Becoming a Farmers Agent - Buying a BoB

[AgencyEquity]

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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As mentioned in my reply, it depends on what you want right now. If you are willing to build a clientele and are okay being a producer at an Independent Agency to help launch this (that will let you take the book) and can wait it out, that is probably the ideal way to go. If you want that instant ownership and book of business, I think Farmers is the way to go. If you build a quality book, people will renew with you, I would not worry too much about that. Also keep in mind, Farmers is also concerned about renewals, so they need to continuously provide a somewhat competitive product. Nobody is ever the cheapest all the time nor should an agency only sell on price alone. You build a very bad book of business selling as the cheapest, these people are the first to flea if their rates go up regardless of which company you are with.

Also, don't expect perfection. I don't say this to only yourself, but to many here. People want the perfect solution. Well that perfect solution does not exist, but what does exist is the best solution for your situation. What may be good for you may not be good for someone else. That is the beauty of the free marketplace, there are options and these options fill the many needs and circumstances.

 

[sludgesurfer1]

As mentioned in my reply, it depends on what you want right now. If you are willing to build a clientele and are okay being a producer at an Independent Agency to help launch this (that will let you take the book) and can wait it out, that is probably the ideal way to go. If you want that instant ownership and book of business, I think Farmers is the way to go. If you build a quality book, people will renew with you, I would not worry too much about that. Also keep in mind, Farmers is also concerned about renewals, so they need to continuously provide a somewhat competitive product. Nobody is ever the cheapest all the time nor should an agency only sell on price alone. You build a very bad book of business selling as the cheapest, these people are the first to flea if their rates go up regardless of which company you are with.

Also, don't expect perfection. I don't say this to only yourself, but to many here. People want the perfect solution. Well that perfect solution does not exist, but what does exist is the best solution for your situation. What may be good for you may not be good for someone else. That is the beauty of the free marketplace, there are options and these options fill the many needs and circumstances.

WELL SAID. Sage advice

 

[adam1314]

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!

My thoughts on Farmers is because they have very loose hiring practices you will see a lot more agent complaints as a majority of those hired being an agent and business owner its just not for them. Not many people have a good business mind, but they do have sales ability and think they can make it in the insurance business. I'm not defending Farmers, but I believe their bad reputation among insurance agents comes from the fact they will hire anyone.

If you have a good business plan, and some money set aside to help you while you are learning and growing your book, you can be successful. However, I do believe if you have the funds set aside you can't beat the independent route. Buy an independent agency and grow it. You can avoid retention issues by having multiple carriers.

 

[xrac]

My thoughts on Farmers is because they have very loose hiring practices you will see a lot more agent complaints as a majority of those hired being an agent and business owner its just not for them. Not many people have a good business mind, but they do have sales ability and think they can make it in the insurance business. I'm not defending Farmers, but I believe their bad reputation among insurance agents comes from the fact they will hire anyone.

If you have a good business plan, and some money set aside to help you while you are learning and growing your book, you can be successful. However, I do believe if you have the funds set aside you can't beat the independent route. Buy an independent agency and grow it. You can avoid retention issues by having multiple carriers.

My thought is that Farmers will hire anyone because they will still have the new policy holders (family members, friends, etc.) after the new agent flames out. That is a predatory business model. Do they care if the agent fails or succeeds? Maybe, maybe not.

 

[adam1314]

My thought is that Farmers will hire anyone because they will still have the new policy holders (family members, friends, etc.) after the new agent flames out. That is a predatory business model. Do they care if the agent fails or succeeds? Maybe, maybe not.

Farmers gives the agent an opportunity, it's up to the agent to be successful. If you build a nice book and Farmers continues to raise rates, that is the risk you take working for a captive. Most people can't afford to go independent so this is one of a few options they have if they want to be an insurance agent that owns their own business.

