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Insurance Agents Lose Fight With Nationwide

PHILADELPHIA (CN) - A federal judge threw out a challenge against sweeping changes to the business model of Nationwide Insurance.

The Nationwide Insurance Independent Contractors Association sued in May on behalf of 54 Pennsylvania agents, claiming that the company is trying to implement unfair changes to the agents' employment contracts.

The association said the changes impinge on agents' rights as independent contractors by giving Nationwide control over policyholder servicing, which has historically been under the agents' purview.

Agents also claimed that Nationwide is trying to take exclusive ownership over all policyholder information by labeling the information as trade secrets - something the agents vehemently opposed.

"There is no legitimate business purpose for Nationwide's assertion that it should have exclusive ownership and use of the policyholder information," the lawsuit states. "This is information generated in the ordinary course of business that originates with, and is developed by, the agent. Nationwide is aware of the information only because the agent has transmitted the necessary information to Nationwide in the form of an application for an insurance policy and then transmitted updating information where appropriate."

The association also accused Nationwide of giving agents an unfair ultimatum: submit to a new retirement-benefits arrangement or receive lower commissions.

But U.S. District Judge Mary McLaughlin said last week that she can't rule on the merits of the suit because the association has failed to demonstrate standing.

The complaint doesn't name a single association member who would be injured by the actual and anticipated changes to Nationwide's business model, according to the 10-page opinion.

It also failed to offer facts supporting the association's claim that the changes amount to a raw deal for most, let alone all, agents, McLaughlin found.

"The plaintiff's conclusory statement of universal harm to all of its members under all of the relevant contracts does not raise a plausible claim," she wrote, giving the association 30 days to file an amended complaint.

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