Captive Agent wants to have wife open an IA.

[Rochambeau]

I would say to be absolutely careful to keep yourself totally separate from her IA. My dad was a State farm agent when i opened my IA and it contributed to him getting his appointment yanked.

That being said, as having been on both sides of the fence I can say with certainty that IA is a much better way to go than captivity. Be ready to learn a lot about the industry you did not know, be ready to really work to get it off the ground. Speaking from experience, you CAN get captives to consider YOUR experience when appointing your family member. If in a state where Mercury writes, you might wanna try them. I landed them and it really gave me market clout that I needed.

I would say this: DON'T put yourself on as an officer of the corp, your existing company WILL use that against you should they take issue with her agency.

Also, seriously don't expect your existing clientele to come flocking to you. With all the State Farm agents I have seen do this or something similar, even when they were able to market those clients from day one, if they got 5% of their old book to switch, they were doing really well. Rest assured that the old company will assert "trade secrets" claims on the client list.

Above all, you would do well to avoid any legal fight with the behemoth that is your old company. To mutilate an old axiom... Don't ever pick a legal fight with an enemy that buys their lawyers by the barrel. In the end, a protracted legal battle will drain your resources and you will lose. They will just out-lawyer you and it is an almost certainty that they will win by turning it into a war of attrition.

[sanddog1]

I have direct appointments with Zurich soon to include farmers o'boy, The Hartford, Allied Ins, Safeco, Chubb, Travelers, CIG, Oregon Mutual, Firemen's Fund, Kemper and more. And just about every Work comp carrier that's worth writing too. So with that being said, if your a captive you don't own your book of business, ie (farmers, Allstate old contract, Statefarm) this assuming your from California. Where is your business coming from after black tuesday? [*]
OK so 90% of the carriers i have mention want a current roll over of business with most, the minimum is $300,000 to $400,000 written premium and not junk sub standard business. I have read email here where it was said they just want a game plan ( NO Way), they want premium and want to know if more is coming. They also want to know if you understand the true commerical market and to protect you and the carrier from E & O claims. A Farmers agent is one of the most uneducated within the field. ( not all but most)
I had to buy $300,000 in written premium just to get an appointment with Allied Ins., man they are tough.
So your wife needs an avenue to place business until she can meet goals of production. I recommend a good IAB with many carriers and opportunity to buy you business from that broker once established.

[choicearizona]

Keep your wife's plans completely quiet with those around you. I know a captive insurer who fired an agent after his wife got her license. Sounds illegal or unfair but it happened. The captive has lost lots of agents to the independent side and is really watching that carefully. It's a no tolerance situation for more and more insurers. http://www.choicearizona.com/article.php?id=10

[mark4insurance]

I am also in your same situation. I have been a captive agent for 20 years and have over 7000 PIF and am now losing all my Fire book of business due to company pullout. You may want to double check being an office in the IA. In my company any ownership or being an officer would be a violation of your contract. I am setting mine up so I can hopefully move most of my fire business to the new agency along with the auto that will likely be lost as well.

Most companies I think will work with you if they know the situation and will appraise the situation as if you were part of running it.

[FFA]

I am currently making the break. Today, I will be submitting my resignation to my DM.

I did not do the wife thing. My Captive business is shrinking at a rapid rate due to the outrageous premiums being sent out. One renewal showed up today - Last year $85$, this year over $2K. WOW. So, as far as your PIF shrink goes, do not worry about that. The execs in LA know we are very uncompetitive in in a down economy. Perfect time for them to reduce distribution cost. Its their plan.

I showed my IA carriers my Captive numbers. All I talked to bit hard and offerd a fast track to an appointment.

Have some faith in your self (wife), you (your wife) will be in demand with carriers that actually want to grow.

[Qspurt]

You did not mention what state you are located in. In the less cat prone areas it is relative easy to get good property company appoinments without having to join a marketing group. I made the transition from captive agent to IA in 1995. Be ethical and live up to all the agreements you made with your captive company as you make your exit plan.

[db1961]

It seems a lot of people are assuming Scout is a Farmers agent. Not sure if that is true or not but if he is, he is probably under an older Agency Appointment Agreement considering his PIF. With the aquisition of Bristol West for the non-standard auto market, and the Zurich Small Business unit as well as the ability to write specialty dwelling in Foremost there are not too many lines of business that Farmers will flat out decline. It doesn't matter if the Farmers premium is twice that of a competitor, if it can be placed and accepted in a Farmers company, you are obligated to do so and placing it oustside solely for purposes of saving the insured premium is a violation of the Agency Appointment. I would think it not worth the risk of losing the contract value on a 6,000 PIF agency simply in order to establish a separate IA.

