminated just because you didn’t make your Expected Results. I have not made my Expected Results in 3 years and I don’t think I will make them this year. Growth is a big problem. The cheaters are a great disservice to the company and to honest agents because the FSLs hold them up to the rest of us and say "Just look, these agents are making it and writing big numbers, what is your excuse?" ______________________________ When agents don't sell enough EB policies, Allstate has no problem terminating them. But but if agents make their EB numbers (dishonestly), then Allstate has no problem looking the other way. It's been that way for many years...remember life sales? Allstate is not the same company it was prior to 2001. I guess you can say I'm one of the lucky ones. After 22 ½ years, I was FORCED to sell my agency. The rate increases took their toll causing me to lose a 1/3 of my book and then I was terminated for failing to meeting my quotas. Fortunately, I was able to sell for more than my TPP, but not by much. _____________________ For years, many of my fellow agents and I have told management in the NY Region that there were some agents were not playing by the rules. Unfortunately, because managements’ bonuses are linked to the agents' bonuses, they looked the other way and failed to act. To do otherwise would be cutting their incomes. The negative effect of all of this on the rates in New York has caused immeasurable damage to the books of honest agents, who have seen their customers fleeing to lower priced competition. The honest agents, who have not been producing sky high numbers, are forced to look at company functions from the sidelines while the crooks receive all of the accolades. In my opinion, any agent who has shown a pattern of dishonesty should be dismissed immediately. In addition, the overall system of monitoring app integrity is flawed. Asking managers who have everything to lose by reporting dishonesty is like asking the fox to guard the henhouse. It would seem we need some sort of autonomous enforcement by people whose incomes don’t depend on production. Until that happens, there will always be a fresh supply of new crooks to figure out how to "work the system" at the expense of the honest. _____________________________

Forcing agents to produce via Expected Results creates many problems. It fosters dishonesty and tempts agents to break the rules. It puts customers at risk because agents are motivated to put their own needs before their customers, resulting in the sale of unwanted and unneeded coverage. It increases the risk of E&O claims, as there is a greater potential for mistakes or deliberate omissions. It puts the company at risk of paying claims on improperly written policies like in the New York Region. Finally, it is just plain wrong because negative motivation never lasts forever. Just ask my kids. Profitability and integrity should be enough to secure an agent's position with any reputable company. At Allstate, the fox that guards the henhouse, simply points to the holes in the fence when the chickens come up missing. ____________________________ It is not moral or ethical to write phony business. I have been in the insurance business 20 plus years, not all with Allstate. I have seen this time and time again and in most cases, as in Mississippi, it blows up. I am confident that someone in management knew what was happening, but chose to look the other way. Agents are not the only one's feathering their nests and protecting their jobs. When agents do this, they are only making things worse. This inflates the numbers, next year they want more, and then what do you do? Why doesn’t Allstate focus on the agents’ profitability instead of production? A profitable agency should be recognized and compensated accordingly. _____________________________ It's a little STRANGE! I was fired after 26 years with a combined loss ratio around 40%. I did EVERYTHING by the book! I worked like a dog, and still they keep the crooked agents that cost them MILLIONS of DOLLARS! __________________________ I am a 20 year agent and have learned to accept this as the norm with this company. With the pressure we get from our current management, I can see where agents would be tempted to fudge, not necessarily for the bonus, but just to keep their jobs. That’s what management by intimidation causes. I think most agents know when they see other agents writing substantially more than the norm that they might be doing something that isn’t legitimate. What irks me is that the company makes heroes of these agents. I equate it to the steroid era in Major League Baseball. You cannot convince me that the managers and owners in baseball did not know what was going on. They looked the other way, because 70 home runs in a season fills seats. I could keep going, but I need to go write a couple of more SKATE BOARD policies to make this year’s RFG! ___________________________ They all should be terminated, no ifs, ands, or buts. These agents violated a sacred trust, which is the obligation they have to provide profitable business to Allstate. Instead, they lined their pockets while ruining Allstate’s loss ratio, which will now lead to increased rates for all customers, including those that the legitimate agents put on the books. It makes me wonder just how many of our local managers knew and allowed their agents to write this bad business. 136 agents is a very high numberX how did so many agents learn how to beat the system? They sure all couldn’t have figured it out on their own. HmmmX ____________________________

