NAAFA News
P.O. Box 431 Oscoda, MI 48750
E-Mail: [email protected]
April 24, 2003 Issue XXVI National Association of American Family Agents Inc.
Allstate Agents Lose Their Case !
In November of 2001, Allstate agents, through their agent association NAPAA, filed suit
against their company in the State of Florida alleging Breach of Contract. This alleged
breach entailed the imposition sales quotas (called ‘expected results’) not outlined in the
agent contract and the arbitrary altering of qualifications on existing agents regarding
their ability to purchase the books of business of other agents of Allstate which is
provided for in their contract.
NAPAA has fought this case vigorously over the past 1½ years trying to gain the
agreement of the Federal Court in Florida that Allstate breached the agent contract by
arbitrarily changing the book purchase qualifications and imposing harsh quotas. The
suit was called a DRA, Declaratory Relief Action, seeking the court’s agreement with the
NAPAA position that the company overstepped its contractual bounds.
On Monday, April 21, the judge in Florida handed down her 31 page opinion dismissing
all the counts in the lawsuit. We share NAPAA’s disappointment.
Former Insurance Agent Charged With 39 Felony Counts Including
Grand Theft And Elder Abuse
LOS ANGELES, CA - Officers from the California Department of Insurance (CDI)
arrested Patrick James Murphy, 45, of Norco, on Wednesday, April 2 and charged him
with 39 felony counts including grand theft, elder abuse, forged official seal, and
submission of forged instrument to a state agency. CDI's Investigations Division alleges
Murphy defrauded 31 insurance clients by collecting premiums and issuing false
insurance certificates for commercial, auto, home and workers' comp, when no insurance
existed at all. Murphy collected in excess of $300,000 in premiums from his victims,
including some senior citizens. Evidence suggests Murphy represented himself as a
Farmers Insurance agent despite the fact that Farmers terminated his agent appointment
in October 1997. It is believed Murphy also sold Farmers Insurance products using his
father's appointment without proper authority. Upon discovery of the improprieties,
Farmers Insurance immediately revoked the senior Murphy's authority.
"Unfortunately, we don't often find out about these scams until a consumer attempts to
file a claim only to find there is no insurance behind the piece of paper they received
from the scam artist," said John Garamendi, insurance commissioner. "Consumers can
take steps to protect themselves by first verifying the agent or broker is currently licensed
with the Department of Insurance, and then once they receive their policy, call the
company listed on the policy to confirm the policy number is registered with the
company and is in force." Murphy was booked into the Riverside County Jail. If
convicted, he faces up to 40 years in prison. Bail was set at $568,600. The Los Angeles
County District Attorney's Major Fraud Unit is prosecuting the case.
Moody's: US life insurers still face substantial
investment, credit challenges
New York, April 7 - US life insurance companies continue to face substantial investment
challenges including sizeable credit losses, depressed equity markets and near record low
interest rates in a difficult economy, according to a new Moody's Investors Service
report. The combination of these factors has placed greater pressure on US life insurers'
investment processes than has been seen in decades. In some cases, this has lead to rating
adjustments, but Moody's continues to believe that most of the industry remains highly
creditworthy. Moody's says insurers most successful in the current environment have
widely diversified investment portfolios, good credit quality, and have managed to avoid
exposure to excessive amounts of "fallen angels" that have become all too common in
this environment. www.moodys.com/insurance
Insurers Hope Repair Shops Can Help Keep Customers
Wall Street Journal
April 13, 2003
By CHRISTOPHER OSTER
Staff Reporter
Insurance companies have long urged customers to go to designated auto-repair shops
rather than local garages. Now they're entering the repair business themselves.
Last week, Progressive Corp., the nation's third-largest auto insurer, said it will open its
own chain of one-stop auto claims centers. Progressive will inspect crashed vehicles at
the centers, hand customers keys to rental cars on the spot, take the damaged cars to a
body shop for repairs and inspect them afterward before giving them back to customers.
