David vs. Nationwide

After seven years as a Nationwide independent contractor, David Howell of New Braunfels decided it was time to move on. Like any divorce, the decision to part ways was neither easy nor swift. The seeds of thought were planted two years earlier when the commission schedules dropped between 2 and 5 percent, multi-line commissions were eliminated and rates were increased to cull the Texas herd.

It took David those two years to “come to grips with the emotion and anger” and begin thinking about leaving the Nationwide fold.

The first time I talked to David, he sounded optimistic. Not quite happy, but strong. Willing to fight. He had drafted a notice to cancel his agent contract and post-dated it to Aug. 31 with the intention of having a Sept. 1 cancellation date. It would be easy for all parties that way, he thought. It was forwarded to Nationwide on Aug. 23.

Not wanting to be dumped, Nationwide responded on Aug. 24. Seems he couldn’t quit, because Nationwide was firing him. Since then, both parties have strapped on the gloves, and David is finding himself in a battle he thought he had taken precautions to prevent.

A letter was delivered to David and his lawyer saying Nationwide believes it has grounds to bring a lawsuit for nine different reasons, ranging from conversion to civil theft to unjust enrichment. This “scatter-gun” letter, as David and his lawyer termed it, has made him his attorney’s constant companion. The bills are adding up, and as David lamented in our last conversation, they haven’t even done anything yet. His voice has changed. Now it’s a little more exasperated. He is hoping to remove his case to federal court to join a class action that is currently underway. “Otherwise, I’ll be dickering in local courts for years.” David is currently subject to a temporary restraining order and is awaiting an injunction hearing for use of “proprietary data.”

I don’t know the merits of David’s individual case (though it might be the subject of a future story), but his situation is one that should make all agents concerned. On its most basic level, Nationwide wants the customers that David procured as an independent contractor. And they’ll use heavy artillery and deep pockets to get what they want, no matter the acquisition cost. As long as they wound their enemy in the battle, the outcome of the war matters little.

This is not just a story about David or about Nationwide. This is about all agents and all insurance companies. On page 28 of this issue, you’ll find a legal discussion of covenants not to compete as they affect the insurance agent. Unfortunately, Michael Sean Quinn can only help you defend yourself once a battle has been waged. And unfortunately for David, his war is just beginning.