Farmers vs. Independent

[sacman]

Following are a couple of links to review the contracts.
Not sure why your DM won't show you a copy of something that is readily available on the net.
Is that a harbinger of things to come? not sure.
Pay special attention to Paragraph D (1) where it states that the contract can be terminated
WITHOUT CAUSE with a 90 day notice. Which means that you do NOT own the agency.
Anytime your 'supplier' can shut you down for ANY reason, then you have no real job security.

Imagine instead that you are considering opening a heating/ac business.
You sign an agreement to provide Trane furnaces and CA's. After 5 years Trane decides that they
aren't going to be your supplier any longer. That can happen. However, instead of you signing a new deal with Lennox and continue business as usual, Trane mgt comes to your office, takes your files,office,
phone number and tells you that you can no longer service your existing customers.
The clientele that YOU built is considered intellectual property of Trane and you cannot
provide ANY htg/ac service or product to them for one year.
You tell me, are you self employed? Does this sound like the best small business opportunity in America?

http://www.ufaa.com/page/contracts/2013%20AAA.pdf

The link below provides a copy of the subsidy agreement.
It is from 2009, not sure if it has changed or not since then.
Notice that they call it a subsidy LOAN agreement.
You can have the subsidy reduced or waived if you meet their quotas, but that is not easy to do in this market.
Especially with their prices. Impossible? no. Difficult? very
Miss the quota.... bye-bye subsidy, hello repayment plan.
Check with local new agents and see how many have done it or on track to meet them.
Read this contract VERY carefully.

http://www.ufaa.com/page/PDFS/New-Agent ... eement.pdf

[gretchman77]

I have a similar question. I am an independent agent working under a broker. I do not see this as a long term arrangement at all, but as an opportunity to learn the business. Recently I was approached by another agency that made me a very incredible offer that I believe beats the current one I am in but I'm not ready to transition. I also do not want to miss out on the opportunity? Is it possible to contract with the other agency too that contracts with carriers that my current agency does not? (This is for life insurance.)

[InsureZoneDirect]

Insurance laws vary by state and you can usually only work for one agent/agency at a time. Working for two agencies could present a conflict of interest and concerns about moving clients from one agency to another.

We offer a great opportunity for anyone wanting to become an independent agent. We pay up to 90% of our commission. We offer an all inclusive technology bundle that provides real time rating for Personal and Commercial Lines, client manager, lead management, email, phones, and product info.

Feel free to check us out at http://www.insurezonedirect.com for more information.

Good luck and, ultimately, do what is best for you!

[chromedome]

hm, I would second also what sacman says. 100% truth. In addition, the loan which can be forgiven if you meet your quotas, you will still have to pay taxes on as ordinary income in the years it is forgiven. I am an 11 year Farmers agent that will be leaving in the next year or two. The reason I will be leaving is the fact that I am in fact NOT an independent contractor. If your agency does not grow, your contract will be terminated. You have zero security as a Farmers agent. The policies are owned by Farmers and NOT you. Nobody cares what you did yesterday, only what you will do tomorrow. You are an independent contractor only as far as the IRS is concerned. Many people have started careers with Farmers only to lose their contracts and leave deep in debt so please be very, very careful.

On the positive side, Farmers will help you learn the insurance business. Every independent in my medium sized town is an ex-Farmers agent. Every one of them.

If you want unsolicited advise, I would go to work as a producer for an independent agency. Learn the business and if you enjoy it and are good at it you can either stay with the independent or you can open you own agency. Either way you will have more security than you ever will with Farmers.

[lonestar]

I agree with Chrome. What amazes me, is that after all the information about Farmers is posted and read here, and everywhere else, why are people still interested in becoming a FIG agent?

If only 2.5% of all new Farmers agent actually survive into year 2, what makes anyone else think that they will be able to beat these odds? You have better odds playing blackjack with your money in Vegas! Seriously.

And if the Farmers agency opportunity was as great as the recruiters claim it to be, please think about the following:
1. Why are so many long time, seasoned Farmers agents being terminated for no cause?
2. If you truly "owned" your own business, like the Farmers recruiters claim you will, why then are agents being told what to do, how many quotes to do per day, how much life insurance they have to write each month / year to keep their job?
3. If you truly "own" your own business, why is it that Farmers owns the customers, and when you are gone, you are legally prohibited from contacting your clients for at least 1 year?

Think about it.

The time of offering only a single insurance company policy, at only one rate, is gone. That was fine in the 1970's through the 1990's. But the internet has changed all of that, and so has the independent marketplace. If you were a customer, wanting to find a better deal on your insurance, which type of agency would you rather call? An agent that offers only one brand at one rate, or an agent that can shop your policies with over 15 different companies, with all different rates?

If you are selling detergent for a living, and you become a "TIDE" detergent "Exclusive" distributor, are customers going to flock to your storefront and buy TIDE detergent in large numbers? Or are they going to go down the street, and shop in the local supermarket, that offers 15 different brands of detergent?

The facts: If this were 1/1000 of the opportunity that Farmers DM's and recruiter portray it to be, you would never see a Farmers agent leaving and going independent. There was a time, say 7-8 years ago, you rarely saw a Farmers agent quit, get terminated for no cause, etc.

