Becoming a Farmers Agent - Buying a BoB

[AZDave]

Today was a pretty monumental day for me as end my 4 years and 1 month career with Farmers. I am grateful for the experience, but so happy to embark on becoming a true insurance professional as an Independent Agent. I have pretty much won all the awards there is to win from (Toppers -Championship), however it is in my best to leave since I know representing 1 carrier with 1 pricing is pretty much what Fred Flintstone would do. All the post here are true in terms of how much or how less uncle farmers care for its agent.

Good decision, 888. Now it is time to get to work! By now you have realized that you love this business. The IA business is tough, but very rewarding after time. Careful with the book roll, Farmers will be watching. After one year, go for it all! I was a captive for 22 years, went IA 5 years ago, best day of my life was when I went 'live'. Still a slug fest out there, but your insured's want you as their agent. Good Luck!

Dave

 

[888leads]

Thank you AZDave, your advice is greatly appreciated!

 

[munda4545]

As a Entry level producer, joining big name & stick with one carrier & one price
is more helpful or joining Agency with multiple careers & various price range is
good for a novice ?

 

[hannonmichelle1]

I have a friend that decided to go the Farmers route. He visited my office and I showed him how the independent insurance agency works. After seeing how our agency worked he decided to go the independent route.

can you please tell me what independent agency he went with?

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Today was a pretty monumental day for me as end my 4 years and 1 month career with Farmers. I am grateful for the experience, but so happy to embark on becoming a true insurance professional as an Independent Agent. I have pretty much won all the awards there is to win from (Toppers -Championship), however it is in my best to leave since I know representing 1 carrier with 1 pricing is pretty much what Fred Flintstone would do. All the post here are true in terms of how much or how less uncle farmers care for its agent.

can you give me some advice on becoming and independent company? How to get my company rolling?

 

[SpikeMalice]

I have been in the car business for 28 years. The last 15 in management roles. Each and every month, you wake up on the 1st "hero to a zero" and have to start all over again. There is very little retention. The hours truly suck, but the pay is addictive. Now that my children are turning into teenagers, I want more control over my life, and time. I can sell. I have been selling credit life and disability for over a decade.

I am looking at buying a book of business from an existing Farmers agent, who is a 2nd generation. His Dad built the book of business, and the son has just basically been maintaining it. They have never been 6 or 63 licensed, so I see a huge opportunity to deepen the relationship with the existing book. Of course I am concerned about the actual retention rate once the family retires. Anyone have actual figures? I saw on post that stated 60%. That would truly suck.

The book is valued at about $145K. What is a fair price for them and for me?
I have read the entire post, and feel that Farmers may be my only true opportunity. Being 49, I do not have time to start over, and have certain income needs. Maybe my kids can go Indy once they come of age.

 

[rndz7]

Run or you will be sorry. The book for sale, is a losing proposition.

 

[jallen505]

I normally don't respond to these, but feel compelled to do so for some reason. Yes, I realize this is an older post, and I'm hopeful that you've survived this long.

I've been with Farmers for more than 30 years, and I couldn't recommend it more. Please understand that what you're entering into is a small business opportunity, and lots of new small businesses fail in their first few years. Farmers is no exception. The first few years were hard for me (I had to start from scratch because you didn't have the opportunity to purchase an agency back then), but once your renewal commissions begin stacking up it becomes a very beautiful thing. Then you get rate increases along the way and it's like getting these huge pay raises. The key to success is to keep reinvesting in your business and don't become complacent, and most of all don't forget that the purpose of an agent is to proactively TARGET MARKET AND SELL. It doesn't make sense for Farmers to pay a commission to someone who's just placing ads and waiting for the phone to ring.

I see a lot of comments here about rates, and I would say this. Don't become obsessed with the AMOUNT of policies you sell. Instead, focus on the QUALITY of households you close on. Farmers' rates are higher than most, and that's a good thing in my mind because I'm paid on commission, but it also means that target marketing is essential. I know plenty of agents who work for "high-end" insurance companies who charge way more than Farmers does and they make way more money than I ever have. These agents are able to make more money with less policies, which is more efficient. If you sold cars would you rather sell 100 Hondas or one Rolls Royce for the same amount of money? If you worked in retail, would you rather work at Nordstrom's or Walmart? We all see the insurance commercials that emphasize price, and we think that's how we should sell it here. That model won't work at Farmers. Once you realize that, then you'll succeed. You should work to build an agency that makes it clear you're worth the extra cost and only work with customers who value the service you provide. Believe me when I say they are out there if you are making the effort to find them.

I've also seen agents lured to the independent side because they think the grass is greener. Yes, they may sell more policies, but many aren't making enough to pay for the staff necessary to handle the service needs of the additional customers. That being said, there are a few successful independent agencies out there, and I have a lot of respect for them, but personally I'd rather deal with just one company, with one approach, one set of rules and procedures rather than a long list of companies who hold me accountable to sales results so I don't lose my appointments with them. Yes, at Farmers you have the ability to write business with other companies as well (when it doesn't qualify for any of the Farmers companies). This makes your contract a kind of "hybrid".

When you purchase a book of business, you will experience a higher rate of attrition than normal and this should be expected. You can be the greatest agent in the world, and customers will jump ship simply because the address of their agent changed. You should see these existing customers as temporary income as you're working to build your agency, and then any of them who stay are just icing on the cake. In the meantime, use them to leverage the growth of your agency.

The key to growth is a balance between new business and retention. You will constantly be working to outrun the attrition by writing new business. This is what nearly every business out there focuses on every year. If you have 1,000 PIF, and 90% retention, you need to understand that you're going to lose 100 customers this year (so to break even you need to issue 100 policies). If your goal is to grow by 10%, then you need to issue 200 policies, etc. Use the numbers to help establish your plan for the coming year. If you close one out of every three quotes you do, then you need to do 600 quotes in the year to meet your numbers. This comes down to 50 quotes monthly or roughly 2.5 quotes per work day. (You get the idea)

Invest in good staff. If you're going to skimp on anything, don't let it be your staff. They will make or break your agency. Then once they get established, hire more. Pay them a mixture of base plus commission and consider a cut of the service commissions. Then hold them accountable to results. You will benefit from the renewals, bonuses, and Achievement Clubs. Remember that staff is an investment from which you should be getting a return, and not an expense.

So yeah, you're starting your own small business. Be excited about that! Make it your passion. I knew that starting a business would be tough (and it was), and I saw the support I had from Farmers and my district office as a plus. If you were a baker and you owned your own shop, you'd be 100% on your own and that's not the case here. You get the best of both worlds. Yes, I've seen a lot of agents fail over the years, but it had nothing to do with Farmers, or rates, or underwriting-it had to do with their attitude and drive. If you have those in line, I bet you won't fail!

 

[AZDave]

I'm still here! Welcome to the Forum!

No matter if your Indy or Captive, agreed it all comes down to, we sell insurance and must continue to sell, or the ship will take on water and go under.

 

[marindependent]

There is no way that I would suggest buying a book of personal lines insurance with no insurance experience. No way.

In addition something seems off, its a second generational agency with a..."book... valued at about $145K"? Perhaps I am not understanding what a book value is.

Have you researched and understand what Farmers appetite for new business including homes and autos are in your location?

Do you know about the commission rate you would get paid? Undetrstand what policies that might sell and not get paid on? Have you looked at the competition? Any idea of what happens in the background to keep clients as clients?

Best of Luck

 

[AZDave]

True, and if this poster made it 7 years now, i think he deserves a prize.