DO and Donts when leaving an insurnace company

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d's insurance store
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Re: Farmers Agent received 90 day notice Ca

Post by d's insurance store » Mon May 08, 2017 12:55 pm

Trotter...first, look within...Farmer's (and Allstate and State Farm, and the other captives) just don't wake up one day and send out these kinds of notices. Generally there are production issues or vocal attitude/culture issues or compliance issues. Any or all of those may be disputable, and may not be fair to reasonable people, but the fact remains, they all have justifiable (at least in their eyes) reasons for terminations.

Secondly, my next step would be to pull down the entire contract and contact an attorney familiar with these issues. You can probably find one by touching base with the group of Farmer's agents who've set up the independent organization. I've forgotten the group's official name, but I'm sure you're familiar with it.

Reaching out here on this forum may satisfy the need to share the pain, but it likely won't move you along in the process to deal with the next 90 days and then beyond. Most certainly, you're not alone in this circumstance, but the advice you'd get here is likely to be a bit thin and at least in my opinion, you've got much better alternatives.

agent14
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Re: Farmers Agent received 90 day notice Ca

Post by agent14 » Mon May 08, 2017 1:47 pm

Trotter, there is an online forum where several current, and ex Farmers agents meet, to discuss this very topic, and many others. You can visit the forum by going here:

http://myinsuranceworld.proboards.com/

You will need to register to use the forum.

ziiqui
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Re: Farmers Agent received 90 day notice Ca

Post by ziiqui » Tue May 09, 2017 11:44 am

Trotter, Agent14 is correct in that proboards WILL give you a TON of information concerning your particular situation. Trust me, I was a Farmers agent for 35-years until I pulled the plug 4-years ago! This company is going no where except DOWN!! You will eventually be much better off!

gregcw
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Re: Farmers Agent received 90 day notice Ca

Post by gregcw » Wed May 10, 2017 12:38 pm

You might want to check out this I/J topic "Farmers - your opinion". Below is a post that I made about their hiring and termination practices. I was a Farmers gent for 7 years, from February '82 to February '89. At that time we were able to have appointments outside of Farmers so I had some renewal income from several companies because at that time my only requirement was that I not "Sell, Service or Solicit" my own Farmers customers. I had my contract value that helped to feed me for about 18 months while I was rebuilding my agency. Your post does not say how long you've been an FIG agent so you may or may not have a significant contract value.

"I started out life with the Farmers Insurance Group company lies before going I/A. As an Insurance company they do an adequate job. If only their management could be trained to be truthful. I had so many lies told to me by the management team that I can't believe that it is not company policy.

In my service area there are currently 3 State Farm agents and 9 Farmers agents. When I started in the business with Farmers in 1982 there were 3 State Farm agents & 4 Farmers agents. Over the next 23 years State Farm has appointed 3 new agents and has had 2 retire to maintain 3 agents. Farmers, however, has appointed at least 35 agents and has only had 3 agents retire. There may be agents that Farmers has appointed that I am not aware of but there are still only 7 offices with 9 agents.

You are working with a District Manager (DM) with Farmers. I consider mine was a District 'Mangler' not Manager. I was appointed by Farmers for 7 years before we decided to part company. This was shortly after they were acquired by British American Tobacco U.S. With Farmers it is important to learn how to spell the word I-N-S-U-R-A-N-C-E. Farmers spends an inordinate amount of time on training to sell life insurance and prospecting but not nearly enough on INSURANCE TRAINING for property and casualty.

Jwebster says they "Micro manages the agencies". I don't think that is true because that implies that they do some "management" activities. I think that "They try to" needs to precede that statement.

The down-side is that while you do OWN your book of business, the commission schedule is lower than an I/A, although that gap has narrowed over the years. You are compensated if a customer changes agents. The up-side is that you do not have to find a buyer. Farmers does give you a contract value, with bonuses for profitability, based only on last years RENEWAL commissions NOT including New Business. An I/A can develop considerably more agency value than a Farmers
agent"
Gregcw

lonestar
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Re: Farmers Agent received 90 day notice Ca

Post by lonestar » Wed May 10, 2017 1:08 pm

gregcw, actually, as an agent with Farmers, you DO NOT OWN your book of business. If you owned it, a departing Farmers agent would be able to take it with them. I was a Farmers agent for 11 years, and I was on the same contract you were on, referred to as the "84" contract.

As an IA, if you have a direct appointment with a carrier, you DO OWN your book of business.

gregcw
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Re: Farmers Agent received 90 day notice Ca

Post by gregcw » Thu May 11, 2017 10:47 am

lonestar, I didn't mean to imply that I 'owned' my FIG renewals. What I did own were my renewals with companies outside of Farmer, i.e. Progressive, CBIC, Viking and Red Shield. Those were the commissions I was referring to. My 'Contract Value' was paid out over 18 months in three installments.

If I did not 'own my book of business Farmers would not have had to pay me the Contract Value and an agent taking one of my customers on an Agent of Record change would not have had to pay me the renewal commission.
Gregcw

agent14
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Re: Farmers Agent received 90 day notice Ca

Post by agent14 » Thu May 11, 2017 1:02 pm

gregcw, actually Lonestar is right. I may be old school, but the definition of "owning" something, means you do not have to give it up for any reason.

The Farmers contract value is really a type of severance, and does not imply any ownership of the book.

gregcw
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Re: Farmers Agent received 90 day notice Ca

Post by gregcw » Thu May 18, 2017 6:21 pm

I've given a bit of thought to this regarding my current book of business and the experiences I've had with carriers I've lost. The concept is that if I either cancel an appointment or have the appointment cancelled by the company, that I own the renewals and the company will non-renew the customer due to my no longer representing the company and that in order to keep the customer I have to provide (resell) them coverage at a comparable premium. This is not necessarily true.