I am still an active agent, but not for long, I am told. I have been with Allstate 28 years. I am currently in a small town with two agents that abuse the rules daily. However, they have the big numbers, so management overlooks the fraud. I have been supplying management with proof for years, but no one acknowledges it. I’m sure it is because they don’t want to stop the production ‘gravy train.’ I am sure it will take a sizeable E&O for things to change. Or a 60 Minutes exposé, maybe that would do it. But by that time, our current leaders will be long gone. I have been told unofficially that I will probably by gone by the end of the first quarter in 2011. I am expected to hit numbers that no one is hitting. My loss ratio has been in the 20% to 30% range for years, but I’m going backwards in accounts due to rates. My ALI is above everyone else, but I am not growing. So this will all be moot before l long. _______________________________ What were these agents doing? Were they manipulating the data? I know at times, especially now, it is very difficult for staff to figure out what qualifies with the crazy grid we have in Florida. Sometimes the risk assessment is wrong. Just want to make sure we are not doing something unintentional. _______________________________

The RVP’s letter says that only those with bad loss ratios will be audited. Management has been looking the other way and apparently will continue to do so, as long as these agents can maintain good loss ratios. Does the company intend to confess to the state insurance department? This has to be insurance fraud or rebating at least! In the meantime, the low production threats continueX __________________________________ The company was definitely too lenient with these agents. They have put many honest agents in jeopardy of losing their agencies. The guilty agents should not be allowed to keep their agencies. It is NEVER okay to bend the rules. When you bend or circumvent the rules, you lose your integrity - something no agent should want to happen. It does not surprise me, though, that the company is keeping these agents on. There is not much integrity in Allstate’s Home Office - anything goes as long as the agent produces. If they skirt the rules – it doesn't matter. We have several examples in our region where management closes one eye because certain agents have big production numbers, most of which were attained with impermissible practices that are outlined in the contract. Please keep doing what you are doing - we really need you! And please do not publish my name - the company definitely retaliates! _________________________________ Here’s a comment for you to consider. I am only a 4 Year scratch agency that is performing well. I may not be the most experienced agent on the planet, but I don't like to see journalistic misrepresentations. I have been a loyal reader and believer in NAPAA for the past 4 years. This article is one of the most uninformed views I have seen from your organization. I personally know several agents in this group of 136 that you mentioned. They are there because they have a somewhat high loss ratio, which can happen to the most diligent, honest agent from time to time. Customer fraud claims have become a real issue in many states with the poor economy and all. It is a fact that some people actually attempt to "beat the system." Several agents are in this group of 136 because they took the Internet approach to marketing for customers. These clients cause retention issues because they are regular shoppers and have a tendency to file a lot of claims. I'm sure there may be some unethical agents in this state and country, but to slander all of them as con-artists is extreme in my opinion. You also made no mention that one of the biggest culprits in this loss ratio problem are, in fact, the 1-800 call centers that write new business. They have had difficulty screening potential bad customers, resulting fraudulent claims. You are clearly misinformed on this topic. _________________________________

No cheating is acceptable, nor is stealing from the company by way of receiving money fraudulently. All of them should be terminated in my opinion. I would also like to know if they paid back any of the bonuses they were not entitled to receive. Probably not, is my guess. There is no justification to keep these agents considering that their dishonest actions went on for THREE years. This was not a one or two time event. ________________________________

Be Entertained24/7 with Sprint

Be the first to own the Android™ powered Samsung Epic™ 4G with a 4-inch Super AMOLED display. Download high

quality movies on the go or shoot your own with the 5-megapixal camcorder. Then, send it to your friends in a flash with

the swipe of the virtual keyboard or choose the slide out QWERTY. Experience 4G, up to 10 times faster than 3G.

