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Hi ya'all. I thought I'd bring this to the forum as there are many FIG agents, and prior FIG's in the group...

My question is about Farmer's appitite and underwriting. I have a FIG agent competing for an account that is a Lumber Yard / Builder's Supply. 70% of their income is from the sale of lumber. We tried to place it with Zurich, but they have a 15% max guideline, and won't make an acception for this big of a difference. Safeco is basically less than 50%. How in the world is FIG going to offer a policy without loss runs, without a fire rating? This is not your basic builder's supply. It is a lumber yard that happens to sell other stuff on the side. The FIG agent is new, only three or four years into the business, and has very little commercial experience. Could he have missed something?

Any help / comments would be appreciated.

Swymmer

You're asking a rhetorical question, right? How can Farmer's, through one of their 'new' agent's accept a risk that doesn't meet conventional guidelines?

From the front line agent, to their local manager, to the 'creative' application, to the 'they want us to put business on the books' underwriting department, this risk will get issued in a Farmer's world of 'whatever it takes'. And, honestly, until there's a loss, who really cares?

I'm finding more and more in the personal lines and small commercial arena that the direct writers, and some independent's are choosing to see what they want to see and be a bit creative on the apps and business just gets done. And, I'm also seeing more frequent signs that the company's are doing their level best to be more creative as well, despite what an underwriting manual might say.

You're far too experienced to be 'shocked' by this behavior. The older I get, the more I realize that maybe, just maybe, rules are for suckers, in this business that I've been in for 25+ years and in many other areas of my day to day life. In the personal lines arena, I've watched the direct writers in my area ignore ISO Fire ratings for protection class, manufacture fire hydrant's where none exist and turn pier and post and stilts into full foundations. I suppose at some point, these liar's, cheat's and lout's will pay a cosmic price, but in the meantime it makes following rules awfully tough to take when it comes to making a living.

Just my rant for the day.

I couldn't agree with D's more.
Every day we see square peg risks fitting somehow into round hole UW guidelines.
That said, you might try to contact ILM at 800-428-1441 / http://www.ilmgroup.com. They will likely give you the chance to compete on this risk and if you put enough fear of consequences into the insured maybe even get the sale.
Good luck.
Shagster

While it may come across as sour grapes, I would tell the customer that the agent is probably falsifying information to in order to get his business. If the customer signs an application with material information that is false he is also involved with the misrepresentation. And when the company performs an inspection, the account could be non-renewed. These facts could be enough to convince the customer to deal with an honest agent/company. If not, then they are probably not the type of customer you want anyway. My experience with FIG agents has been similar with D's. Is it because they have an agent on every street corner?

A quote from one of my mentors:

"underwriting guidelines get dramatically relaxed as the end of the month approaches and goals have not been met".

As a former field rep for a local MGA representing Farmers, I can tell you their underwriting guidelines were NOT flexible enough to write a building material dealer with 70% lumber sales. This mentality of agents and companies fitting square pegs into round holes no matter the consequences in order to write business sounds like what our banking industry has been doing for the past several years and you know where that has gotten us!!!!

Having started out life with Farmers Insurance Group, 26 years ago, and now working on both sides of them (Zurich & Foremost), I think that a lot of the things that have been mentioned here can be attributed to their sales philosophy of throw as many new agents up against a wall to see how many stick, compound that with District Manager Manglers whose only function is to throw that dirt on the wall and train new agents. The new agent doesn't have the slightest idea of what the company wants and the District Manager (DM) sole thought and goal is to get the newbie to put business on the books to get paid. The DM really doesn't care because he gets more pay (commission override) for the trainee agent than he does for experienced agents. He also gets more brownie points for the newbies production and gets to blame the loss ratio on the newbie, who probably won't still be around to defend himself or care anymore.

When that agent starves to death, he then has a book of business to use, to lure another newbie to throw against the wall. I know that this sounds like nothing but "sour grapes" but I think that it is reallity.

It's not only Farmer's and it's not only the insurance industry. Many or perhaps most large sales organizations live in the moment and yesterday's sales figures. "Thanks for that sale, now what have you got going?" is the common mentality of those involved with bringing in the business.

When one signs on to a place like Farmer's, or State Farm, Allstate, Nationwide, etc, the expectation is that policies have to be sold and the training session about ethics can take a back seat when the sales chart that dictates income and bonus' isn't rising. Little things like competitiveness, rates, market conditions and underwriting guides mean little when there's enormous sales production pressure from the higher ranks of management.

The original posting that started this thread was voicing frustration over a lost sale because of underwriting integrity issues and the prospects acceptance of faulty front end salesmanship and the knowledge that without proper disclosure, there might be problems in a claim situation for the policyholder. As long as there is the sales pressure in insurance organizations and a lack of ethical behavior on the part of carriers regarding their own rules and rates, this will continue to happen. It's not new bahavior.

