'GOOD HANDS' PEOPLE DROP 1,600 AGENTS.

Byline: Russ Britt Daily News Staff Writer

Told Monday they would no longer be employees of Allstate Insurance Co., some of the company's 1,600 California agents who now will be independent contractors joked about the carrier's famous "Good Hands" ads.

"You can fall through if you're not careful," said one agent. "They can juggle you or drop you."

But many Allstate policy sellers were not laughing. When managers told them in 50 meetings held throughout the state that they were terminating their employment and suddenly turning many of them into unwilling entrepreneurs, they were upset.

"I feel we're getting a raw deal from the company," said George Pliske, a Granada Hills agent, one of few willing to be identified. "I think it's going to end up costing me a minimum of $15,000."

The Daily News reported last week that Allstate planned to turn its agents into independent contractors as part of a dispute over how much the company should reimburse expenses for their policy sellers.

A class action lawsuit over unreimbursed expenses, filed by four ex-Allstate agents, was the catalyst for the company's decision to change the status of its policy sellers.

A Feb. 29 hearing date in Alameda County Superior Court has been set for those included in the suit to voice objections to the settlement.

Bob Murphy, Allstate spokesman, said the company still plans to go ahead with the independent contractor program regardless of whether the terms of a proposed settlement over the class action suit are changed.

The suit is predicated on California state laws, which order employers to cover all expenses of workers regardless of whether an agent's expenses are excessive, Murphy said.

Allstate is enforcing the action only in California, although the company has urged agents to become independent brokers voluntarily nationwide. State Farm Insurance Co. and Farmers Insurance Co. have agents on similar contracts, company officials said.

Murphy said the company's plan to transition agents to contractors should wind up costing them nothing. Each agent's commission will increase from 8 percent to 10 percent to make up for expenses, health insurance and to create new pension plans for themselves. Contributions to agents' pensions will stop and the monies will be frozen until they retire.

"We are really concerned that the Allstate agent will be unhappy in any way," Murphy said. "We put this package together to encourage all 1,600 agents to stay."

But the number of agents unhappy with the lawsuit settlement and the new employment terms is growing. Last week 455 agents had signed on with a new attorney who plans to contest the settlement, but now that number has swelled to 630, sources said.

The increasing number of agents unhappy with the agreement has swelled so much that Alameda County Superior Court Judge Joseph Carson, who approved a preliminary settlement, will transfer the hearing date to a larger courtroom to accommodate a bigger audience.

After hearing the company's presentation, agents said the benefits the company was trying to offer would leave them several thousand dollars short as they attempt to meet expenses. This comes at a time when Allstate has cut back on homeowners and auto insurance policies due to a large number of earthquake claims and Proposition 103.

Some say the severance package, 1.5 percent of their annual premiums, is not enough to get them to leave.

"I don't think the package is great enough to get them out of the business - until they fail," said one agent. "I think they're going to fail. So many expenses are put back on them that they just can't make it."