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- Farmers Insurance – Avoid this Company!
- Farmers Insurance Hit With Class Action Lawsuit After LA Wildfire
- 21st Century Insurance (4)
- Bad Faith (7)
- Bristol West Insurance (1)
- Farmers Insurance (21)
- Farmers Insurance Agent (5)
- Farmers Insurance Complaints (9)
- Farmers Insurance Employee (7)
- Farmers Insurance Group (13)
- Farmers Insurance Lawsuits (12)
- Farmers Insurance Reviews (6)
- Foremost Insurance Group (1)
- Mid-Century Insurance (1)
- Uncategorized (2)
- Zurich Financial Services (1)
AUSTIN, Texas (Legal Newsline) – The defendant in a class action lawsuit over automobile insurance policies has filed a motion to dismiss in Texas federal court.
The motion to dismiss was filed April 3 in U.S. District Court for the Western District of Texas.
Plaintiffs Charles Grigson and Robert Vale filed a case against Farmer’s Group Inc. in February, claiming the company violated the Texas Insurance code’s unfair discrimination statute by offering less-expensive insurance policies to new customers. They also accused the company of not informing current customers about the new, less-expensive policy.
Past members held Farmer’s Auto 2.0 (FA2) policies that were phased out when Farmer’s Smart Auto Plan policies were developed. Thus the company stopped offering Farmer’s Auto 2.0 policies.
The lawsuit claims that the policies are basically the same but the Farmer’s Auto 2.0 policy costs more.
However, the company has requested that the court dismiss the case with prejudice.
It also stated that because the policy rates were submitted and approved by the Texas Department of Insurance, the case is baseless. According to the defense, the commission of the department has a responsibility to go over rates and ensure that they are fair.
It also pointed out in its motion that there is a grievance process with the department that individuals are able to access if they are concerned about the rate.
Farmer’s Group also stated the statute “only applies to discrimination without actuarial basis, in the amount of premium fees, or rates charged policyholders under a particular contract of insurance. It is focused on the fair and actuarially sound allocation of risk between policyholders with the same insurance contract.”
In addition, the motion claims that insurance policies are complex, which is why the law only considers discrimination between those holding the same policy.
“A seemingly minor change in coverage can have a large impact on potential loss payments and thus the rate paid,” the defendant stated in the motion to dismiss.
Farmer’s Group Inc. is represented by Norton Rose Fulbright US LLP in Austin and Los Angeles.
Complaint, after complaint, after complaint! This company is the WORST! Avoid Farmers Insurance Group! Seventy-nine percent of reviews submitted to the Better Business Bureau (BBB) of Farmers Insurance Group are NEGATIVE! Farmers Insurance had 213 complaints in the last year and 643 complaints in the last three years! Do you want to deal with a company with that many consistent complaints? Read some of the complaints below.
“I have been a customer with farmers for auto and home for 5 years. Overall thought it was pretty good until i filed my very first auto claim. Van in shopping area during a very windy day while i was indoor shopping. Upon returning noticed mild damages on bumper and both van doors. I am not sure as to cause possible carts, possible vandalism, don’t know and of course no witnesses. Claims agent came to look at the car and stated these are 3 separate claims and 3 deductibles. Even if same time can’t be on same claim. I was in shock and still am. Will pay for it cash and switch to another insurer who doesn’t play these games to save money. Heed the Warning! ”
“Hello to whom may this concern , FARMERS is the worst insurance to have , not only they charge you for fees that have no meaning to the business except for the fact that they just want to collect as much money out of you once you sign up with them but when it comes down to submit an accident they will NOT inform you properly on how to pursue the claim so it gets taken care of asap and more importantly properly . I was involved in a minor incident and the other party had State Farm and I’m in the process of switching insurance due to the fact that FARMERS is withholding my deductible with no legit reason on why they are holding my refund , they informed me that the deductible was going to be refunded . This has been going on for two weeks now I just got off the phone with STATE FARM and they informed me that everything was taken care of and paid to my insurance (FARMERS) with no complications . Now I try to get a hold of my agent and she is avoiding my calls . If you need ANY information please feel free to contact me .”