There is no real solution except for each of us to make our own determination about what's right and wrong and continue to hope that there is enough of a market that appreciates ethical sales behavior to keep us in business. Once the marketplace decides that rules are for suckers and agents go along for their own financial survival, then it will be 'game over' for those of us who try and balance sales income with integrity.

gregcw wrote:Having started out life with Farmers Insurance Group, 26 years ago, and now working on both sides of them (Zurich & Foremost), I think that a lot of the things that have been mentioned here can be attributed to their sales philosophy of throw as many new agents up against a wall to see how many stick, compound that with District Manager Manglers whose only function is to throw that dirt on the wall and train new agents. The new agent doesn't have the slightest idea of what the company wants and the District Manager (DM) sole thought and goal is to get the newbie to put business on the books to get paid. The DM really doesn't care because he gets more pay (commission override) for the trainee agent than he does for experienced agents. He also gets more brownie points for the newbies production and gets to blame the loss ratio on the newbie, who probably won't still be around to defend himself or care anymore.

When that agent starves to death, he then has a book of business to use, to lure another newbie to throw against the wall. I know that this sounds like nothing but "sour grapes" but I think that it is reallity.

I posted my resume on Monster.com - some of the very first people to contact me right away were Farmers DMs. I actually had one visit me all the way from the OC to Riverside - quite a driver, and he had an SUV. I was curious why out of all the poeple and companies it was them that were so aggresive and so quick to respond to my resume.. then there was Survival insurance too. lol. But anyway.. this post has given me a lot of perspective. It's like they really don't care if you have any experience.. but there's a lot to be said about a company that can take someone from knowing nothing to becoming knowledgeable.. they must have a good training system.. which is what i'm curious about.. because i wants to learn more. But this post has given me more perspective.. thank you

One must keep in mind, aside from the many companies that make up FIG, there are almost as many special interest groups (SIG)at play all the time in Farmers. I feel that agents and underwriters for all intents and purposes must be lumped together in one SIG. For lack of a better terminology lets class all management as temporary help (TH). Let's also identify a very influential group we will call the Hourly break takers (HBT). When we as SIG's allow the THs and the HBTs to forget that without a properly trained and supported SIG force, we will not as an FIG need any TH or HBT.
Another way of putting it, stop throwing reserves at the walls, stop rewarding unethical behaviors or marginal agents mentored by unethical DMs, DMMs, and State Executives. Go back to recognizing quality business by quality agents, get rid of PIF and phony awards programs that elevate the careers of marginal TH.

Thanks for all the feedback!

As a follow-up, I really enjoy being an indy. I have secured an excellent offer from Pennsylvania Lumbermens Mutual, a carrier that specializes in these risks. I think their offer is priced competitively, but most important, it's designed correctly. For example, the FIG guy never discussed Inland Marine coverage (or offered it) on the several forklifts used at the business. I think he just figures it's all "Business Personal Property".

I really don't like being harsh to my (client) neighbors, but I did try to tactfully share with the client that I appreciate when customers shop locally, as he should also. I hinted that my new trex deck project (+/- $10K) would be going forward soon, and that I hadn't planned on dealing with anyone else but him... But that may change. I don't know what his profit margin is, but if it's 30% he'll recoup half of the premium just from that one sale to me.

He has until next week to decide, so I'll fill you all in on the outcome soon. Thanks again for the feedback.

Swymmer

I think this conversation is a good reminder of how quickly ignorance speads. This whole conversation started with talk of Farmers Insurance's appetite for a particular type of business. I'd also like to state for the record that I've known my fair share of 3-4 year agents with more insurance knowledge than many 15-20 year agents. Now, do you know for a fact that what that FIG agent quoted was a Farmers product? Farmers DOES allow its agents to write outside of Farmers if the risk doesn't fit inside Farmers appetite. I can't speak directly on a situation that I don't know first hand but I can tell you that when something doesn't fit inside of Farmers appetite, you CANNOT write it in Farmers PERIOD. Underwriting CANNOT make those kinds of exceptions. This is typical of most carriers.

I dont know the state insurance rules in every state but where I come from, telling a prospect that you're about to do a 10K project that could profit him if he bought a policy from you is called REBATING. It's illegal in most states. It sure sounds to me like possibly no one is perfect.

I think if I were the lumber yard owner, I'd dump both agents and find one that is both experienced and ethical. With that, everything else just falls in place.

OK, Insurance guy101.

My point about the deck was done tactfully. I didn't come right out and threaten to buy elsewhere, I simply reminded him that I'm just about ready to start a project he has been discussing with me for months. I even asked him to recommend a contractor. I've been a very good customer of this building supply for years, Our kids attended the same schools and we are in a very small town that depends on each other's local business. I've not yet seen the proposal from the FIG agent, he refuses to share it, so I cannot say for certain that Farmer's wrote it... but the insured did tell me that the FIG agent was able to secure an additional discount on the primary policy by also placing the commercial auto with the same carrier... and the cancellation notice I received stated "Farmer's" as the new BAP carrier. 2+2 says FIG wrote the new case as well.

The particular FIG agent has a documented history of lying to insureds, mostly to steal accounts from other FIGs, but occasionally others as well. I've known the guy for over 30 years, dealt with him in other businesses, and even was his health insurance broker for a few years. He has a perverted sense of logic and ethics. Actually, I think d's insurance store is right... I'm just a sucker for thinking that others will follow the rules, too.

Swymmer