Looking at Farmer's

[philip]

I have been with Farmers since 1977. I am not familiar with the contract new agents sign now. Yes there are reqirements a new agent must meet when signing on. Are not most new employees, at any job, put on some sort of probation? I am not, however, an employee of Farmers. I write what they want and if they don't write it, then I am free to broker it out. So I don't consider my self totally captive either. Farmers offers, for me (auto, home & life) and my clients good products at generally competitive rates. The pendulum will always swing back and forth with respect to rates. New agents are indeed required to make x number of sales (including life policies) initially. If they make it past the first two years, if I remember right, then there is no longer a requirement for a certain amount of life. But they still want it. Why? It is a profitble line of business. ONLY ONE CLAIM1 District managers have the job of recruiting and training new agents. That's it. Some Farmers DM's are good and some not so good. Where I am we have the best. He helps when you start and continues to do so through out ones career and so does his staff. Yes I am prejudice towards Farmers. I have never been an independent, I am not worth ten million and I don't have to constantly worry about production to maintain a contract with some company as do independents. If you are in a large city and you work you will be successful with Farmers. There is plenty of support for their computer system, but when using computers anywhere there will occasionally be problems. For all of those who used to be with Farmers and now are independent and making a good living, quit bitching and keep on taking care of your clients like the rest of us are trying to do. Good luck in what ever you do.

[kevinraz]

CareerChanger, you made a comment about the ownership of Farmers. Here's my knowledge of the situation but you should learn more on this yourself. I might be off on the dates.

Farmers started out and operated for a long time without any outside ownership, then was bought by BAT (British American Tobacco) back in the 80's. BAT owned FIG (farmers) until they sold it to Zurich back in the 90's.

This is a semi big deal. Zurich is a large insurance company and they run life insurance operations in the US. Their products are cheap and FIG can't compete on premium - so you have competition that has inside info on your rates. It hurts when you lose to a related company.

As for policy count, here is what I remember: home or renters is worth 5 points, no matter the premium. Auto is one point per line - liability, comp & collision on a vehicle is 3 points. Life was something like 1 point for every $5 first year commission. Check that against what they say you need for production on a monthly basis to keep in their good graces. Note that you do not get any production credit for renewals, just new business.

Finally - I did get excellent training at Farmers. Much of it was on life insurance, not quite so much on auto & home. I went from Farmers to working for a large independent agent then a career as an underwriter with a national carrier. FIG was a good place for me to start.

[gregcw]

The Farmer's DM is ready to go after one interview so it fits that he just wants quality reps out there if they work out great, if not, then what the hell, no skin off his nose. I would be an independent agent, not an employee.

But consider, I am a complete insurance novice. If I work for an independent, the training will suck, as will name recognition. I thought Farmer's was part of the Zurich Financial Group, not a tobacco company, anyway.

Could I apply for an independent and get good training and leads?

Think about the part that I highlighted in red and then the following part that I just underlined. Do you really think that just ONE interview would tell him that you are a quality prospect. The way that he gets paid is for putting on Reserve Agents, bringing them up to Career Agents and the Commission overrides for all agents. The Recruiting, Training and Commission Override totals for Reserve and Career agents will exceed the Commission overrides for his full time agents. I also have one correction to your next comment. You would not be an Independent agent. You would be an Independent Contractor. There is a significant difference between the two. Basicly you ARE an employee at worst and an encumbered agent at best that is responsible for all of his overhead taxes and expenses.

Yes, they are owned by Zurich now. They were purchased by Zurich, from British American Tobacco U.S. a bit over five years ago. I neglected to include that in my first post. They, Farmers not Zurich, then purchased Foremost Insurance Company. In the process they re-wrote their entire book of Manufactured Homes to Foremost even though the premiums were higher than that on their own product. My understanding is the Motorcycles will be the next step since Foremost offers that product as well.

I don't know how their acquision of Bristol West is working out but my understanding is that they are giving lower rates than Mid-Century (Farmers High Risk Auto market). My commissions with FIG were 10% with Farmers and 7% with MId-Century. lonestar indicated 15% to 18% as an Independent. My auto commission schedules vary from 12% new 8% renewal with one company to 15% plus potential annual profitability bonuses of up to 23% for low loss ratios with other companies. Farmers bonus program is that you get certificate for up to 5% of your contract value each year you are profitable. That certificate turns into money when you quit, retire or just get terminated. Your Contract Value is 100% of last years RENEWAL commistions, not including new business commisions.