This hands-on approach is part of a push by insurers both to lower their costs and to hold
on to customers. Insurers say they are relieving customers of the burdensome task of
finding a body shop and then making sure that the work is performed correctly.
Some consumer advocates and lawyers have their doubts about the new push by insurers.
"In the past, repair shops were independent businesses whose interests were to repair the
vehicle, and they weren't controlled by insurance companies that might have different
interests," says Michael B. Hyman, a Chicago attorney who has sued insurers for repair
problems. "The customer is going to be at the mercy of the insurance company more and
more."
Critics worry that the quality of repairs may suffer as insurers scrimp on costs. So-called
steering laws in many states already prohibit insurers from mandating what garage is
used -- both to protect consumers from shoddy repairs and to protect garages from being
squeezed by insurance companies.
Insurers say their new approach complies with such laws because customers always have
the option of picking their own garage if they wish. They argue that the poor quality of
repairs done by many independent garages is a far bigger problem for car owners.
Farmers Insurance estimates that 40% of repair jobs involve some type of fraud.
Repairing cars is a huge business. In a typical year, there are 25 million to 30 million auto
claims filed. That includes collisions and weather-related claims such as hail damage.
Understandably, insurers want more control over how that money is spent. Allstate Corp.,
the nation's second-largest auto insurer, in 2001 purchased a chain of auto repair shops.
State Farm Mutual Automobile Insurance Co., the country's largest auto insurer, teams
with repair shops that make estimates and find rental cars for State Farm's policyholders.
All the top carriers and many smaller insurers that offer such programs have some
combination of services that include helping arrange for rental cars -- the cost of which is
covered by some policies -- and guaranteeing repairs.
But the availability of these services varies by region. And keep in mind that the services
might not be worth it no matter where you live if you're a car buff or have a buddy who
owns a body shop.
Write to Christopher Oster at [email protected]
NAII Unhappy with Ore. Credit Bill's Advancement to Senate
Insurance Journal
April 16, 2003
The Oregon Senate Judiciary Committee unanimously voted to pass Senate Bill 260,
which would prohibit insurance carriers from using credit information for underwriting
and rating policies, the National Association of Independent Insurers (NAII) said. SB 260
now heads to the Senate floor for a vote.
Committee members also considered amendments to SB 280, which would allow insurers
to use credit information subject to a number of
restrictions. The measure, however, was put aside for lack of consensus among insurers
on the amendments, according to Sen. Minnis, chairman of the committee.
The NAII is disappointed with the outcome since SB 260 bans insurers from using the
credit-based insurance score of a consumer who is applying for or renewing a
homeowners or personal automobile insurance policy.
NAII believes that regulations addressing credit issues, set to take
effect June 1, should be given adequate time to determine whether it does a good enough
job providing reasonable consumer protections. The regulation mandates insurers
disclose its use of insurance scores and prohibits insurers from using insurance scoring as
the sole reason to cancel or non-renew policies. According to the NAII, the regulation
balances the need for consumer disclosure and preserves the industry's ability to use this
accurate, unbiased, and predictive underwriting measure.
Note from NAAFA Headquarters: Flood maps are now available on the Internet. Go to
http://www.msc.fema.gov/ and click on the “FEMA Flood Map Store” icon. This
information is provided by the CEAA (Coalition of Exclusive Agent Associations of
which NAAFA is a member) representative to FIPNC (Flood Insurance Producers
National Committee).
SECA TAX
Please feel free to request our SECA Tax kit. It is free to members.This kit gives the
member important information on how to reduce the tax burden on his/her Extended
Earnings payments.
Please Visit:
http://www.naafa.com/
Encourage your colleagues to join on-line or call NAAFA Headquarters!
We accept credit card payments for your dues, as well as monthly payments of dues!
Hear Ye! Hear Ye! You may now pay your dues renewal payment on-line.
Just go to our website and click on the blue button in the left hand column of the home
page titled: “Pay Dues On-Line”
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