Need Advice

ShinerBockDownSouth · Post by **ShinerBockDownSouth** » Mon May 15, 2006 6:04 am

I am relatively new to the p&c side of the business and would like some input. I have an opportunity to buy an existing Allstate agency in a location where rates are competitive and loss ratios are good. However, there is a lot of negative press surrounding Allstate. I also have the opportunity to become Brooke agency owner. I would prefer to own my book of business but from what I understand it is difficult as a relatively new agent to get contracts. Thanks in advance for your replies. I am in central Georgia.

independent guy · Post by **independent guy** » Mon May 15, 2006 6:05 am

I would do neither. I'm sure someone else will rant and rave for hours and give you plenty of reasons why.

d's insurance store · Post by **d's insurance store** » Mon May 15, 2006 9:08 am

Shiner, depending on who is here, you may get tons of cons and a few pros regarding captive (ie Allstate, State Farm) or 'restrictive' franchise like Brooke.

The major downside to being a captive is lack of product and absolutely no input into what you can offer the buying public. I've survived the captive life and lived to open my own small IA. The captive companies put you into what basically amounts to a franchise, where you have to follow their rules, but without the protection of a true franchise agreement. My take on those who are unhappy in the captive environment centers around what are perceived as quotas to keep the office sign and control issues from lower, middle and upper managers who have no experience running a business and who are insensitive to the trials and tribulations of the business owner keeping the doors open. In addition, the majority of captive company environments now think of themselves less and less as P&C shops and more and more as financial service storefronts, with strong requirements to sell thinks like annuities, life insurance, CD's (not the album kinds) and mutual funds.

You also have to be prepared in most instances to targeting personal lines as a captive, which although it can bring financial success, there are those who post here who will make a strong argument that commercial lines with its potentially much larger premium base, will lead to higher income returns for the agency owner.

I don't have any direct experience with Brooke, but from what I've read, you appear to become an indentured servant to their system. They set you up, arrange the financing and lay out their version of a success manual. You sell, make the payments and presumably see financial rewards. It didn't appear to be my cup of tea, but shucks, it probably works for some people.

ShinerBockDownSouth · Post by **ShinerBockDownSouth** » Mon May 15, 2006 9:50 am

Thanks for the replies. Let me give you some more information. I live in a small central Georgia community(25k pop). I want in this business, so which is the best and right way to get started?? MGA, buy a financial interest(Allstate), etc.. If I want to find MGAs in Georgia where should I look? Should I contact companies directly and see if they will appoint me??

kevinraz · Post by **kevinraz** » Mon May 15, 2006 12:07 pm

First, every company gets bad press and lots of it. State Farm is frequently called Snake Farm because of their claims practices. Allstate screwed their agents 2-3 years ago. Farmers gets more than their share of bad press, deservedly so.

But they keep on going and many succeed with them.

Are you 100% sure you can buy an Allstate agency? I know that with Farmers their agencies are not able to be sold. Even transferring them within a family is almost impossible. When the agent dies or quits Farmers pays a contract value and that's the end of it, all business goes back to the company. It's then parceled out by the district manager.

I've never heard of a State Farm or Allstate agency being sold. Make sure that what you have opportunity on is valid. Read the agency agreements and have an attorney review them as well.

ShinerBockDownSouth · Mon May 15, 2006 12:18 pm

With allstate you buy the economic value of the book of business. You don't own the book Allstate does. I am sure they sell their economic interest.

sanddog1 · Post by **sanddog1** » Mon May 15, 2006 4:49 pm

ShinerBockDownSouth, the posting are absolutely correct, you don't own anything not the policies not the renewals. You must go to Allstate and prove your worthy of filling the prior agent's shoes. And like a good neighbor farmers is the same. Allstate new contract gives agents a right to hand off their business to another pre-qualified allstate agent. Farmers you must be related to the agent. Farmers truly sucks anyhow stay away

volstrike3 · Post by **volstrike3** » Mon May 15, 2006 5:10 pm

Sanddog1. Any opinion about brooke agencies?

They sound like a fairly appealing option if you want agency ownership but do not have the volume to get appointed directly.

sanddog1 · Post by **sanddog1** » Mon May 15, 2006 5:33 pm

I have hard enough time running this beast; I know nothing of franchise type agency, as I never had and interest in getting involved. I'm a firm believer in working for a good broker who will allow you and avenue to buy your book and move on

Porter · Post by **Porter** » Mon May 15, 2006 6:20 pm

I have looked at Brooke. They are no good. They charge too much. If I were you I would take Sanddog's advice and work for a broker. Get in with someone that will let you keep your book down the road if you decide to hang your own "shingle".

You definitely do not want to get involved with any captive company. Putting all your eggs in one basket is not smart. Think what would happen if you buy a book from Allstate or started a scratch agency. The company can decide at any time they don't want to write a line of business anymore and if you are heavy in the line of business you are screwed. You also have production requirements. If you don't make them you're gone and so is your investment.

In this business independent agency is the only way.

broberts · Post by **broberts** » Mon May 15, 2006 8:08 pm

What about Agents Helping Agents, part of SIAA?

jrf · Post by **jrf** » Wed May 31, 2006 4:14 pm

I've been considering purchasing an Allstate agency as well - does anyone know if I'd be contractually prohibited from writing commercial P&C with other carriers?

sanddog1 · Post by **sanddog1** » Wed May 31, 2006 5:34 pm

If any of my carriers found later that I was a captive employee agent, i would be disbarred from the real broker industry and branded as a looser. I am not trying to be too rude it's just that all of these posting are very clear as to what you should be doing.
The single agent office with one carrier is dying on the vine. Yes there is the 1 out of 1000 that's does good at selling auto & home

jrichd · Post by **jrichd** » Wed May 31, 2006 8:39 pm

E-mail me at jrichd@yahoo.com and I will tell you about an independent
non-captive opportunity where the clients are yours.

Jason
MBA

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