Today, they are leaving by the droves, and being terminated for no cause in droves. And the new agents that are leaving, or that are washed out of the program after 1-3 years, are leaving with $30,000 to $40,000 dollars in debt, that they owe back to Farmers.

How would you like to be 5 years into the Farmers agent program, and you just signed a 5 year office lease as $3,000 per month, and you just bought a new house, so your mortgage is around $2,500 per month. And in walks Farmers, to terminate you for no cause with only 90 days notice. You cannot get out of your lease, and Farmers is going to steal your clients(your revenue source) and give them to another newby Farmers agent at 50% of the regular commission.

Newbies have been warned. Newbies best beware.

(sarcasm on) "Never been a better time to be a Farmers agent" (sarcasm off)

[William Graham]

I was a Farmers Agent (FIG) for 22 years - I was terminated about 4 years ago.

I was profitable for all but about 3 years when we had large hail storms. I was running about $1.2 million in Gross Written Premium for the last five years with FIG. I recieved a call from my District Manager at the end of October,2009 and after he said he would accept my resignation in a heart beat for the third time- I kinda got the message. He went on to say that if I did not resign he would become my enemy and put me on the DARG program-- DARG is a management created program which eliminated any semblence of independence by micromanaging the agent and his ability to conduct business. Every agent I know that was placed on that program wound up stressed out of their minds if they stayed on the program- for most it was just a pathway for the company to document reasons to force you out of the business- this was before FIG pioneered the mass termination process (without cause) in Texas-
After the call, I consulted my attorney. He advised me that my contract could be terminated by Farmers for just about any reason with a 90 day notice. I asked for the 90 days & I resigned -- the business I spent half a lifetime went flying out the door.
But, I found there was life after Farmers. I am now an Independent Agent. The stress of the last 3 years I had with FIG is gone & I enjoy the business again. We are on pace to have in six years maybe less what it took me 22 years to build with FIG.
I have many friends who are still successful FIG agents and FIG was a great place for me for 18 years. I had 2 great District Managers (DM) who helped me grow in the business. But with the last DM it was not so.
My advice is to choose carefully. FIG may work out for a few but I would not recommend it.

[jackwehoca]

I have read many of these FIG posts.Can never equate these posts with the glowing career recruiting material . I guess it comes down to your upper level management, a situation which you really cannot control. Leads me to believe that independence or aligned with a few people you know and trust that have complimentary/not competing books of business is the way to go. Either stay small by yourself or combine with a few others, but DO NOT become a long-time employee of any major corporate enterprise. Very little autonomy no matter what they may promise...they will always go the way most beneficial to the company, not the agent. If you must start with a "biggie", get your feet wet and learn as much as you can as fast as you can, then bolt before they start turning the screws.

[Courtney]

Some interesting takes here. I'm captive but know a lot of Inds and while the daily battles may differ a bit there will always be something to deal with. You can be very successful taking either route with the right approach and work ethic. If you want to own an agency the long term vision needs to be scaling and having producers under you. If that is not your plan then signing on with another agency as a producer might be a good idea. A lot less of the ownership headaches. My advice would be to talk to as many people as possible on each side.

Courtney
http://www.SanAngeloInsurance.com

[lonestar]

I would like to add to the phrase:"If you want to own an agency the long term vision needs to be..." I would finish the sentence as follows:"...to actually own your own agency." Captive agents do not own anything but the debt. Go IA, so that you can trully "own" your own business. The contracts on the IA side specify that the agent "owns" the policies.

[sacman]

I don't mean to nitpick, but you do NOT need to have producers under you in order to 'own' an agency.
Successful ownership is in the eye of the beholder.
I've 'owned' a FIG agency for 17 years and an IA for 6, never had a producer.
My IA agency is 25% larger than my old FIG agency and income is almost double.
If that is not reason enough to leave the captive world for IA, I'm not sure what is.

Courtney is absolutely correct in that you can be very successful in this business as either an IA or
a captive if you have a strong work ethic. However, real ownership of the agency only occurs in the IA world,IMHO.
When a company can dictate your office hours, location, cancel your contract and shut you down for any reason
at any time,etc. then you really don't have ownership.
Things are not perfect on the IA side. There are still issues to deal with. However, the companies try to help the agent.
They actively try to resolve issues instead of ignore or blame issues as some captive companies do. As an IA, if I don't like how a carrier treats my clients, or myself, that carrier will lose my business. An incredibly valuable alternative that the FIG, SF, AMFAM, & Allstate agents don't have.

[munda4545]

hello Friends, I am a new in field with a CA P&C License.
Please suggest me the company,where I would start as a entry level or trainee position to learn the rope....

[d's insurance store]

hello Friends, I am a new in field with a CA P&C License.
Please suggest me the company,where I would start as a entry level or trainee position to learn the rope....

As I read this, you really mean to communicate that you went to the time and trouble of getting a California P&C license WITHOUT any idea of what you would do and how you would do it? I would respectfully suggest some very quick and very elementary career focus consultation and research and then some industry specific investigation into how to best match your temperment, goals, background and talents into a career path.

The possession of an insurance license can open a bunch of doors, but right now you need some serious work on figuring out which key to use.

Good luck.