“I have 3 BMW’s covered with “storage insurance”…one vehicle was parked in my yard and a motorist drives into my yard and crashes into my vehicle (hit and run)..Farmers says they don’t cover that..PATHETIC..If you have Farmers and or are considering them, DO NOT! The best is that one Farmers representative said it”s covered but when the adjuster called, they informed me they do not. People need to band together and demand insurance scammers like Farmers change their rotten ways! ”
“this company practices what is called price optimization – they slowly raise rates hoping you wont notice … ok so i payed my bill without doing due diligence in terms of my premiums – lets this be a warning to ALL insurance customers – i have no excuse – their own web site gave me a cheaper quote than my bill was … the problem is the customer service here – in 3 years of having farmers insurance i never have been able to contact my agent … most of the time i would get frustrated and just call the 800 number – but this time i was told [ two times in fact because i tried again] that i had to talk to my agent – you cannot cancel from the 800 number … well i never could and still never have been able to contact my agent …. they called me when they thought i was overdue on my payment and wanted their money … a collection agency im not quite sure who it was [wasnt the agency] … but farmers billed me for the time – 49 dollars in fact – for 23 days over that i could not get a hold of them ….. so ok farmers you got a few extra bucks outta me – and in return gave me lousy customer service — im at least gonna let everyone know i can about my farmers experience – was it worth it ? ”
We have been in the same home for 15+ years. As a current farmers customer I now realize it’s the worst mistake of my life. We had a house fire. Due to the sot and ash still in the air, my father has now been in the er twice. Continuing to drag your feet with the “farmers suggested” restoration company is seriously taking a tole on my family. Not only have you proven to care nothing about your long term loyal customers, you have shown me that your company was the worst mistake of my life.”
“I have been paying for insurance for my rental home through Foremost/Farmers for 5 years. Never one late payment in that time. I had some renters who did significant damage to my rental home. I met with my agent and he initially said they would cover $8000 dollars for the damage. That $8000 turned into $2000 once I received a copy of his report. He then called me a week later and said that they reviewed the policy again and found a loophole to where they didn’t have to pay anything. They put a stop payment on the check and now refuse to return my phone calls. I had a $35000 policy and they are giving me nothing. Please do not do business with this company. They are frauds and thieves. The only good news is that after I contacted an attorney, he says that I have an extremely strong case. Hopefully I can get some of the money back that I have paid them for 5 years.
“I called my agent about my car being broken into. They informed me that I had $1000.00 deductible (OK that was my choice) but then said I might want to think about not filing a claim because I would lose my “no claim discount.” Now that is “not the same as penalizing you for using your insurance, it is just losing your discount. Really? It is EXACTLY the same thing. Nothing like getting ripped off twice. This company is just as much a thief as the guy who broke into my car. We’ve paid tens of thousands of dollars over the last 20-something years without making a claim. The first time we have one? We are told not to submit and penalized.”
“The rates as quoted did not match the premium charged at times. The cancellation process is an Unfair Trade Practice in that when they are notified in writing and through customer service of a cancellation of insurance coverage, they do not follow instructions and seek to further delay the cancellation causing additional charges to consumers.”
“I was only 2 weeks with this company then canceled my auto insurance they did not return my money at all then when I call them they start to argue with me that I still have to pay $14 more because they have a cancellation fees. It’s ridiculous I’m not recommend this company be careful read first everything then sign paper . This company it’s just taking advantage from people . Stay a way far from this company . I’m from Arizona.when I call here the agency than pay for auto insurance but the statement shows 3 diferant address one in Mesa.Az other at Pasadena.CA and the tired address shows at Hollywood.FL. Foremost insurance.coast national insurance .bristol west insurance .stay Farr from this company’s ..I’m not recommend”
