Should friend buy an AllState Agency? - Help!

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BrianBaughman
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Should friend buy an AllState Agency? - Help!

Post by BrianBaughman »

Hello all, I've been on the independent agency side my entire career. A friend of mine from church (age 50) is considering purchasing an established AllState agency. I do not believe he has experience in the field. What are some of the common pitfalls or things to be aware of as he approaches this choice? Does AllState have competitive rates that would enable him to write business? Does AllState have a good reputation among agents?

This info has probably been covered in the past, but if you could write your opinions again that would be helpful. One thought I had was that it was getting harder and harder to write PL because of the direct writers and increased online availability.

Any thoughts would be really appreciated. This is a big decision and I'd like to get your thoughts.

randrew54
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Re: Should friend buy an AllState Agency? - Help!

Post by randrew54 »

NO! If you value your friendship at all you need to tell him to run away, FAST!

gforaker
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Re: Should friend buy an AllState Agency? - Help!

Post by gforaker »

Really? According to a friend who is an Allstate agent, they are very restricted in who they can sell their agency to. Of all the Allstate agents in the area, only 2 are permitted to buy others. His son worked for him as a sub-agent and he could not sell to his own son. Your friend needs to first talk to Allstate and get something in writing that they will allow him to buy and be licensed. Personally, I doubt that he sounds like a good prospect to them.

macuser
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Re: Should friend buy an AllState Agency? - Help!

Post by macuser »

Brian - I'm an ex Allstate agent who went independent several years ago. Most of the Allstate agents I know are miserable. Your friend needs to know that if he doesn't hit his expected results for life insurance and financial products for two consecutive years that the company can and probably will terminate his contract. Does your friend have his series 6 & 63 liscense? If not, he's going to have to get it, or, after two years, his contract can and probably will be terminated. Over the last 6-8 years their emphasis has been on financial products rather than their core business of P&C insurance. Your friend needs to understand that. Their rates over the last couple of years haven't been competitive and taking business from them has been easier than taking candy from a baby. Ask the agent who is selling his book of business what his retention is. Years ago, Allstate was a good company to represent. I wouldn't touch them with a ten foot pole today. At age 50, ask your friend if he is willing to invest his money in an agency without any prior insurance/financial experience knowing that if he doesn't hit his expected results that Allstate will probably terminate his contract. The problem is, your friend is only going to represent one company, Allstate. So when they lay the line "your self employed" on him, don't believe it. When you only represent one company, they control every aspect of your agency.

RKunz2
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Re: Should friend buy an AllState Agency? - Help!

Post by RKunz2 »

BrianBaughman wrote:Hello all, I've been on the independent agency side my entire career. A friend of mine from church (age 50) is considering purchasing an established AllState agency. I do not believe he has experience in the field. What are some of the common pitfalls or things to be aware of as he approaches this choice? Does AllState have competitive rates that would enable him to write business? Does AllState have a good reputation among agents?

This info has probably been covered in the past, but if you could write your opinions again that would be helpful. One thought I had was that it was getting harder and harder to write PL because of the direct writers and increased online availability.

Any thoughts would be really appreciated. This is a big decision and I'd like to get your thoughts.

Dear Brian,

Macuser and the other contributors make excellent points. Ultimately, it'll be in the agent contract with Allstate as to what the agent can or can't do with the agency. The FINRA licensing is also an excellent point. All the big captives want their agents to be Jacks of ALL Trades now and offer full financial service products, as well as, being insurance experts too. I'm certainly no Harvard Grad, but a reasonable level of intelligence I do have and that's simply too much. In my OPINION, it's a disservice to your clients and a extra hazard to your E&O carrier. Be an expert in one field of study (insurance or financial services) not both. In regards to your question about Allstate being competitive; all carriers are competitve, it simply depends on product, packaging, geographic region, type and size of risk, etc. As a former FIG guy, I used to beat Mercury and GEICO frequently because I knew my products and how to package them. I also knew my competitors' weaknesses and turned them into strengths in my quotes. Insurance, like many professions is an art and a school of constant practice. You don't simply wake up one day and say, "I think I want to be an insurance agent now." I spent almost 20 years representing insurance and premium finance companies before deciding I wanted to switch to the sales side 4 years ago and you know what - I'm still learning every single day. Tell your friend to proceed with the utmost care and for God's sake, do the DUE DILIGENCE if it even looks remotely likely to happen.

Best of luck! 8)

d's insurance store
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Re: Should friend buy an AllState Agency? - Help!

Post by d's insurance store »

I'll add my voice to the choir, be a real friend and tell this person to look elsewhere to buy a job.

Allstate has indeed gravitated in recent years to a cesspool for agency owners with its demands for quota's disguised as 'goals', its controlling rules that rival a franchise without the protection of federal franchise law and its restrictive underwriting under the guise of controlling their maximum probable loss exposure.

At the age of 50, anybody considering a career change needs to look inward before plunking down hard earned dollars for a so-called investment, and even a superficial number of drop in interviews with existing Allstate agency owners outside of the immediate area of the selling agent would reveal a deep dissatisfaction in the relationship between Allstate agents and the company that controls everything in their business lives, including rest room breaks.

As previously stated, a mid life career change into an entirely new field deserves far more than a sales pitch from a local Allstate manager intent on meeting their recruitment goals with someone else's money. If an insurance sales career is in the cards for this friend, why don't you take him on as an intern to see if the career is a good fit.

You say you know him through your house of worship....well, if he hooks up with Allstate, you'll have the whole congregation praying for him. God speed, indeed.

RKunz2
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Re: Should friend buy an AllState Agency? - Help!

Post by RKunz2 »

d's insurance store wrote:I'll add my voice to the choir, be a real friend and tell this person to look elsewhere to buy a job.

You say you know him through your house of worship....well, if he hooks up with Allstate, you'll have the whole congregation praying for him. God speed, indeed.


Well said d's...well said! :twisted:

ga1
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Re: Should friend buy an AllState Agency? - Help!

Post by ga1 »

Old thread. However the simple answer is no. You're a 1099 contractor as an Allstate agent, but contractually obligated to that company and it's sales quota of products.

In today's market, very difficult to compete in certain zip codes with only one product. Check to see how many agencies are for sale in your area. It can be done, but you take all the risk and look at national claim service reports. They score below average on both auto and homeowner's claim satisfaction, therefore, policyholder retention may be less than average. Add that you have all the operating expenses and overhead, there are better opportunities out there.

davidjamesball
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Re: Should friend buy an AllState Agency? - Help!

Post by davidjamesball »

I have been an insurance agent for 37 years; 16 years captive agent, 21 years independent agent. I believe I have seen it all. Tell your friend to run away! I read above, “cesspool” reference to Allstate. I believe that is an understatement with regard to corporate management and generally (80%) of their agents. Run away!

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