Now in Spring 2016- Should I Work for Farmers Insurance?

Apr 6, 2016

  1. Remodeller

    Remodeller New Member

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    I know back in 2009-11ish there was a lot of activity on various forums of agents being upset with Farmers- how is the climate now? Please list the pros and cons- thank you.
    *fixed title typo*
  2. billyboy

    billyboy New Member

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    They are getting crushed in WI.
    billyboy, Apr 14, 2016
  3. djs

    djs Super Moderator Moderator

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    Realize that it is hard to enter the P&C market. All of the captives make it MUCH easier then doing it on your own as an independent. Keep in mind, all of the captives also make it very hard to get out from under them.

    With Farmers, I know in a lot of states, they are rolling out a new home product which the agents I've talked with are doing very well with. Problem is, they did this about 10 years ago with auto, bought up the market, then raised rates out of the world due to large losses. This is typical of carriers in general, just as a captive, you have to deal with it. As an independent, if one carrier goes squirrely, you can move clients to another.

    As captives go, Farmers probably has the lowest entry requirements so its very easy to get in with them. Realize though, you will quickly be in debt to Farmers (literally owing them thousands of dollars) and this is how they keep you with them for years. The reason for the debt is simple, they advance you money, what they call subsidy, while you build your agency. If you hit certain milestones, they waive paying that money back. Miss the milestones and you pay it back. I've known very few agents who have had all of their subsidy waived in the end.

    If you are talking with a Farmers DM already, have them refer you to a couple of the agents he has that have been there for 2-5 years. Don't bother talking to the ones that have been around for 20 years or so, they are on a different contract and get to play a different game.

    The other end of the spectrum is independent agent. This is a great world, but, you have to see if you can get access to carriers in your area. Unlike life and health, it can be very difficult to get appointed with solid P&C carriers, so sometimes going independent leaves you less independent then you want to be. This is part of the reason that around me, most independent agencies focus on commercial business. Higher premium, more 9-5 style work, and you can pick a niche and focus on it and get carriers for it.

    In the middle area, you have clusters, which a lot of agencies use. The cluster gets you access to the carriers, make sure you get your own codes if you are going to do a volume business with a carrier. You can get much better bonuses with a cluster as well. The cluster charges a fee and a commission percentage, so be careful, watch what it takes to exit the cluster if you want to in a couple of years. Clusters vary from the 'why bother' category to being very good. You would have to research the ones in your area. In some areas, even clusters are hard to get in with. They only have room for so many agents and want agents that perform and write good business.

    In general, if you can avoid taking the subsidy money from Farmers, it may not be a bad way to get started in the industry to find out if you can succeed as an agent. Problem is, they make it hard to turn down the money, or at least, life makes it hard to turn down the money :) As soon as you take it, then you are hooked for 7+ years or you will be writing them a check to leave.

    djs, Apr 14, 2016