The training that you get from the Farmers DM will vary depending on the knowledge of the DM and their Career School, Commercial School and Life School may vary depending on the region that you are in. As an Independent Agency employee agent or principal it will also depend on the trainer and the Continuing Education Classes or programs that you select. On that there absolutely NO GUARANTEES on EITHER side of the fence.

I think that one of the keys that was in two posts "Farmers, in my state, is a mess right now." on one, and "Farmers is not the same company it was 30 years ago and the changes, some good some bad, have led to a very dysfunctional organization." in another.

[Career changer]

I appreciate the responses. How about Allstate's agent program? Any better? They seem to want people who are serious, but they can open a competitor whenever they feel like it. Also, they're not as competative as Farmers on price. At least they're open about it. Plus the financial product requirements are problematic, IMO.

[lonestar]

Career Changer, be wary of Allstate. They only pay 10% home insurance commissions, and I have heard that Allstate in Canada is going to no renewal commissions after the policy is on the books for two years. Don't know if this will happen in the US, but why take a chance? You might try joining up with these guys to get access to the independent companies: SIAA http://www.siaa4u.net. Oh, by the way, if you sell your indendent book of business down the road, you can sell it to ANYONE YOU WANT, and the going rate is 2x to 3x the annual renewal commissions. Farmers touts contract value, but this is valued at only 1x annual renewal commissions. Being able to sell your business to a family member down the road is not a unique feature. As far as brand recognition, I think that allows you to compete if your premium is only 5-10% more than a company they have not heard of. Other than that, according to my IA friends and from what I have seen, customers will buy a policy from a company they are not familiar with, as long as the financial rating is "A" and the policy form is the same or better than what a captive company is offering. An insurance policy is a legal binding contract. An insurance company has to pay the claim, no matter what company name is on the declarations page. If your rate as a captive Allstate agent or Farmers agent for homeowner is $1,400 and they get a quote for $900 from Travelers, I would not count on them going with you, unless you are able to sell refrigerators to Eskimos. If you owned an Exxon gas station, and you are selling gas for $4.00 a gallon, and a competing 7-Eleven gas station across the street is selling at $3.00 a gallon, do you think folks will buy from you because you represent Exxon, a brand name? Some of you agents might be better salesmen than I am. I have always believed that a quality product at a good price will sell itself. (The market is much more competitive today than it used to be, and perhaps that is why Farmers has a 70% washout ratio on new agents trying to make it? Maybe other captive companies have a similar washout rate?) Plus, as an independent agent, you really do OWN YOUR OWN BUSINESS, and the policies. You answer to no one once you have established your production on the front end. As a Farmers agent, even though the DM sells you on the idea of "owning your own business" and "being your own boss", (just like Allstate) I have found this to be just a marketing spiel. You will NOT own your own business as a captive agent, and even though for tax puposes you are classified as an "independent contractor", you are not an independent agent, and will be treated as if you have quotas to meet on life production, which is where the "treated like an employee" analogy comes in. The district manager's employment contract that he signed with Farmers as a DM dictates that they do have a life quota of 20-24 life applications per agent each year in his district, and he has to bug his agents to write life insurance to keep his job. This "bugging" may manifest itself in the form of weekly phone calls from your DM asking "what have you done for me lately" as far as life insurance applications, or monthly visits to your office to pressure you to write more life insurance. Regular emails and faxes are also common in this regard as well. I can't see Allstate being very different from this. In my opinion, this is one of the main reasons Farmers and Allstate are losing so many agents. Agents just get tired of being "employed". For those agents that enjoy writing life insurance for their captive company, that is great, and no offense to you folks. So, officially you do not have a life quota with Farmers or Allstate, but at the end of the day, you really do. Will this type of arrangement keep you happy in the long term? Only you can answer this question for yourself.

[Bart]

The independent way of selling insurance products is the fastest growing segment in our industry. Why do you think that is? Because you truly do own your own business, I have been a Farmers agent for 30 years and wish I had of bought an agency when one came on the market as it did 15 yers ago. Now I am stuck with an agency I can't sell, I can only give it back to the company which is exactly what they want. I think I will stick around a little longer just to piss off the creep they hired to be their DM in our district.

