State Farm Agents on the AA05 Contract

[xrac]

For anyone who is on the fence, might I suggest looking at Nationwide? I'm not sure if I'll be staying with them for 30 years or not, but if I do I can see it working out. Sounds like the commissions blow away SF and Allstate, and Nationwide provides brokerage and market access solutions to their agents - no sneaking around to wholesalers necessary. Dozens of companies for stuff you can't write with nationwide through their brokerage, many of them direct access. I'm directly appointed with Foremost, American Modern, Hagerty, Progressive, and Dairyland. There are others, just hasn't been a need yet for me to pursue them. Have my own login to BTIS and can also get direct access to USLI and I think Chubb? I don't remember the last one right offhand. There are other direct access markets as well, just haven't really needed them yet. I haven't done enough business with our market access to warrant direct appointments yet (haven't needed to, the Nationwide product is too competitive, at least here in SC) but if you can think of a big-name national preferred carrier then yes, we probably have access to it. Only downside is I can't contract with any regional carriers who aren't contracted with Nationwide brokerage.

I dunno. I know folks here are pretty anti-captive, but it's a pretty good middle ground, IMO. I realize it can vary by state and might not be as ideal in other areas.

Nationwide sounds like a good deal. How long have you been with them?

 

[insurance1822]

Why are you referencing appointments "directly" w/ Foremost, AMOD, Hagerty, Progressive & Dairyland? Those are nothing & are used .000001% of the time for the rarest of occasions. And Chubb...what...you have some "in" /w the high value market? I've used them 2x in my career. If you had access to the big name indy carriers, you would start to understand that maybe having Nationwide as your main go to isn't all you're hyping it up to be. You either don't have the access you think you do, don't have the financial compensation to work that access....or just don't know what you're talking about. I have 8 plus preferred carriers & my business is evenly spread out w/ them (or pretty darn close.) To say Nationwide spanks everything suggest you just don't know what you're talking about. There's too many variables in rating to allow 1 company to always dominate. Now I'd understand the following statement a bit more..

"Nationwide is my preferred carrier due to profit sharing contingencies & the enhanced growth bonuses they provide, however I work w/ Travelers, Safeco, Encompass, Kemper, Metlife, Hartford & 4 regionals around here as well that are also super competitive."

I see these Nationwide minions who really work for a Nationwide agent & don't really own their own location that don't honestly understand running an agent from a financial standpoint, an agency/carrier relationship standpoint...or any standpoint other then knowing how to issue policies for people that come in.

I will say of all captives out there, Nationwide is the best. And surely NOT because you have access to dairyland, AMOD, foremost or any other retard crap you spit out. It's because you have the best commercial markets of any captive, you get paid more, your profit sharing opportunity is better, your financial products are more competitive in the market place, Nationwide will finance acquisitions, seed accounts, give direct access to Prog & Titan (and other carriers despite lower commissions & a more difficult time doing business overall in that regard..) and they have a great incubator system to expand w/ satellite offices that can mostly be autonomously ran by minions like you.

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So for an independent guy to start with zero policies and grow it organically seems difficult at best. On the indy side it seems to boil down to purchasing a book correctly (right price) and paying it down over time. With the captive side you are getting capacity (renewals) immediately without a buy in, but then are under the stipulations of that contract/company.
I see the benefits of the indy side but see the barriers to entry as well.

I started Indy w/ zero policies & grew organically incredibly fast. This is of no thanks or credit to me personally..it's because I was given access to a BUNCH of super competitive carriers & I had an existing referral system in place. Combine the 2 and any monkey w/ a computer & phone can grow fast. So far as finding an Indy for sale? I truly don't mean to say this arrogantly...but good freaking luck. Most are part of groups whereby the group will have RFR & if they aren't in a group it's because they're OLD and BIG and either have family or an existing producer/manager to take over...or they're most likely too big to be bought out cash & will approach fellow huge agencies to buy them out. They're also not going to sell to a brand newbie because don't forget...the carriers need to approve it.

So take buying an indy out of the equation. Only hope is finding a small notary that wrote some non standard crap over the years that MAY provide some tiny cash flow & the opportunity to market clients. But again...good luck.

The captive side doesn't always seed accounts. SF & Nationwide have incubator programs & yes...you can eventually start out w/ accounts. Allstate you either start scratch w/ maybe 300 accounts at best...OR you buy a book. SF doesn't let agents sell their book. Nationwide does...so you may be able to buy on of theirs. But again you're taking on a debt service in that regard so while you may cash flow...you aren't just going to walk into a captive & be handed a book.

