Farmers Appointment in SoCal..need Advice

[Insurance951]

There's little to no advantage to going captive other than they will provide you a safety net of sorts when your making the initial 5 year uphill climb to sustainability. The point where your skill and book of revenue throws off enough cash to cover costs and your income needs.

You're obviously pro independent. Can you be specific with the things that you view as beneficial as an independent vs. captive?

Thanks Steve!
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Well, I personally dont think that helps much - especially if your ONE company gets name for being crappy at paying claims, or non renewing people in a zone, or becoming uncompetitive .... why dont captives switch more often? Lack of will ... or the carrier has an agent retire and guess who gets the book?

Im in CA too and I dont know of 1 independent agent that has gone captive in 20+ years of networking and doing business in southern california. I probably come across a lot more friendly competitors and other agents being in so cal than a guy say in remote Idaho ...

However; I'll add this ... we have over 90 captive agents who REFER us Business from norcal to the mexican border ... month in and month out. I've only needed to refer them back 1 piece of business in like 10 yrs ... a motorcycle.

... Hi, Im Steve Aylor with XYZ Insurance Brokerage in mission viejo .. how are you ...

- their reply " Ohhh insurance ehhh - which company do you work for?"

Me: "My own ... but we represent nearly ALL of them licensed to do business in California ...and Florida Nevada, Texas Colorado and Arizona ... which companies handle your insurance?" or "which carrier do you like?"

Awesome info...I like your angle....
Stupid question: So you're able to right business in other states as an independent?
Thanks again for the enlightenment.

 

[djs]

I'm pro independent as well, but I think it's harder, much harder, to get started. This can be a hurdle not easily overcome.

Independent or captive - Does it really make a difference? In health, yes, in a big way.

I think both Steve and I probably know some independent agents that we would consider extremely successful. We probably both know captive agents that we would consider extremely successful. I'll go one step further and say we probably know independent and captive agents that are having difficulties paying their bills.

In general, the level of success in P&C isn't as much a matter of captive or independent, it's your own personal work ethic and passion for the job. If you develop a solid business plan, work the plan, and truly work, you will do well. If you let the last lost sale dictate your strategy, you'll flounder. Yes, you should learn from lost sales, but don't dwell on them.

The advantage to being independent:
- Look at Allstate a few years ago. In several states stopped writing new home policies. Now, Allstate is a solid company, but this severely hurt the agents. In addition to not being able to write new policies (home), they took a decent rate increase on current policies.
- Look at State Farm in Florida. They are pulling out of the state for Homeowners, leaving agents in a bit of a lurch.

This type of thing doesn't happen every day, but it does happen. It doesn't affect just captives, but captives can be more locked in. Years ago, in California, almost every home insurer threatened to pull out of the state due to mandated earthquake coverage. Out of that was born the California Earthquake Authority.

In a captive environment, the bigger problem agents have is rate increases for a particular line. For instance, after all the wildfires, some carriers raised their home owner premiums due to either needing to rerate based on losses, or raised their premiums to slow down business due to reserves. An independent could simply walk the business down to the next carrier and work with the client to maintain a reasonable rate. A captive had to work on finding a way to work with the client, either in increased deductible, correcting coverages, finding discounts, whatever.

Why captive? Mostly, they provide the business processes, systems, and training. Also, you usually get binding authority, which while some independents have, many don't. You also have a better support system, other agents to complain to (you know, the water cooler chatter), and usually some sort of financial support.

In the end, I don't think captive or independent is what makes someone successful, but it can make someone appreciate their career more.

Dan

 

[SoCalBroker]

DJS is pretty on the money - as usual. We both do know some very very successful agents in both camps ... many in Quantum Club [ I think thats part of his inference ] Which Id recommend to a new agent to set the foundation of your insurance practice from the get go. If he just wasnt so frikken full of himself ... but I do think there is a lot to be learned in Michael Jans Quantunm Coaching program - from Jans AND mainly from all the mentor type agents in the program

When Prop 103 hit in CA we lost about 1.5m in premium in 8-9 months.

Ohio Casualty yanked the cord

Travelers - our lead carrier followed shortly thereafter - that hurt

Then Hartford just made it impossible to write with them.

So Ive been there done that too from the Indi side. Sux all around. But at least we had more options and moved our clients to even better carriers - more work - same $ - but we had options to retain and gain.

The good news that developed was - we picked up Mercury and C.n.A. ... PL - before they became Encompass [Allstate subsidiary ] rolled our travelers and Ohio Casualty book and most of the hartford - rock n roll.

 

[Soaringagent]

There are pros and cons to both. Captive has more of a safety net and might be easier getting started. But then you are trapped with the company if they have a rate increase.

 

[1manshow]

Pros of independant for my office are significantly higher "hit" ratios on all new business. Probably varies greatly based on demographics/market penetration/cash flow underwriting.etc.

Like So Cal said, the ability to roll a book can be priceless when your market disappears.

 

[Evo0724]

Excellent posts,Im looking forward to opening my Agency this Summer
Thanks guys.

 

[sr22]

There are a lot of Farmers Agents. Check the zip code where you want to put an office. Being new you need to get experience somewhere. You may want to work for an agent before you invest a lot of money and time. No matter who you work for your self or someone else, it is all about sales, lead generation.

 

[Soaringagent]

Why Farmers over State Farm? Just curious, did you interview with State Farm too?

 

[insurancewebservice.com]

Does Farmers allow you to own your book of business? I know State Farm is more like owning a job than owning a business.

 

[sr22]

I believe Farmers will buy your book at one times the book or you can give the business to a child if they are eligible to become an agent.