Becoming a Farmers Agent - Buying a BoB

[NewAgent01]

Hello all,

I am new to this forum and am seeking advice from experienced individuals on becoming a Farmers Agent, as well as taking over a Farmers book of business. I am 24 years old and I hold bachelors degrees in Financial Management and Economics.

So I have recently accepted a position as a Farmers Agent in the Northern California area to sell P&C Insurance as well as their financial products (mutual funds, life, 401k etc). I have read numerous threads on this forum which mostly bash Farmers and say its just a scam to get new agents to sign up their friends\family and then after they don't produce they get booted. However, I have noticed similar complaints from agents with the other big companies.

So my question is, are these complaints towards Farmers warranted? Or are these just complaints and frustrations stated by individuals who didn't put enough work in to get new business? I am not trying to offend anybody, but I can't help but feel like part of the reason people have failed or complain is because it requires harder work and longer hours than a standard desk job to be successful. I say this partly because I personally know a couple of successful Farmers Agents who say that many new agents fall out because they don't put in the time and they never work more than a 35-40 hour week. So am I making a huge career mistake? Or are the complaints exaggerated, or mainly due to underestimating how much work is involved?

Secondly, the main reason I accepted the position with Farmers is because one of the agents I know will be retiring soon. I believe this is a great opportunity to try and take over his book of business as I know he is looking for a way out. From my discovery work so far I know it's a very large book at $2.2 million, he has low overhead, and mostly well off insureds. What are your thoughts on this endeavor? I have a ballpark sale figure for the book based on a cash flow multiple, but any other estimates on a sale price?

Thank you in advance for any insight!

 

[xrac]

Oh, by the way welcome to the forum and good luck whatever you decide. No offense but from your post and the fact that you have already signed up I think you have already reached your conclusion. You have discounted the posts you have read and believe what the Farmers recruiters and agents have told you. Why would anything said now be different than what you have already read?

I have never worked for Farmers but I do know these things as facts.

1. Farmers is always recruiting.
2. You do not have to have much of anything to be hired other than be breathing.
3. I have a very good friend who was with Farmers for about 5-7 years. He won a lot of awards and after 7 years was starving.
4. He went independent with one of the clusters and within 3 years was making twice as much money as he ever made with Farmers.

 

[CaNewAgent]

Hello all,

I am new to this forum and am seeking advice from experienced individuals on becoming a Farmers Agent, as well as taking over a Farmers book of business. I am 24 years old and I hold bachelors degrees in Financial Management and Economics.

So I have recently accepted a position as a Farmers Agent in the Northern California area to sell P&C Insurance as well as their financial products (mutual funds, life, 401k etc). I have read numerous threads on this forum which mostly bash Farmers and say its just a scam to get new agents to sign up their friendsfamily and then after they don't produce they get booted. However, I have noticed similar complaints from agents with the other big companies.

So my question is, are these complaints towards Farmers warranted? Or are these just complaints and frustrations stated by individuals who didn't put enough work in to get new business? I am not trying to offend anybody, but I can't help but feel like part of the reason people have failed or complain is because it requires harder work and longer hours than a standard desk job to be successful. I say this partly because I personally know a couple of successful Farmers Agents who say that many new agents fall out because they don't put in the time and they never work more than a 35-40 hour week. So am I making a huge career mistake? Or are the complaints exaggerated, or mainly due to underestimating how much work is involved?

Secondly, the main reason I accepted the position with Farmers is because one of the agents I know will be retiring soon. I believe this is a great opportunity to try and take over his book of business as I know he is looking for a way out. From my discovery work so far I know it's a very large book at $2.2 million, he has low overhead, and mostly well off insureds. What are your thoughts on this endeavor? I have a ballpark sale figure for the book based on a cash flow multiple, but any other estimates on a sale price?

Thank you in advance for any insight!

You have been lucky enough to have found a website where people will voice their opinions freely.

Some will say you will get access to better training by signing up with a large captive company than trying to start an independent agency. You are also controlled much more.

Now that you are researching Farmers, go to google and search this string, 'farmers insurance sucks'. You can do the same for Allstate and State Farm. The complaints are numerous and I'm not referring to customer complaints of the claims processes.

The complaints, lost dreams, debt that runs into the hundreds of thousands of dollars, having your successful agency taken from you because of politics are all too real.

Some people do succeed at Farmers. Far more do not. It has nothing to do with work ethic. I would not recommend Farmers to anyone.

By the way, there is a United Farmers Agent Association that was formed for the specific reason of protecting Farmers agents against management. Ask yourself why this group was formed and why it has been successful. UFAA - United Farmers Agents Association - Agents Helping Agents - DRA - FIG - Farmers Insurance Agents Association

Ask your DM what the expected retention rate is for policies that are bought by a new agent. It is probably somewhere in the 60% range. You will buy this book for around 1.5 times commission and if the average hold true, you will lose the majority of the policies the first year.