[gregcw]

I am a captive agent with a large company. I have around 6,000 PIF, but am feeling that the end if near with the company I am with. I plan on hanging on as long as I can, but I want my wife to open an IA in the meantime. I can't be an active participant in any agency outside of my company, but I want to know if I present my licensed wife as the principal, and my background (loss ratio, production), do we stand a shot at getting appointments? I will be an officer in the IA corporation. I plan on sending all the business I can to my wife, and when I sell my book, I will not become an agent in my wife's office until the non-compete has expired, but will be an invisible owner. I am sick of my company's sh%$t, and don't want to be associated with them much longer. I have read some articles about Smart Choice, and ISIAA, but this seems to be a form of "Captivity" which is what we are trying to get away from...
Any suggestions? Thanks!

scoutmaster1, Your comments that I highlighted and underlined make you sound like you're with Farmers. If that is true and, unless they signifacantly changed their contract since I left Farmers, your non-compete would make your plan, the comment that I just highlighted, unnecessary.

The FIG non-compete says only that you are not able to "directly or indirectly solicit, accept, or service the insurance business of any policy holder of record in the agencies of this district". What it does NOT say is that you cannot compete with then head to head.

I did not have to test this when I left FIG but I stayed away from my customers. If another agents customer approached me I felt that the burden of proof that I SOLICITED a customer of another Farmers agency was on Farmers. They did not ask me to give up my office location or my phone number. The result was that for nearly a year I was listed as a Farmers Agent and was able to sell insurance as an independent without interferance

[captiveagent]

Scoutmaster1, thank you for posting your question, I was just entering the forum to post the exact same situation. Have you met with a carrier to obtain a direct appointment? Did you consider having the marketing rep sign a confidentialty agreement? Of course, my concern is to keep this as quiet as I can. Please let me know how you are doing thus far. I value your input.

I assume by slanted "A" you mean Allstate, but I'm not an Allstate agent. Having said this, you have given me the absolute best advice I have gotten from anyone in or out of this forum. I sincerely appreciate everyone else's input, but you have given me the roadmap I need to make this happen. Others have asked why I would want to do this with the size book I have established? I don't see a relationwhip with my company that will take me to retirement. If I can get my wife an IA she can slowly build a book, and when the time is right I can sell, get as much as I can get, and after my non-compete join my wife in IA heaven. I know the grass is not always greener on the other side, but when you are looking at scortched earth, even brown grass looks appealing.

Thanks to all who have taken the time to give an opinion. I look forward to other's as well.[/quote]

[doyourhomework]

Scoutmaster, so sorry to be so late in responding to your message of 2-12.

First, Its my understanding that State Farm and Allstate handle the captive situation differently than Farmers. While Farmers does permit you to write business elsewhere that they cannot write, State Farm and Allstate do not. Thus, Farmers agents really do not have to set up separate sidebar agencies as long as they run each piece of business past Farmers and get declinations. If you are a State Farm or an Allstate agent and you want to write business outside of those companies you are really screwed unless you do as you suggest.

Second, the Farmers agents with whom I work do not have outside carrier contracts. In lieu of those they use services such as Market Scout or Insurance Noodle + they rely on wholesalers and MGA's for market access. If you would be a State Farm or Allstate agent and your wife set an agency up under her license [no ownership interest on your part] she could use those same sources. Fact is that contracts with the large admitted carriers now require so much production that they are of little use to other than very large agencies. I would conjecture that your business would not be conflicting in any way with the large agencies. Different paths. Different rules. Your wife could set up shop in your home and be no more than a paper pass through. You don't even need a separate office - just space....but you must show no involvement on your part.

Last, its interesting how this market has developed in the past few years. Some wholesalers are actually now cooperating with each other and giving others access to their markets in exchange for reciprocity. That gives small to medium agencies enormous reach in the marketplace if your wholesaler is part of such a network. Afterall, from the wholesaler standpoint it is better to write a piece of business than not ......and that plays directly into your hands. The old staid protectionist wholesaler will not last long these days.

[Tommybarrett]

yeah, I would definitely be careful. I heard of a similar story at the place I work too with a captive insurer.

[FFA]

E & O is going to be an issue. Getting a newly licensed agent to run an agency is not desirable to the carriers. You will end up going to the Surplus world and the premium is going to be a rude awakening.

It will not take long for your DM to figure out what is going on and then the termination followed by the No Compete Law Suit will stress you out and cost you upwards of $20K to defend just to have it dropped a week before the court date show down.

No Compete has already been in front of a judge. Ruling was that you can not impeede a persons ability to make a living. Judge did order defendant to repay the buy out.

Its a surprise that some class action attorney has not reliazed the hugh potential in this arena as captive carriers continue to bring the suits.

[alx730]

Obviously from Farmers if you're using PIF count haha...

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