 

[indienoise]

Why are you referencing appointments "directly" w/ Foremost, AMOD, Hagerty, Progressive & Dairyland? Those are nothing & are used .000001% of the time for the rarest of occasions. And Chubb...what...you have some "in" /w the high value market? I've used them 2x in my career. If you had access to the big name indy carriers, you would start to understand that maybe having Nationwide as your main go to isn't all you're hyping it up to be. You either don't have the access you think you do, don't have the financial compensation to work that access....or just don't know what you're talking about. I have 8 plus preferred carriers & my business is evenly spread out w/ them (or pretty darn close.) To say Nationwide spanks everything suggest you just don't know what you're talking about. There's too many variables in rating to allow 1 company to always dominate. Now I'd understand the following statement a bit more..

"Nationwide is my preferred carrier due to profit sharing contingencies & the enhanced growth bonuses they provide, however I work w/ Travelers, Safeco, Encompass, Kemper, Metlife, Hartford & 4 regionals around here as well that are also super competitive."

I see these Nationwide minions who really work for a Nationwide agent & don't really own their own location that don't honestly understand running an agent from a financial standpoint, an agency/carrier relationship standpoint...or any standpoint other then knowing how to issue policies for people that come in.

I will say of all captives out there, Nationwide is the best. And surely NOT because you have access to dairyland, AMOD, foremost or any other retard crap you spit out. It's because you have the best commercial markets of any captive, you get paid more, your profit sharing opportunity is better, your financial products are more competitive in the market place, Nationwide will finance acquisitions, seed accounts, give direct access to Prog & Titan (and other carriers despite lower commissions & a more difficult time doing business overall in that regard..) and they have a great incubator system to expand w/ satellite offices that can mostly be autonomously ran by minions like you.

Thanks for putting words into my mouth. Do you always get to choose your own interpretation of what anyone says?

Look man, I really don't know if you intend to, but you come off as super arrogant. You don't have to tell me some of my appointments are used infrequently, I already know it. I'm not trying to spout any of the carriers everybody has as the end-all, because we all know they arent. I'm just pointing out it's a LOT better deal than the other captives out there. You've seen my other threads where I'm pondering the advantages of an IA. My post was, as i clearly spelled out, for the consuderation of someone who was waffling between independent and captive. You'll also notice that without giving specifics, the FIRST thing i mentioned was nationwides compensation. I also never said nationwide spanks the competition all the time. NO carrier does. But obviously a nationwide agent is supposed to focus mainly on selling nationwide products, and if the compensation is better to boot, of course you'd want to focus on it and not sell travelers instead for a $50/ year premium savings. Are there downsides? Sure there are. Isn't there with everything.

Im not foolish enough to believe nationwide is THE BEST carrier. Would i be looking at other options if I did? It just so happens they fill a niche that correlates with my natural market that takes little to no effort to market to. I never said I don't use other carriers, just havent NEEDED to place much business elsewhere.

 

[insurance1822]

Thanks for putting words into my mouth. Do you always get to choose your own interpretation of what anyone says?

Look man, I really don't know if you intend to, but you come off as super arrogant. You don't have to tell me some of my appointments are used infrequently, I already know it. I'm not trying to spout any of the carriers everybody has as the end-all, because we all know they arent. I'm just pointing out it's a LOT better deal than the other captives out there. You've seen my other threads where I'm pondering the advantages of an IA. My post was, as i clearly spelled out, for the consuderation of someone who was waffling between independent and captive. You'll also notice that without giving specifics, the FIRST thing i mentioned was nationwides compensation. I also never said nationwide spanks the competition all the time. NO carrier does. But obviously a nationwide agent is supposed to focus mainly on selling nationwide products, and if the compensation is better to boot, of course you'd want to focus on it and not sell travelers instead for a $50/ year premium savings. Are there downsides? Sure there are. Isn't there with everything.

There's no downside to Indy. Once Nationwide gets cold in your market (and that WILL happen because we're in a cyclical industry..) you'll be singing a different tune reallllly quick.

 

[indienoise]

There's no downside to Indy. Once Nationwide gets cold in your market (and that WILL happen because we're in a cyclical industry..) you'll be singing a different tune reallllly quick.

Im aware of that. Thats why im looking now, because if it hurts bad enough then theres not so much risk involved at that point in jumping ship. Not much teeth to a non compete if customers are already out the door. Already been through that once with the moratorium on new business with Titan. However, for the long term nationwide guys who have bought in to an agency, I'm sure access to other carriers will get them through the lean times. That's the whole purpose to the "network" program, seems to me.

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There's no downside to Indy. Once Nationwide gets cold in your market (and that WILL happen because we're in a cyclical industry..) you'll be singing a different tune reallllly quick.

Be honest. I truly believe there are FEWER downsides to indy. But none? Stop lying to yourself. I never intended to be captive, but life is like that sometimes, isn't it? if there were none at all, don't you think I would already be gone? Much like your carrier affiliation, isn't it all about what works for your target market?