“I’m not one to complain about a company, but this experience from start to finish has been awful. When my Fiance and I Went to farmers we had a great experience with the local agent he was nice and helpful. That’s where the good ends. To get a hold of said agent you had to call and leave a message and wait for a call back. Most the time it was quicker just to drop into his office. When we started our auto insurance policy, it took almost 3 months before the payments started getting pulled from my account, even though we set up direct deposit. That was the first nightmare, the second nightmare was when we tried to cancel the auto policy. We put my Fiance’s name on the auto policy since he had homeowners insurance through them as well. Well he was out of state working, when we found a new company with the same policy, but half the price. So when I called to cancel the girl I talked to didn’t say anything to me about the main policy holder needed to be the one to cancel not me. She only told me to fill out the email they were going to send me and to send it back and it’d be canceled. I did that and checked a few days later to find the policy wasn’t canceled. No one sent me an email to explain that it had to be my fiance who sent the email. So when I called to find out what was going on they worked really hard to help me, which was great. Unfortunately since they didn’t tell me the first time about the cancellation terms I was too late to get a stop payment on my account so I wouldn’t have the bill taken out. So I waited a week and half to call to check and see when I was going to get my money back from them. Only to find out that they are mailing me the check instead of just returning the money to my account. And the catch to getting the check was that they didn’t schedule my refund to be sent out till 2 weeks after I finally got the account canceled. I got sent to billing via the customer service and was told that they could cancel my check and have my money back to me in 3-5 business days and then it’d be a few days after that to get the bank to process the deposit. She also told me to call back in 5 to 6 days to make sure they had processed everything for me. I called back 5 days later to get an answer of there is nothing on your account about cancelling the check and sending the money directly to your account. And when the girl tried to figure out why they didn’t do what the said they would, she found out that they can’t just cancel to check. And that it would take 7-10 days to cancel it and another 5-10 to get me the direct deposit, plus however long it took my bank to process the deposit. So almost 4 weeks later from my policy cancellation, I’m still without my refund. Which wouldn’t be a huge problem if I wasn’t going to be on vacation out of town for a whole week with a friend, and now have barely any money to pay for the trip. ”
“I had a policy for 27 years with foremost insurance company part of farmers insurance. they insured my mobile home. I made a claim for water damage, first claim in 27 years. It was turned down, they claim it was old age rot when you can plainly see it is water damage and you can feel the water in the floor. do not do business with a company that lies ”
February 9, 2017
Auto insurance company Farmers faces a putative class action lawsuit alleging it discriminates against longtime customers by offering preferential pricing to new customers while raising rates on its current customers.
Lead plaintiffs Charles Grigson and Robert Vale allege in their class action lawsuit that Farmers Texas County Mutual Insurance Company “betrayed” their policy holders through “illegal and discriminatory” policy regimes in early 2016.
The plaintiffs claim that when Farmers rolled out its policy pricing, it unfairly offered new customers lower rates and did not inform current customers about them. Further, argue the plaintiffs, Farmers raised rates on current policy holders.
Grigson alleges that he has been a Farmers Texas auto policyholder since 1981. He says that in January of 2016 he was insured by two Farmers auto policies, but was never informed about the available lower premium rates.
In early May, Grigson says became aware of the lower rates and attempted to apply, but was told he was ineligible because he was not a new customer.
Similarly, Vale alleges in the class action that he’s held a Farmers auto policy since 1997. He says his policy expired in May of 2016, but he was not made aware of the preferential pricing policy at the time of renewal and paid a higher rate.
Both plaintiffs were eventually allowed to apply for the lower policy rates, according to the complaint.
“In nearly all cases,” allege the plaintiffs in the class action, “the premium rate that an existing [Farmers] policyholder pays is higher than the premium rate a new customer would pay under FSPA for identical or virtually identical coverage.”
“The rate difference between FSPA and FA2 can be as high as 20-40%, or even higher,” continue the plaintiffs. “In some cases, individuals and/or families may save more than $1,000 for every six (6) month policy period by switching to FSPA.”
According to the class action lawsuit, the pricing regime that favors new customers violates Texas State Law. Additionally, the plaintiffs allege that there was no “actuarial basis” for the preferential pricing for new customers.
The plaintiffs say that they, and other existing Farmers policy holders, have suffered “significant economic damages” as a result of the pricing regime. “Existing [Farmers] policyholders have paid, and continue to pay, higher premiums than they should. Through its unfair discrimination, FGI is forcing Farmers Texas’s most loyal, existing FA2 policyholders to effectively subsidize the lower FSPA rates offered only to new Farmers Texas customers.”
According to the class action lawsuit, Farmers intimidated its insurance agents into concealing the better rates from existing policy holders. This will erode the trust between the policy holders and their agents, say the plaintiffs.
The plaintiffs are seeking an injunction against Farmers to stop the preferential pricing regime. Additionally, they are seeking damages and/or restitution, pre- and post- judgment interest and attorney’s fees and costs.
The plaintiffs seek to represent a Class of Texas Farmers auto policy holders affected by the preferential policy regime initiated on Jan. 4, 2016.