I had an appointment with Allied and they continued to offer renewals to my customers after they cancelled the appointment. The reason for the cancellation was loss ratio. I contacted Allied and quoted the contract section that gave me ownership of the clients but the continued to renew the policies, telling me that I was allowed to rewrite those customers. In essence they competed with me to keep my business. I did contact Allied as well as the associations I am a member of. Allied refused to stop offering renewals and was advised by the associations that the cost of contesting this would probably be greater than anything I could recover.

The only real difference between this and Farmers practice is that Farmers had an 18 month non-compete clause for my customers. So I was compensated for "not competing" with them and because they paid me I was paid for my book of business.

After that 18 months I was able to solicit my FIG Book and was successful in regaining about 60 Per-cent of it. I understand the Farmers current allows their agents to "sell" their book to another FIG agent or have it transferred to a family member. This does sound like ownership.
Gregcw

agent14
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Re: Farmers Agent received 90 day notice Ca

Post by agent14 » Fri May 19, 2017 10:21 am

gregcw, what you just stated about "sounds like ownership" is the reason why many a young, green behind the ears newby to the insurance business is recruited by a captive company, thinking what they are told by a company recruiter is true, that "they will own their own agency." The problem is, the only thing this statement from the recruiter has in common with actual policyholder ownership, is it only "sounds" like the agent owns it.

Not trying to poke you, but I and many thousands of other EX Farmers agents thought the same thing, and believed that we would "Own" our own business. But I did not own anything but the debt. Now, Farmers will allow the agent to transfer the commission rights to another agent, but make no mistake about it. Farmers owns the policies, and they have not been shy or bashfull about suing agents the last 10 years for those that think otherwise.

Any agent with a captive carrier is really nothing more than a "clerk", who is paid to sell and service the captive carrier's book of business. I know, I know, for those out there that are captive, I realize that it does not sound nearly as grandiose to people and friends you run into, to say anything other than proudly proclaiming, "I own my own agency." But don't kid yourself, you only own the debt. Unless your captive carrier appointment contract spells out that YOU, JOHN Q SMITH owns the policies and the renewals, you are only at best renting the customers until a time in the future that the carrier can terminate you for any reason, and assign your policies to someone else. If they did so, it would not be theft, as theft would imply legal ownership on the agent's part.

Now on the IA side, at least with the major companies I am appointed with, the contract spells out ownership of the policies and the renewal to the agent. Pretty clear cut.

When I left Farmers, I consulted my CPA about being able to claim my severance package from Farmers as a long term capital gain. I showed my CPA my agent contract, and since it did not specify that I owned the policies, she correctly advised me not to claim my Farmers severance as a long term gain, since you have to legally own something first before claiming long term capital gains.

So as a result, it was 1099 income.

again gregcw, not trying to poke you, but my purpose in taking some time to answer is really for any potential new agent that is considering signing up with a captive carrier, such as Farmers, Allstate or State Farm. I wish someone had done this with me prior to me spending 11 years with Farmers, being told by Farmers management that I owned my agency when in reality I did not.

d's insurance store
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Re: Farmers Agent received 90 day notice Ca

Post by d's insurance store » Fri May 19, 2017 10:31 am

Being a former captive (Crooked A) agency owner, I recall the terminology being something to the effect of owning the 'compensation interest' in the book of business, with various escape options that boiled down to accepting a buy out or being able to sell that comp interest to another, approved, agency owner within the same captive system.

As an independent agency owner, the terminology is ownership of expirations, which is generally meant control of names, expiration dates and policy data.

At the point where I was thrown out of an appointment, each policy holder did receive a notice of non renewal and it was up to my agency to proactively contact, propose coverage alternatives and rewrite the risk. Even in a book roll situation, the insured is merely sent a renewal document and they have to reactively respond by paying premium in order to continue that insurance coverage, and thus, the relationship with the incumbent agency.

None of us have complete control over our clients...any one of them can fire us at a moments notice. In gregcw's case with Allied, frankly, I don't see much downside in Allied's attempt to retain those risks it deems potentially profitable. It may seem disingenuous for the carrier to compete with its former agency, but in this cutthroat world of retail insurance, I guess all is fair in the pursuit of a shrinking pool of policyholders.

MrD
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Re: Farmers Agent received 90 day notice Ca

Post by MrD » Fri May 19, 2017 11:51 am

There are even some instances where you do not really own your renewals with independent companies. We recently lost an appointment with a national carrier for their special program with an unnamed association of retired persons. As a result of this national carrier's contract with this association, they cannot non-renew any customer in the association; i.e. a lifetime renewal guarantee. As a result, they will be offering our auto customers the opportunity to continue their coverage direct or with another agent currently still with the program. So, do I really own the renewals and have control? Don't think so! Such a valuable lesson

lonestar
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Re: Farmers Agent received 90 day notice Ca

Post by lonestar » Fri May 19, 2017 12:51 pm

MrD and D's, this is why as Independent Agents, we actually have a choice as to whether we decide to obtain an appointment with a given carrier or not. I am aware of the company MrD is talking about. In a profession like ours, in which it is important to read and know the differences in insurance contracts, it is equally important that we know the pros / cons of any carrier's appointment agreement before we sign. If the agreement does not spell out agency ownership, I will not sign. Other agents may choose to sign it anyway, that is up to them. But at least on the IA side, we do have a choice of who to do business with. All my carrier appointments spell out agency ownership. I actually declined to sign an agency appointment with Bankers in the last year, because it did not contain strong enough language on agency ownership. Read first before signing, and that way you will not be surprised later.

But with a captive company, there is for sure no ownership of policies.

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