 

[insurance1822]

Im aware of that. Thats why im looking now, because if it hurts bad enough then theres not so much risk involved at that point in jumping ship. Not much teeth to a non compete if customers are already out the door. Already been through that once with the moratorium on new business with Titan. However, for the long term nationwide guys who have bought in to an agency, I'm sure access to other carriers will get them through the lean times. That's the whole purpose to the "network" program, seems to me.

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Be honest. I truly believe there are FEWER downsides to indy. But none? Stop lying to yourself. I never intended to be captive, but life is like that sometimes, isn't it? if there were none at all, don't you think I would already be gone? Much like your carrier affiliation, isn't it all about what works for your target market?

There's NO downside of being indy (if you generate your own business.) If you're not able to generate your own business, then maybe the cost sharing and/or marketing dollars (that doesn't really add up to THAT much..) would be a benefit of captive. But that's like saying the benefit to being homeless is you don't have to pay any bills.

The only "downside" is the process of getting into the indy world. But once you're there...there's NO downside.

 

[xrac]

There's NO downside of being indy (if you generate your own business.) If you're not able to generate your own business, then maybe the cost sharing and/or marketing dollars (that doesn't really add up to THAT much..) would be a benefit of captive. But that's like saying the benefit to being homeless is you don't have to pay any bills.

The only "downside" is the process of getting into the indy world. But once you're there...there's NO downside.

The downside to being INDY is lack of training and mentorship. If one tries to go in completely green the learning curve is steep and access to carriers is almost impossible to achieve other than through clusters. In my opinion the smartest thing anyone can do is start by working either as a captive or under another agent or agency and learn the business. In 2-3 years than go INDY but not before.

 

[indienoise]

There's NO downside of being indy (if you generate your own business.) If you're not able to generate your own business, then maybe the cost sharing and/or marketing dollars (that doesn't really add up to THAT much..) would be a benefit of captive. But that's like saying the benefit to being homeless is you don't have to pay any bills.

The only "downside" is the process of getting into the indy world. But once you're there...there's NO downside.

getting in is definitely the biggest. As far as clusters or aggregators go I'd basically be getting into another noncompete and overrides would put my compensation at the same percentages I'm already at. Getting contracts is one thing, maintaining them is another and that's not even a concern in a captive environment unless you just don't know how to sell. Unless keeping your carriers happy is a lot easier than I'd expect. Another of my biggest concerns is highlighted in another thread, I know there are plenty of nonstandard and preferred carriers to go to, I don't really know of any really, really good midmarket carriers. And yes, there's Progressive but they are too all over the place to really rely on, and then there's their commission. I'm not currently using any of Nationwide's marketing dollars so I don't see any benefit from that. Other things are somewhat minor, but you're probably paying for your AMS, credit card processing (unless that's included in your AMS or your carriers do it for you), probably higher E&O instead of the group rate we get, esignature solutions and stuff like that which is provided for us. Minor stuff I know, but it's there.

I will also say the name recognition does make closing really easy sometimes. And walk-ins. Again, minor.

 

[meganbailey]

Hi,
I am pretty familiar with the challenges of the AA05. You will hear many agents recommend you go independent, but the challenge is finding a good opportunity that offers support. Might I suggest you look into Goosehead Insurance? Below is some further information on our company.

Goosehead Insurance is one of the fastest growing agencies in the country. We represent the largest organically grown personal lines independent agency in the state of Texas. Our partners, vendors, and employees will tell you we are one of the best companies to work with. We have been featured in the Insurance Journal 3 times in the last 2 years, as one of "The Best Independent Insurance Agencies to Work For", as well as their "Top 50 PL Leaders". At Goosehead we offer the most competitive, A-rated product portfolio in the state of Texas while eliminating virtually all service work allowing our agents to focus 100% on selling. Our franchise model allows agents to have the ability to grow 3X faster and earn significantly more commission compared to any captive or independent agent today.

Here are the top 5 reasons agents partner with Goosehead:

Book ownership: You will have the autonomy to sell your book on the open market, pass it down to a family member, or take our guaranteed a buy-back.

No service work: We provide you with a team of licensed agents who will service 100% of your book. While pro-actively managing your clients, we ensure a higher retention rate and higher client satisfaction. Producers are the only employees you will need to hire, which will significantly reduce your overhead while increasing your sales capacity.

Carrier options: Our product portfolio is unmatched. We aim to optimize our closing rates and optimize our marketability.

Industry Leading Technology: Our comparative rater combined with our custom agency management system will allow you to manage your agency like you have never seen before.

Training & Support: Our comprehensive training program is free to you and your producers.