[d's insurance store]

Others have pointed out some of the disconnects between the 'sales pitch' from a captive manager trying to recruit and the realities of hooking up with a captive to get started in this business.

I would like to add that there has been a consensus here that it's OK for a novice to learn the trade on someone else's dime as a captive agent, and then get pissed and leave, taking your knowledge and initiative with you, opening your own independent shop.

Like any major career move, you'll have a lot of homework and introspection to deal with as to your own motivations in entering the insurance business as an agent, or agency owner.

Please know for real that starting with a captive will teach you a lot about the business, but your knowledge will very much be dependent on the skill set of your manager, who may or may not have any real insurance background. The captive's training programs are primarily based on the premise that if you do what they tell you, you will be successful. But, those 3 ring binder's with all of the knowledge don't take into account the real world of selling insurance in a very crowded marketplace.

It's common for poster's on this forum to say 'if you work hard and show persistance and knowledge, develop a nitche, have a sympathetic agency owner who will invest in your learning, then you'll do fine as a commercial producer.' That may work well if you aspire to be a commercial lines producer, but captives are pretty much about personal lines and financial (life and basic inestment products) production, with a smattering of commercial coverage. Well, personal lines is all about rates. And the smaller commercial stuff is also all about rates.

The real question in any case is how are you going to carve out your segment of the pie? What are you going to offer potential clients that they're not already getting? And in a shrinking marketplace? In other words, why do business with you? Knowledge of personal lines coverage is in my opinion, somthing that the new, broad marketplace largely doesn't value. When auto and home products are promoted for purchase over the phone from call centers with largely generic coverages, then what value can you bring? With a shrinking main street, small commercial market, what does that leave you with? A bunch of doctor and attorney offices, while the main street merchant's close their doors with with it the opportunity to sell insurance to the mom and pop retailers? Imagine if you'd been in the business over the past 10 years and specialized in contractor's. Agencies that did that prospered, and now are scrambling to cover their overhead. How about if you'd opened a personal lines office in one of the newly expanding suburbs of Arizona, Nevada, Florida, California or any of the other high growth states. How do you think your business would be doing now if you'd located in an area beset by heavy foreclosures?

Please, I urge you to think of all of these things in addition to the slick recruitment brochures from Farmer's and Allstate. Having full knowledge will help you make a good decision that you can live with.

Good luck.

[mica.cooper]

From Bart

The independent way of selling insurance products is the fastest growing segment in our industry. Why do you think that is? Because you truly do own your own business, I have been a Farmers agent for 30 years and wish I had of bought an agency when one came on the market as it did 15 yers ago. Now I am stuck with an agency I can't sell, I can only give it back to the company which is exactly what they want. I think I will stick around a little longer just to piss off the creep they hired to be their DM in our district.

Bart,
I see this all the time. I don't know what your contract says but, ... I see State Farm, Farmers, etc all the time 'pass' business to another agency, in effect rolling new or existing business. I even see them doing comparative rating to support this. The other agency is usually owned by a spouse or family member. There has always been a HUGE interest in getting captive rates into comparative raters for this reason.

I expect to see a LOT more of this as the sticker shock of multiple double-digit premium increases hit captive insureds mailboxes.

[earlybird]

If you are going to start from the bottom, you may have to go the direct writer route to get a start. All of them will push you to sell life policies, first and foremost, because they get the most income from the life products, and will probably keep it, even will you fail to "qualify" and get booted out the door!

I suggest that any position you can get at an independent insurance agency will be better for you in the long run. It may be very difficult to get in, depending on where you are located and who you know!

[ED3771316]

Farmers just announced another rate hike in my state -25% Fire bump.

Farmers, according to my state director, has the highest operating expense of all companies. This is due to the poor Computer System and hack programers.

It took almost 1 hour to quote 3 cars. I was not competitive. I dished it to a broker and he had the quote done in 5 minutes and wrote it.

[atgnut]

Please and I say this with everything in me. RUN FOR THE HILLS!!! Do not consider Farmers. You will never catch the carrot. Do your research. The new contract is designed for you to fail, unless you can sell snow to an eskimo and spend hours and days with him convincing him that he really needs the overpriced ice. Check out the Primerica pyramid scheme!