Get yours today with an exclusive online package & receive added incentives as well as free shipping! Online

September offers:

*24% monthly Sprint discount off most plans for you & your family *Up to $100 off most PDA devices & wireless connection cards (with tax ID) *[FREE] accessory and earn a $50 gift card with your new Epic or EVO activation with our exclusive online package

*FREE $25 prepaid AMEX gift card with all other new online activations

Only available at your exclusive Sprint store at www.sprint.com/allstateagent or call 1-866-869-6686 or

email us directly at sprintsolutions@bluefishwireless.net (not available in retail stores)

Allstate Expects Buybacks Sept. 8, 2010, By Maria Woehr, www.TheStreet.com An Allstate( ALL) executive would not rule out a stock buyback program if the U.S.-based carrier makes it through the current hurricane season relatively unscathed. Robert Block, vice president of investor relations, said the insurer may consider buybacks during the Keefe, Bruyette & Woods(KBW) Insurance Conference at the Waldorf-Astoria Hotel in New York City Wednesday. "Word on the street is that after we get through hurricane season and by the first quarter of next year we will be in the position to do a buyback," Block said after he gave his speech at the conference to a small group of people, inferring that market speculation regarding a buyback would not be far off the mark. "First, Allstate would need to achieve its own growth goals." During his speech at the conference, Block said over time, Allstate would expect to achieve returns of at least 15% over any cycle. Operating return in equity is about 11%. The net income at the end of the second quarter was about 6%. Block said that historically the company has averaged around a 15% return and it hopes to maintain that for the rest of the year. Block admitted that Allstate stock was at a, "historically low valuation" and the company is currently looking at opportunities to increase shareholder value. In addition, block added that Allstate was repositioning itself by shifting away from mixed annuity sales, improving customer retention, reducing its exposure to catastrophes and increasing rates due to weather-related catastrophes. "We have been managing or exposure to large catastrophes for several years. We are gradually withdrawing from areas by bringing in agencies to broker the business. We are trying not to be in areas where there is exposure to hail, wind and water."

The National Association of Professional Allstate Agents, Inc. is a nonprofit professional trade association for Allstate agents. NAPAA provides its members with reliable communications on issues that affect agency owners and their customers every week. NAPAA further serves its members by acting on their behalf and speaking with a distinct and unfettered voice on a wide range of issues. Our operations, including our publications, Website and office expenses are funded by member agents who pay membership dues.

Please support NAPAA with your membership today. http://www.napaausa.org/membership.asp

NAPAA is a professional trade association, membership dues are $350 per year, or $29 per month by EFT, and are tax deductible as an ordinary business expense.

Letters to NAPAA It is NAPAA's editorial policy to publish letters submitted by our readers. Just because we publish a letter, does not mean the NAPAA Board agrees with, supports or endorses the letter's content or the writer's opinion. Also, NAPAA reserves the right to edit any material submitted for offensive or inappropriate language, length, tone and civility.

Office Inspections: Well, I just got my phone call from the CIS folks, and we refused to accept their request for an inspection. I wasn't the one to answer the phone, but my office manager was told by CIS that it was "required" by Allstate to have this completed. We still refused. Sorry, but I'm an independent contractor, and "what happens in my office, stays in my office". Thanks for the heads-up on this issue. Before I joined NAPAA, I probably would have just blindly agreed to this. But now I am forewarned and forearmed for the games being played by Allstate. An Agent In Florida ____________________________________________________________________ I thought you guys would find this amusing. I was contacted by an inspector who informed me she was hired by Allstate to come to my office and take inside and outside photos for an assessment of my agency. I said I hadn't heard anything about it and she said that I could learn more by going to... the NAPAA website! I played dumb and asked “What is NAPAA?” Then I asked if there was somewhere on the Allstate Gateway where I could learn more and she said she wasn't sure, so she was sending everyone to the NAPAA website. I told her it was not convenient for her to come when she wanted and asked if we could either reschedule, or if I could decline. She said I could certainly decline and that others had already done so. I told her I'd think about it and that she should call back in a few weeks. Are you aware that Allstate is in the process of physically inspecting all offices for not only their condition, but is now in the “suggested improvements” business? It will not be uncommon for the inspector or a regional rep to suggest a fresh coat of paint, new signs, etc. And of course, they will be reporting back to corporate on all their recommendations or suggested upgrades to our offices. I asked if I could refuse access to that visit and the answer was “NO.”