I can provide a list of agents for you to reach out to if you would like. Please feel free to contact me anytime.


Megan Bailey
Business Development Director

EMAIL [email protected]
DIRECT 214.838.5206
CELL 949.338.4185

100 EAST ROYAL LANE, SUITE 320
IRVING, TEXAS 75039

 

[Foolmeonce]

Active or past State Farm Agents on the AA05 Contract. It's 2015, and this contract is roughly ten years old now. I would like to get feedback from those with atleast a few years experience on the AA05 contract that have taken over a book. I am scheduled to take over a traditional assignment of roughly 1600 cars and 1200 fire polices (1.6million premium) in a few short months.

1)Regarding semi-monthly variable compensation, are you able to meet the auto and fire benchmarks set up on an annual basis and have you dropped below the 2 year default of 10%. If so, what has that done in subsequent years to reach the benchmark again? No, it is not really possible. The growth targets are 6 times what the area sales targets are

2)Many agencies are being split on a 2 for 1 basis and/or starting the new person out in a position where they inherit a book of a maximum of 1.5 million in premium. The remainder of the policies get spread out in the territory. New Market agencies are starting to spring up again per leaderships desire to get more financial services. Do you have any concerns about your ability to continue to grow an agency with more competition (with 25-35% SF existing market penetration) and have 1-2% of renewal and new business commissions forever tied to your agency growth? It seems to be a bit of a hamster wheel. That is the biggest issue with the contract,- it is a hamster wheel and you don't control much of it. we control so little of it. If our rates our out of whack it makes growing very hard. In my area only 2 new people hit the targets last yr. Most of the AA05s lost policies. Not to mention if you don't sell enough policies in the yr, you don't even receive the financial services variable comp. The contract is very one sided

3) Sales leaders compensation is now closely tied to not only recruiting but financial services sales. What are your thoughts about increasing agents in a territory without any protection from more SF agents? I'm talking about the 2 for 1 model being duplicated over and over. The 2 or 3 for 1 model has been going on for a long time. Its not that concerning. Very few new agents walk in to a book that has not been divided. If you are looking at that scenario, try to get the location, phone number and staff of the retiring agent. Stay there for a few yrs then decide if you want to move

4)How have file assignments (if any) helped your agency and what are the top two keys in your opinion to netting a livable income ($80,000) with this venture? DO NOT COUNT ON ASSIGNMENTS once your assigned, THEY DONT HAPPEN often. The company may say you will get one but there is a lot of pressure to add new agents so they will hold on to an assignment for ever until they can patch together 5 or s6 scraps of agencies and add a new agent. Is 80k a livable income? You can get 80k jobs anywhere that don't have a qtr of the the problems you will have as a small business owner, not to mention the benefits. As an independent contractor we have to pay for our benefits, our retirement health care, social security etc. If 80k is your magic number, don't waste your time at here. Find a job.

5) How is your debt load from building the agency? Did you have to raid your retirement? What is your forecast to pay it back? Been in it for 10 yrs, didn't raid all of my retirement but raided just about all of my savings, half of my retirement and the equity in my house. My debt load is still over 100k

6)How much money does a person need to realistically have set aside to make this contract work financially assuming they don't fall victim to lavish furniture programs and keep a sharp eye on controlling costs? Are you able to make the scorecard work and make much off of it? You need to have 75k. You must control costs, do not over hire. do not over market. Your Sales leader will give you every idea on how to spend your money, don't listen to them. Get out and network, that is the best way to get new client, Scorecard is another thing they hold out as the magic solution. I went to a meeting where they were trying to defend the new contract vs the old contract and they had to show a bonus of 75k to make the new contract even with in striking distance of the other contracts. Someone asked what the avg bonus was. It was less then 20K, its closer to 9k from what i've heard recently. You cant build your business model of the bonus, you will file for chapt 11 if you do

7) Do the pros outweigh the cons of this and would you do it again? No way. I would not do it again. If they offered me 1 yrs revenue to leave today, I would take it in a heartbeat

8) Lastly, assuming you have debt...If a person were to give you a check to pay off your debt would you walk away from the agency today or do you foresee sustainable opportunities in the future?

No 1 yr of revenue is what it would take. I want to use the revenue from my current situation to building another business so that I can let the agency rot away. fire all staff, open 2 hrs a day, downsize my office and just take everything from the agency and pay off my debt, house, cars etc. I will do the bare minimum to keep it and bleed it to death, loosing state farm customer along the way. If it got too bad, I would file for bankruptcy and stick sf bank with bad debt.

I saw a post from someone who wasn't an agent yet but was in the program. You cant really understand this contract til you have lived it. If you are looking at sf then I suggest your talk to new agents on your own, not the ones that recruiter sends you to.