The plaintiffs are represented by Michael L. Slack, John R. Davis, and Paula Knippa of Slack & Davis LLP, Joe K. Longley of the Law Offices of Joe K. Longley, and Roger N. Heller and Jonathan D. Selbin of Lieff Cabraser Heimann & Bernstein LLP.
The Farmers Preferential Auto Insurance Pricing Class Action Lawsuit is Grigson, et al. v. Farmers Group Inc., Case No. 1:17-cv-00088-LY, in the U.S. District Court for the Western District of Texas, Austin Division.
According to the JD Powers 2014 U.S. Household Insurance Study, Farmers Insurance got the WORST rating they could get for Renters Insurance in the following categories:
Billing and Payment
To top it off Farmers Insurance had the WORST Customer Satisfaction ranking of all the insurers.
According to the 2015 Temkin Experience Ratings, an annual customer experience ranking of companies based on a survey of 10,000 U.S. consumers, 21st Century Insurance had the WORST ratings for the 5th year in a row! Five years in a row? Is it a coincidence that Farmers Insurance Group bought 21st Century in 2009? It didn’t take them long to run this business into the ground in regards to customer service and experience. 21st Century Insurance was also one of the three companies that declined by most percentage-points between 2014 and 2015!!
To generate these ratings, Temkin Group asked 10,000 U.S. consumers to evaluate their recent experiences with a company across three dimensions: success (can you do what you want to do?), effort (how easy is it to work with the company?), and emotion (how do you feel about the interactions?). Temkin Group then averaged these three scores to produce each company’s Temkin Experience Rating.
On the heels of a recent multi-million dollar refund agreement with the state’s largest homeowners insurer, Texas Department of Insurance Commissioner David Mattax announced a revised settlement with the second largest homeowners insurer, Farmers Insurance, stemming from a 2002 lawsuit by the state against Farmers.
The settlement now goes before a Travis County District Court for approval.
The settlement, which amends a prior agreement, will enhance benefits to Farmers policyholders who fall within the settlement class.
As part of the settlement in 2002, Farmers provided a 6.8 percent homeowners rate reduction that has already been received by its policyholders. An additional $74.38 million in refunds has been increased by $10 million to account for the passage of time.
Under the terms of the agreement, eligible Farmers policyholders will receive a total of $84.38 million in refunds.
“This is a significant step toward returning funds to deserving Farmers customers,” said Commissioner Mattax in a departmental release.
He also noted the recent settlement with State Farm Lloyds totaling $352.5 million in refunds. Taken together, the two settlements provide for almost $437 million in refunds to certain Texas insurance consumers.
Farmers Insurance rated worst, as usual. -Admin
“We have had Farmers car insurance and roadside assistant. My husband’s was travelling from LA to bay area and car broke and brakes failed on I5 north near grapevine while coming down on the mountain. Even the emergency brakes did not work. I called Farmers insurance and told about the situation. They kept asking questions for 1 hour and very slow in response. For example on telling what exit I am, the person was not able to locate the exit while I found online and told where the exist is exactly.
Car is out of control and she is asking where we want to take the car…. On telling nearest car repair shop, she took 10 minutes to find the nearest shop and again did not find the info that the shop is opened or closed since it was Sunday evening. I told, “Why don’t you send the roadside assistance” and meanwhile we decide where to take the car. She did not agree and asked me harassing questions for more than an hour. Finally my husband hit the car against the curb/divider again and again and stopped it.