 

[munda4545]

Hello Guys,
I'm having a same story.Join Farmers,price objections blocking policy writing & Inc. expected business. Is there carriers,who sign & train new producers as an Independent Agent ?

 

[AgencyEquity]

Hello Guys,
I'm having a same story.Join Farmers,price objections blocking policy writing & Inc. expected business. Is there carriers,who sign & train new producers as an Independent Agent ?

If a carrier were to train someone, then they would want that agent exclusively since they have an investment in that person. That is why carriers like Farmers, Allstate and State Farm spend so much in training, not for agents to write with others, but for agents to write for them. The really only way to train as an Independent is to become a producer for one, an alternative is to go the captive agency route for at least 3 to 5 years. This would be like someone saying they want to practice medicine without going to medical school, well not to that extreme, but to a lesser extent. Part of succeeding is business is paying your dues, there is no instant flipping of the light switch and making things happen, it's more of the lights coming on slowly over a period of time and if one does that right thing to make that happen. If being an Independent is that easy, there would be a ton of people in it, a lot of competition and very little money. Please except that the entry into this will take experience and the more experience one has when they start and Independent Agency, that great their chances of success. Any kind of business you run, there are going to be obstacles, running your own business is never smooth sailing, those who seek 100% perfection need to be employees and even that won't give 100% perfection. Starting a business takes risk with money, risks with your time, trial/error and you name it. Not all are meant to run businesses, it's only for those who are ready to roll with the punches!

 

[xrac]

If a carrier were to train someone, then they would want that agent exclusively since they have an investment in that person. That is why carriers like Farmers, Allstate and State Farm spend so much in training, not for agents to write with others, but for agents to write for them. The really only way to train as an Independent is to become a producer for one, an alternative is to go the captive agency route for at least 3 to 5 years. This would be like someone saying they want to practice medicine without going to medical school, well not to that extreme, but to a lesser extent. Part of succeeding is business is paying your dues, there is no instant flipping of the light switch and making things happen, it's more of the lights coming on slowly over a period of time and if one does that right thing to make that happen. If being an Independent is that easy, there would be a ton of people in it, a lot of competition and very little money. Please except that the entry into this will take experience and the more experience one has when they start and Independent Agency, that great their chances of success. Any kind of business you run, there are going to be obstacles, running your own business is never smooth sailing, those who seek 100% perfection need to be employees and even that won't give 100% perfection. Starting a business takes risk with money, risks with your time, trial/error and you name it. Not all are meant to run businesses, it's only for those who are ready to roll with the punches!

Anyone who is new and immediately wants to go independent without experience should read this post.

 

[munda4545]

Thanks a lot for clarification...

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Going independent for a novice is not easy ride,Understandable...
Can new agent accept internship or entry level position In an agency,which do business as an independently & learn /earn
rather then going captive ??
I am trying to explore the options..so, please help.

 

[AgencyEquity]

Thanks a lot for clarification...

----------

Going independent for a novice is not easy ride,Understandable...
Can new agent accept internship or entry level position In an agency,which do business as an independently & learn /earn
rather then going captive ??
I am trying to explore the options..so, please help.

There are all kinds of arraignments out there, there are certainly independent contractor options, you just need to find the right agency and be clear about your long term goals, many agencies are open to this, but don't expect the moon if they are going to train you and then let you take your policies some years later. You also want to get it in writing that you own your book. They may want (as any good agency will want):

1. You to commit to a certain number of years.

2. A buyout clause, where you will buy them out of you book when you leave (they did train and house you).

3. Don't except the world as for a split, especially under the terms you are coming in under.

4. You don't want to be too independent of them, you will need both them and their support, especially during the first year or so, if not more.

5. I would get your license and be ready to go.

You need to get this in writing and given the direction you want to go, have an attorney review this (if you don't write the contract). You may be thinking a handshake deal, I would stay away from this as it can be a disaster in the end, the more details you include in the contract, the more likely a smooth transition to you Independent Agency.