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Letter to the Editor

Allstate Gets Injunction In Case Vs Texas State

The company received a preliminary injunction that allows its Allstate Insurance Co. unit to resume joint-marketing campaigns with its auto-repair unit, Sterling Autobody Centers.

Allstate and Sterling also claim that Texas House Bill 1131 violates their free speech rights. The challenge, filed last August, won't go to trial until September, according to an Allstate press release.

Texas House Bill 1131, which became law last September, prevents insurance companies from participating in joint marketing programs or programs that favor their own repair centers. The law also prohibits insurance companies from buying new or building additional repair centers.

Allstate Corp.'s Sterling currently runs 14 repair centers in Texas.

The injunction allows Allstate to resume its practice of promoting Sterling's services during the referral process.

"The state cannot undertake to level the playing field for the purpose of protecting local business from competitors," the U.S District judge wrote in his decision.

Repairs done at Sterling account for less than 5 percent of Allstate's overall claim volume, both in Texas and the other 14 states in which Sterling operates.

The unit has about 60 repair centers in 15 states, and while there aren't yet similar laws in other states, legislation is being discussed elsewhere.

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