The roadside assistance came after 3 hours. It was just very horrible, very frustrating. They do not understand the situation… They understand only money taking and maybe wait till the car does meet an accident so they can put fault on drivers. Very horrible. We were so scared, afraid and frustrated that day.. Cannot tell. Never go with Farmers.” Jan 2015
“I had my car under a canopy carport and a very bad windstorm came through the the carport, damaged my vehicle. I went to a reputable auto body repair shop and received an estimate for $3,600. The Farmers adjuster came to my house and said that the damage wasn’t that severe and left me with a check for $1,400. I thought I had a $500 deductible, not $2,200. I’m very upset about this and I’m considering getting a lawyer. This guy doesn’t own or operate an auto body repair shop, but he thinks he’s qualified to disagree with the professionals.” Jan 2015
“Agent was sent email on new vehicle didn’t issue auto insurance until 3 weeks later but no backdated to the date of email. I forwarded the email from my sent box.. He said “I won’t accept it”??????? So how do I prove he accepted a later email on another car. How can I trust the “Insurance Agent” misplace emails or phone calls? Your “Vision Statement” seems to be just words. The Credit Union charged me for insurance which I had already and paid in full months earlier. It cost me $1710.00 plus interest. Besides agent has started insulting me because I changed insurance companies due to him not honoring the email sent to him but has accepted others prior and afterwards. Maybe this will get someone to help.” Jan 2015
“I was in a car accident while sitting at a red light. A guy hit me full speed and pushed me up under the car in front of me. I was hurt very badly in the accident and Farmers took me through a year’s worth of fighting sending me to their Dr where I had to get undressed. Then I had to go and sit for an hour while their attorney interrogated me for their client’s negligence. At the end of the day all I got was my hospital bills paid and 1000.00. I live in Oklahoma.” Jan 2015
“My daughter was hit by an impaired driver. Several physical therapy visits followed. The police report clearly identified the other driver as the at fault driver. Farmers immediately paid for the car loss at about 60% of the blue book value. They refused to pay the very low medical costs. We hired an attorney too late… our fault. Even our attorney lamented that Farmers is the worst insurance company in America. I had policies with them for more than six vehicles and they always refused claims unless I complained to my local rep. This company is pathetic and does not deserve to operate. AVOID THIS COMPANY AT ALL COSTS!”
“I had a 21st insurance policy for years, but they told me that they couldn’t cover my trucks now that they were work vehicles with my personal vehicle and I had to use Farmers to get coverage. Farmers insisted that I had to have separate policies and my insurance cost per year almost doubled (covering the same vehicles). I asked my GL insurer if they could give me a quote and not only could they include both personal and work vehicles on one policy it was about 3/4 of the cost. Naturally I switched over. With 21st if I was late in payment (contracting is not a steady check), they would terminate coverage, but farmers also sent a bill for additional cost and when I went to pay them 27 days after due date they already sent it to collections. Farmers as an insurer has been my worse experience with an insurance company I have dealt with in my 30 years of driving.”
“It’s very simple. At Farmers Insurance they will sweet talk you to hell. One of the worst I ever seen, for small fender bender, I mean Small. They will act like they are CIA agents. Every time you call them this is what you get: “WE ARE STILL INVESTIGATING THE ACCIDENT” (for almost 30 days). THEN IF THEY FIND THEM SELF CORNERED, SIMPLY THEY WILL CALL YOU RACIST. If you ask them “how long this investigation of yours will take”, this was what I got back as answer from Adjuster: “you are asking me to predict the future. Are you crazy, it takes what it takes.”
“I had a head-on collision and sustained permanent nerve damage to my neck. My UM policy limit was $100K and they offered $3k for pain and suffering. I had to sue my own insurance company to get a settlement. My agent took money from me for 22 years and when I really needed them, they said “sorry we can’t help you.” Do not think that low premiums will save you money in the long run. Look at the payout stats online for different companies before you buy. I have AMICA now and they have a good payout rating. That’s what insurance is for–to make it right when you need it. When you have a bad accident, it’s too late to expect all those promises they feed you at Farmers to be true. They aren’t! NEVER use Farmers.”
by Michael Futterman and Jaime Touchstone
A claims adjuster filed suit against Farmers Insurance when she was terminated after returning from a medical leave. A Fresno jury found that Farmers discriminated against the employee based on her age and failed to reasonably accommodate her disability. The jury awarded the employee $749,000, and she may be able to recover her attorneys’ fees as well.
Claims adjuster sues over termination
Farmers Insurance hired Sharron Warehime to work as a claims adjuster in its Visalia office. Warehime, who was 57, had more than 15 years of experience in the insurance industry. Initially, she received good to outstanding job performance ratings and was awarded various professional honors and accolades by Farmers.
Things at Farmers began to sour for Warehime after she was transferred to the company’s Fresno office. Following the transfer, she asked to handle her own caseload rather than working on cases assigned to other adjusters. Her supervisor obliged, allegedly assigning her the largest caseload in the office, including a previously fired coworker’s problematic files.
Overburdened, Warehime eventually requested help and a reduction in her caseload. In response, her supervisor acknowledged that she was responsible for a larger than usual number of files but didn’t reassign any of her work.
