53 State Farm Agents in California Fired

A State Farm Insurance agent’s fund-raising for his alma mater has led to the firing of 53 agents, mainly Californians, whom the company accuses of trying to misuse money from its charitable foundation.

Contra Costa agent Don Soukup, an alumnus of Wayne State College in Nebraska, was fired Feb. 18 after sending 52 State Farm colleagues each a check for $1,000 last year. He asked them to send the check to Wayne State and to apply for matching contributions from State Farm’s foundation, according to his Oakland attorney, Daniel King.

Soukup used the arrangement to bypass the company’s $1,000 ceiling on individual matching contributions.

“All anybody wanted to do was to benefit a charity--a college in rural Nebraska,” King said.

King accused State Farm of using a minor problem to rid itself of veteran agents, nearing pension age, who have become disenchanted with the Bloomington, Ill., insurer’s cutbacks.

“Certainly nobody wanted to jeopardize their lifetime retirement,” King said.

State Farm spokesman Bill Sirola called the dispute “an internal matter that is truly unusual and truly unfortunate,” but he declined to be specific on why all the agents were fired over the incident. Soukup appealed his firing to a board of two agents and two company officials, but they let it stand.

King and State Farm declined to reveal the identities of the other agents, whose appeals have yet to be settled. King said that about five agents are from Los Angeles and Orange counties. He said that many of the agents, like Soukup, were close to qualifying for pensions from State Farm.

Now, unless they are reinstated, they will be bought out with reduced earnings for five years so long as they do not solicit former clients. Those former clients will be handled by other State Farm agents, Sirola said.

State Farm, California’s No. 1 provider of fire and car insurance, is one of the nation’s best-known insurers. Its policies are sold by independent contractors, “captive agents” who agree to sell only its products.

The unprecedented mass firings of what had always been called “partners” follows cutbacks at State Farm, which had decided to stop writing new residential policies in California, Florida and other high-risk states.

That change followed 1993’s Hurricane Andrew, which resulted in $3.7 billion in insured losses at State Farm, and the 1994 Northridge earthquake, which cost the company $2.6 billion.

King contends the firings actually were retribution against veteran agents who support a proposed state law to allow them and other captive agents to sell policies from other insurers.

Soukup, 53, sent a $52,000 check to the State Farm foundation, asking that it be used to make up for the matching donations if company officials felt those had been inappropriate or else use it as an additional donation to Wayne State, King said.