It might not be too late for you to get out. Choose wisely.

 

[Insuranceguy99]

Here is my story with Farmers. I was an agent for just shy of 7 years. I did pretty well for awhile. In 2009 they raised rates in my area by 70% on an average home policy and 25% on auto. I battled through it and worked two jobs to get by. Eventually it got better and I started making good money again. In mid 2012 they did the exact same thing as in 2009. I resigned and decided to go with a cluster. They have accused me of embezzlement (not warranted) and are refusing to pay me the $20k contract value they still owe me. On top of that they say I owe them $8k for impounded policies whatever that is. I am writing so much more business as an independent agent and so much happier.

It may be different in CA but I would be careful.

 

[Norwayguy]

First I am not a P&C agent and have never worked with Farmers. The one big pitfall of any captive company is that is all you have to sell. Call a farmers agent in your area and get a quote for your own Homeowners and Car insurance policy. How does that rate compare to your existing coverage. If it is more than you pay now then that is what you will be trying to overcome. Even if the rate is good today as others have posted P&C carriers have a tendency of going through periods of raising rates. Not such a big deal when you have access to other carriers but can be when you do not.

Do plenty of research before pulling the trigger as these contracts can and have devastated some people.

 

[nyc2phi]

As a first gig in insurance I say it is a good place to start. Farmers will train you and test your ability to sell. I wouldn't invest too much money into Farmers unless it is going to help you bind business (ex: buying interent leads, lists, ect.).

 

[ngcsu2477]

Here is my story with Farmers. I was an agent for just shy of 7 years. I did pretty well for awhile. In 2009 they raised rates in my area by 70% on an average home policy and 25% on auto. I battled through it and worked two jobs to get by. Eventually it got better and I started making good money again. In mid 2012 they did the exact same thing as in 2009. I resigned and decided to go with a cluster. They have accused me of embezzlement (not warranted) and are refusing to pay me the $20k contract value they still owe me. On top of that they say I owe them $8k for impounded policies whatever that is. I am writing so much more business as an independent agent and so much happier.

It may be different in CA but I would be careful.

InsuranceGuy, you sound happy with your decision to go indy. What cluster do you use? What do you like about them?

 

[magent1]

I come from a family of captive agents and there are pros and cons.

I have heard Farmers let's your write business through other companies. I would ask your manager about this.

I would also talk to the agent who may be retiring, ask him in the event he does retire how much would he sell the book for?

Also make sure of the requirements Farmers sets for agents to purchase another book. Some Cos. will block you from purchasing another book for various reasons ( performance, location, already have another agent in mind)

 

[AgencyEquity]

I would not start an independent agency without experience, you will probably have road blocks doing so. However if you want to go the acquisition route, then Farmers is a good choice for a newcomer to the industry because they train you and have the infrastructure in place. If you are really want to go the Independent Agency route, then work for someone as a producer for at least 3 to 5 years, then once you know the business, making an acquiring an Independent Agency can become viable. Ideally, work for someone who plans to retire in the 3 to 5 year time frame. This may give you the best shot a acquiring the agency. Also make sure to go with an agency that will let you take you book with you, if you intentions are to start an agency. However if you want ownership right now, Farmers is not a perfect solution, but a workable solution and will give you the instant ownership of the 2.2m book if you the deal is yours to lose.

 

[NewAgent01]

AgencyEquity,

So do you think I should pursue acquiring the Farmers Agency? I worry about retaining the existing client base when there is a rate increase or something of that nature. Is this something that I would encounter with other agencies? Also, if I am able to open an independent agency down the road do you feel that starting with Farmers is a good opportunity?
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ARAC,

I appreciate your response. I wasn't discounting the previous posts, rather I was more looking for additional insight into trying to understand if the previous complaints are accurate.
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Here is my story with Farmers. I was an agent for just shy of 7 years. I did pretty well for awhile. In 2009 they raised rates in my area by 70% on an average home policy and 25% on auto. I battled through it and worked two jobs to get by. Eventually it got better and I started making good money again. In mid 2012 they did the exact same thing as in 2009. I resigned and decided to go with a cluster. They have accused me of embezzlement (not warranted) and are refusing to pay me the $20k contract value they still owe me. On top of that they say I owe them $8k for impounded policies whatever that is. I am writing so much more business as an independent agent and so much happier.

It may be different in CA but I would be careful.

Thank you for the reply, I appreciate the advice. In your experience, are the rate increases something that you only see with Farmers? Or are those rate increases something that is across the board for the insurance industry? I worry about acquiring the agency and then having a mass exodus of clients due to the rate increase.