On top of the heavier workload, the Fresno office was staffed with younger employees who allegedly began directing ageist comments at Warehime, including “I don’t want to work when I’m your age” and “The old fuddy-duddy is coming in.”
Warehime complained. Her supervisor allegedly responded by conducting “case reviews” on her files, which culminated in Warehime receiving several “warnings” and being placed on probation. When she responded that the negative evaluation of her work was inaccurate and unfair, she was instructed to improve her performance.
The stress at work became so intense that Warehime allegedly suffered a mental breakdown and took a doctor-recommended leave of absence to undergo treatment for depression and anxiety. At the conclusion of her medical leave, her doctor cleared her to return to work, allegedly with a request that Farmers allow her to initially work a part-time schedule. The company didn’t respond to that request, and when she showed up for her first day back, a young man was sitting at her desk. Farmers had allegedly terminated her without notice.
Warehime sued Farmers for violations of California’s Fair Employment and Housing Act (FEHA), including claims for age discrimination, retaliation, failure to provide reasonable accommodation, and failure to engage in a timely good-faith interactive process. After a five-week trial, the jury found that Warehime had been a victim of age discrimination and retaliation and that Farmers failed to accommodate her disability. The jury awarded her $749,000, which included damages for lost wages and benefits.
Warehime also filed a motion to recover her attorneys’ fees. That motion and Farmers’ posttrial motions for a new trial and judgment notwithstanding the verdict are set for hearing in January 2014.
Jury believed employee
The FEHA affords job protection to individuals who are 40 or older and prohibits the harassment of any employee or applicant based on age. Businesses that regularly employ five or more workers on a full- or part- time basis must comply with the FEHA’s antidiscrimination provisions and evaluate job applicants and employees on the basis of their abilities, not their age.
Employers with one or more employees may be held responsible for any acts of harassment committed by their agents and supervisors and are required to take all reasonable steps necessary to prevent harassment on the basis of age. When a job applicant or employee is denied an employment benefit or is the victim of unlawful harassment based on age, the employer may be liable for age discrimination.
However, the FEHA does not insulate older workers from disciplinary action or performance standards administered equally to employees of all ages. Employers may terminate, discharge, demote, or otherwise discipline an employee who is 40 or older if she either fails to perform the normal functions of her job or conform to its legitimate business requirements.
In her lawsuit, Warehime contended that she was treated differently than other employees because of her age, and when she complained to her supervisor, she experienced retaliation through progressive discipline designed to lead to her termination. In response, Farmers argued that she was terminated because she didn’t embrace technology at work, rejected training to become a better employee, and blamed others for her problems when her workload backed up. Farmers also claimed she “low-balled” customers on their claims, leading to increased lawsuits against the company.
Ultimately, the jury believed Warehime when she asserted that she was a “committed team player and good with customer service” who participated in any required training and received positive performance ratings for the first three years of her employment.
Farmers failed to accommodate disability
The FEHA requires covered employers to accommodate an employee or applicant with a known physical or mental disability as long as the accommodation does not cause an undue hardship. In response to a request for an accommodation, covered employers must engage in a timely good- faith interactive process with the individual to determine if any effective reasonable accommodations are available.
Warehime allegedly suffered from work-related anxiety and depression, making her a qualified individual with a disability under the FEHA. She requested that upon her return from medical leave, Farmers allow her to work a part-time schedule as an accommodation for her mental health condition. Rather than granting her request, Farmers terminated her immediately upon her return from medical leave.
Warehime accused Farmers of failing to provide reasonable accommodation for her disability and failing to engage in a timely interactive process. The jury agreed, which likely contributed to the six-figure award. Sharron Warehime v. Farmers Insurance (Fresno County Superior Court, Case No. 08CECG02976).
Complaints of discrimination based on age and disability require a thoughtful response from employers. Firing an employee on the same day she returns from leave is rarely a good idea. The large jury verdict in this case suggests that Farmers acted in an overly aggressive manner without adequate appreciation for the legal and economic risks at stake.
A group of Farmers Group Inc. agents have filed a lawsuit in Los Angeles Superior Court alleging the Los Angeles, Calif.-based carrier has undercut them by sharing their data with a competing subsidiary and several contract violations.
The United Farmers Agents Association alleges in its suit that the U.S. subsidiary of Zurich Financial Services in 2009 “began orchestrating and engaging in a series of improper actions” at the expense of Farmers agents.
