Subject: Just Cause Termination

In talking to agents from around the country, one of the most pressing issues most have is company termination for no cause.  Knowing this will likely be a state-by-state battle, I decided to put together a general guide to help agents in their quest to get a Just Cause Termination bill passed in their state.  It is based on my experiences in Texas, but the strategies outlined apply in most states.  

A.  Form a State Coalition.   This should consist of agents from State Farm, Allstate, Nationwide, American Family and any other group of captive insurance agents in your state.  Some states may already have such a coalition in place, which may or may not be active.  But, if there is currently no such coalition in place then this should be one of your initial efforts.  Start by contacting agents that are members of their own association and that, above all, wish to pursue a Just Cause Termination bill in your state legislature.  UFAA, through CEAA, can assist by getting names and phones numbers of agents in your state that are active in their association.  I emphasize the word active because you will want to work with those men and women who will take this effort seriously.  You may find, as we did here in Texas, that only a core group of agents in the coalition were the main driving force.  Additionally, and at the very least, this coalition should have a President, Vice President, Treasurer and Executive Director.  In Texas, our Executive Director was our main spokesperson and worked on a contract labor basis.  He/she should not currently be an active agent and should have contacts with other organizations that will support our cause.  In our case, we received endorsements from AARP, American GI Forum and other civic organizations mainly because we worked behind the scenes on a bill banning the use of credit scoring.  The fact is that if you wish to get the support of consumer groups we must push for legislation that is consumer oriented. 

B.  Fund Raising.  Lets face it; it is going to take money to get this legislation passed.  Our main fundraiser in Texas was a raffle where our own insureds were the greatest source of ticket sales.  But I can tell you from our experience here, do not raffle big-ticket items such as a car for $250.00 a ticket.  Sales were dismal and, in the end, we had to refund some of the money.  Fortunately, many agents saw the need for these funds and donated the money.  Of course, you can call agents and ask for donations, which they should be willing and proud to give.  However, many may not even donate for something that will benefit all captive agents.  The raising of funds will have to be an ongoing process starting well before the legislative session and going well through the term.  In Texas, the legislature meets every two years for a six-month period.  The point is that raffles are popular and can be an excellent funding vehicle, but keep ticket prices reasonable. 

C.  Lobbyist.  Much of the money raised will go toward a Lobbyist.  Most likely, two Lobbyist will be required, one for the Democratic legislators and one for the Republican legislators.  When it comes to choosing a Lobbyist, as we recently found out at the CEAA, you get what you pay for.  Also, perhaps the most important Lobbyist you hire will be the one for the Republican side.  The reason I say this is that most Democrats, not all, but most, will be supportive of Just Cause Termination legislation.  On the other hand, Republicans are more pro business and most likely received some of their campaign contributions from the insurance industry.  Both Lobbyist should be good and do not take the Democrats for granted.  But the Republican Lobbyist will have to work really hard to deliver the votes and action needed to move this bill through the committee.  If this bill does not receive the support and sponsors required it will die in the committee. 

D.  The Bill.  CEAA and UFAA have copies of model legislation to help draft the bill.  Most anyone can draft the bill but a State Representative and State Senator will have to introduce and sponsor the legislation.  (Note:  It would be great if you can get a sponsor with clout and influence, as this will greatly increase your chances of success.)   Much thought should be given to who will carry this bill.  Once the bill has been introduced it will be assigned a number.  At this point agents need to start contacting their representative and senator to get support.  Co-sponsors for the bill will be needed so that it can move through the committee.  The UFAA website can be utilized to post a copy of this legislation along with talking points.  In contacting legislators let them know you are one of his/her constituents.  They will respond to you.  At least they should if they expect to get re- elected.  Do not let them off the hook too easily with a verbal show of support.  Ask for a written response as to whether or not he/she will co-sponsor the bill.  Toward that end, a letter or email is the most effective and preferred method of communication with legislators.  The bill’s success will hinge on having a large number of agents contacting their state legislator(s).  Lastly, the Governor of the state will have to be in favor of this bill or he/she will veto it.  Some of your coalition members will need to contact the Governor or his/her key aide early in this process to get his/her views on this legislation.  Again, if it’s a Democrat your chances of success are better.  A Republican will require some lobbying effort of the Governor. 

E.  The Company.  Rest assured that Farmers management will fight this measure once they get the first indication it has even a remote chance of passing.  They will not want to lose the control over agents the ninety day no cause termination provides.  Passage of this bill will not eliminate the no cause provision of the AAA contract but will give those agents who feel their termination was unfair and discriminatory legal remedy.  But just as important, it will change the makeup of the Termination Review Board (TRB) to provide a more level playing field for the agent.  This bill should include a provision stating whom the TRB members will be, taking control of the TRB away from the company.  Also, if committee testimony is going to take place, the company will be there in full force.  The coalition will need to line up agents willing to testify.  The company will have some of its favored agents testify against this bill.  Agents that have been terminated for no cause will be the best prospects.  Current agents, due to fear of retaliation, may not want to appear before the legislative committee knowing management will also be there taking notes and writing down names.  The coalition also should gather evidence such as DARG letters or other similar letters from the company to agents threatening termination if they do not improve loss ratios or life sales.  Committee members need to be made aware of this especially if the agent was ultimately terminated for no cause. 

In closing, this is a general guide that may not encompass every goal, plan, scenario and possibility.  Also, in some more sparsely populated states such as North Dakota or Idaho the need for Lobbyist may not exist.  Hope this helps.  ED