Departing Allstate I suppose I should get a personal email address pretty soon. I am so looking forward to getting out of this job as an psuedo "Independent Contractor.” 10-1-2010 won't get here soon enough. ____________________________________________________________________ Thanks for all you do. I just wanted you to know that I sold my agency effective 08/01/2010. I have reduced the stress in my life at least 75% and am thankful I could get out with my skin. This is a sad commentary after more than 3 decades of service to Allstate. _____________________________________________________________________ Please change my e-mail address as I will be leaving Allstate 8/1/10. I would stay, but like most agents, I can't afford to get screwed out of my agency, which is why I decided to sell now. _____________________________________________________________________ Thanks for all you do...I loved the latest issue - it just reinforces my decision to sell my agency last year. I still would like to keep active in the insurance field and I am most interested in learning what the “retiree agents” are doing and what opportunities are available out there. Thanks again for all you're doing.

Allstate, Berkshire Circle RBS Insurance Sept. 10, 2010, By Maria Woehr, TheStreet.com Rumors are that Allstate and Warren Buffet's Berkshire Hathaway may be interested in acquiring Royal Bank of Scotland's(RBS) insurance units Churchill and Direct Line. Reports in Marketwatch and The Sunday Times say that RBS was hiring advisors to run the sale. This isn't the first time that Allstate has been rumored to be checking out RBS' insurance assets. The insurer was rumored to purchase the assets during the financial crisis and, "it became a big issue," says Paul Newsome, an analyst at Sandler O''Neill & Partners.

"It makes sense that if they looked at them before, they would be looking at them again," he says. "It would allow Allstate to go from a domestic company to an international one and would also add to the direct distribution system."

Of course, it is unclear if Allstate is interested in making acquisitions. The company historically has focused on stock repurchases, and it is likely they could make buybacks again . Allstate told The Street the company did not comment on acquisition rumors. P/>Strategically, it would make more sense for Berkshire, to expand its personal lines operations, Geico, with the acquisition. Berkshire also has an international presence, explained Newsome. Allstate Spent $1.33M Lobbying Government in 2Q August 23, 2010, Associated Press Allstate Corp. spent $1.33 million in the second quarter to lobby the federal government on legislation involving flood insurance regulations, safe-driving laws and financial reforms, according to a recent disclosure report. The total is down from $1.54 million that Allstate spent in the same quarter a year ago, but up from the $1.08 million that the property and casualty insurer spent in this year's first quarter. According to a July 20 filing with the House clerk's office, Allstate lobbied the government on issues including flood insurance rate-setting and financial regulatory reforms. Those reforms included a proposal to tighten regulation of derivatives, private bets between two parties on how the value of assets like crops or measures like interest rates will change in the future. Allstate, based in Northbrook, Ill., also lobbied the House and Senate on legislation aimed at reducing accidents caused by inattentive drivers who send text messages while at the wheel.

All agent communications from NAPAA, such as Exclusivefocus magazine and DirectExpress e-newsletter, from which the above articles were excerpted, are made possible by the generous support of our dues-paying members. Membership in NAPAA is strictly confidential, and costs less than $1 per day. Now more than ever, isn’t it time for you to join NAPAA today?

www.napaausa.org Join NAPAA Now! http://www.napaausa.org/membership.asp

Note on letters: The opinions expressed in letters are not necessarily those of NAPAA. Letters should be brief and are subject to editing. We will publish letters anonymously; however, we will not accept letters sent anonymously.

The views expressed by NAPAA, or any of its positions relative to its activities and those of its members' actions on behalf of this organization, are expressly those of NAPAA, and do not reflect the views or opinions of Allstate Insurance Company, or any of its affiliates.

This newsletter may not be redistributed or reproduced in any form, including electronically, without prior written permission from NAPAA.

Contact Information for Agent Informer Newsletter & NAPAA Headquarters: National Association of Professional Allstate Agents, Inc. (NAPAA) P.O. Box 7666, Gulfport, MS 39506-7666 Toll free Phone: 877/627-2248 Toll free Fax: 866/627-2232 E-mail: ExecutiveDirector@napaausa.org Web Site: www.napaausa.org