Those alleged actions include Farmers unilaterally changing the terms of the contracts with its agents, the company using client data gathered by Farmers agents to undercut them and terminating agents through a purposely rigorous new set of standards to take away their books of business and give them to agents making lower commissions.
“Under this scheme, Farmers utilizes information and data about the Agents’ policyholders – information and data acquired by the Agents through Agents’ efforts – to directly solicit those Agents’ existing policyholders with less expensive insurance policies sold through a subsidiary of the exchanges,” the suit states.
The fallout between Farmers and its agents seems to have started in 2009 with Farmers purchase of direct writer 21st Century Insurance Group. Following that buyout, Farmers unveiled a series of performance programs subjecting agents to new standards, including production minimums, quoting requirements and office hours, according to the suit.
In 2009 Farmers introduced a modified version of the contract that pertains to agents who entered the contract after that date. That same year Farmers acquired 21st Century, a direct writer of primarily automobile and homeowners’ insurance.
Farmers completed the acquisition of 100 percent of AIG’s U.S. Personal Auto Group, which included 21st Century Insurance, in July 2009. In addition to 21st Century Insurance, the acquisition included the former AIG Direct business and Agency Auto business. The purchase price amounted to approximately $1.9 billion.
Unlike the agent-based model, 21st Century does not rely on agents to sell its insurance products, instead it markets and writes policies directly to consumers.
“By employing a direct writer approach, 21st Century can offer insurance at low rates which undercut the rates being charged to the Agents’ own customers and policyholders,” the suit states.
Following the purchase of Century 21, Farmers began using applicant and policyholder data from agents under contract with Farmers and disseminating it to 21st Century and other Farmers-held companies that were competitors of its own agents, according to the suit.
“In both cases, Farmers, through 21st Century or another competitor, would then typically offer insurance policies to the Agents’ policyholders and prospective policyholders at lower prices than those which Agents could offer,” the suit states.
“These new programs were unlike any past programs, in that they impose explicit production minimums upon Agents without their consent; irrespective of an Agent’s past performance; and without regard for whether an Agent even markets and sells the particular type(s) of insurance required to be marketed and sold under the various programs,” the suit states.
UFAA President Tom Schrader declined to discuss the suit in detail, citing his fears that bad publicity would impact Farmers’ clients and agents negatively.
“This is a fundamental disagreement between the company and the agents and we prefer to handle it in-house without airing our dirty laundry,” Schrader said.
Farmers spokesman Mark Toohey offered the following statement:
“Farmers Insurance strongly disagrees with the issues raised in this lawsuit. During our nearly 85-years of doing business in the United States, Farmers Insurance has taken great pride in the strong relationship we have developed with our agents and we look forward to the future.”
The suit continues: “Farmers has used and continues to use these programs as a basis for taking disciplinary and other action against Agents, including termination, in violation of the contracts, which do not contain any provision requiring Agents to meet performance standards of any kind.”
According to the suit, Farmers has also taken action against agents on the basis of the location and type of offices being maintained by agents.
UFAA is a not-for-profit professional trade association, and is a member of the Coalition of Exclusive Agents Associations Inc., a national organization of exclusive agent associations whose companies insure over 60 million families. UFAA describes itself as a voluntary membership organization with the purpose of improving working conditions for Farmers insurance agents.
Each member of UFAA represented in the suit has a contract with Farmers. Under the contract agents serve as independent contractors of Farmers and must extend the right of first refusal to Farmers to bind insurance coverage on behalf of applicants procured by the agents.
Aside from sharing agents’ clientele information and contract violations, the suit alleges that Farmers has been terminating some agents for failing to meet the new guidelines and taking their books of business, which under contract is owned by Farmers, and using those books of business to provide seed accounts to newly signed agents earning a smaller commission.
The suit further alleges that the new performance standards imposed upon agents by Farmers are designed to be difficult to meet and they are being used as a pretext for terminating agents.
Aside from setting daily minimums for agents to contact, quote and present insurance products, the new program often also requires agents to market or sell products they have never sold before, according to the suit.
The suit seeks declaratory relief and seeks a jury trial. No trial date has been set. Neither Farmers parent Zurich nor 21st Century are named as parties in the suit.
Click here to read a copy of the lawsuit online.
Source : http://www.insurancejournal.com