New and renewal commission’s are always an issue, but what about when an agent wants to sell his book of business to another Allstate agent? Is that the same for captives, as it is for independents?
Remember when they used to pay 15% new and renewal comp on homes and then they did a transition which gradually lowered it to the 10 and 10 they pay now and management said that 10 & 10 new and renewal was sacred and that they would keep it there. Well that’s all this is, is another lets boil the frog slow and steady move,this way they don’t jump out of the pot to soon and hurt them, thats why the other guy who was in charge of comp. got fired because he let the cat out of the bag too soon and to quickly, instead of what(They) do best and thats bleed them slow and steady.
mark my words come 2014 they will lower the comp to 8 & 8 and if these agents have a half a brain they will run out now while they can still get something for their book, if not they will eventually take a 20% cut on their book value as well. So in closing if these agents are content on being sheep then don’t cry when the wolf is at your door ready to eat you and your profits, because you let them in instead of standing up for yourself and leaving to greener pastures, because lets face it, you can’t even write homes any more through them either, so what good are they especially when all their going to give you is 8 & 8 serves you right to lose your butts if you let them do this to you! But most will not leave becasue (they) know most of you are sheep….
Our agency is shying away from actively pursuing homeowners policies in Florida, We currently are only getting 10% of the non-wind premium on a homeowners policy. that might meen 4% of the total premium. If you dont pay much in commission eventually you will make it unattractive for your salesforce to go after good business.
@Old Agent – I’m sure most of the agents aren’t content about being sheep. Granted there are most likely much better opportunities out there, but in the meantime I’m quite sure many of them have non compete clauses for a MINIMUM of 12 MOS, sometimes as long as 36 mos. So, it’s not easy for a captive agent to break away and start completely fresh. Especially so for agents that have been with Allstate for 15-20+ years and have established books, for them I’m sure this is devastating. :/
I disagree. I left, started from scratch in a differnt town after 12yrs. Non compete was not even an issue. New town, new clients and total success. If agents are afraid they can’t start over again and need their old clients to be successful then agents have no faith in their own abilities.
Allstate captives benefit from strong advertising that drives customers to their door. Their independent counterparts gain little from the marketing efforts of the company. Prospects find the local Allstate Agent, it’s a different insurance buyer than the Independent Agent customer. Captives need to factor in the benefit of the carrier’s marketing. It’s the difference between having customers come in your door, and you having to go out and find them.
Marketmaker, you’re clueless. Doesn’t matter how many prospects get driven to the door by Allstate’s advertising. The guidelines in S Fla are so restrictive, we couldn’t write them. It was a total waste of time to try…
you can’t write Allstate auto in S Florida? I know homeowners is a no go, but you should be able to write auto (although, from what I’ve seen, Allstate isn’t that competitive on auto).
In my area Allstate is all over the map. Sometimes they’ll be so low I can’t find a carrier to come close. Other times I can present 3 or 4 proposals that are less. I’m not sure what market they’re chasing.
A few years ago it seemed I couldn’t beat Allstate’s auto rates. Now I beat them all day every day. For me, GEICO is the coin-toss carrier. Sometimes I crush them and sometimes they crush me. I can never get a good grasp on it.
Liberty Mutual is non-renewing a bunch of homeowners. Getting a few calls every day. Usually beat them handily on the auto which makes up for the increase they’ll see on the homeowners side.
December 6, 2012 at 9:54 am
Agent says:
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What they are chasing is the Esurance crowd of online sales, not their agency force market.
December 29, 2011 at 10:54 am
Mr. Solvent says:
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What a joke MarketMaker. Have you seen any Progressive or Travelers commercials lately? How about Trusted Choice commercials? Independents don’t enjoy the SAME marketing advantage, but we make up for it with customer service and a variety of markets.
This is a valuable contribution because its introduces a crucial element. Would I rather receive 10 percent (or less) for a pre-sold customer that shows up at my door, or 15 percent for one I have to go out and find. Presented this way, the answer is a bit more difficult to discern.
It does not matter how many come to the door if your rates are double everyone else’s. Every time I complete a quote I know there are at least 10 more people that know I am not competitive.
Not a very stable work environment since Mahem took over at the helm. How about rewarding those that got you where you are. I woulld think that Allstate has had a pretty good level of success. Allstate, State Farm and Farmsers, I believe have made poor business decissions regarding their workforce in the last few years. Their efforts to grow profit at the expense of their workforce actually works against them. So instead of the brightest and most capable workforce they are attracting the lower performing rejects from the large independent brokers. Not like it used to be. It used to be if you wanted a great living and stable work environment you went to work for one of the large captive carriers who had a tremendous pay structure that the independents could not compete with. Those days are gone and we in the independent agency world will be there to benefit from the poor business practices of the captives.
MarketMaker’s point is dated. The availability of online quotes and insurance has significantly changed the playing field.
It used to be that the captives gave the customer a known brand that could provide service to a policyholder even if the policyholder was not in their home market because other agents for the same carrier could provide assistance even in another state. The independent agent provides a variety of carriers and could tailor a policy that better met the client’s needs and be more affordable. The direct writers and the online market has turned the product into more of a commodity than it should be; everyone believes they know enough about insurance to confidently buy their own until they have a claim and even then, it is someone else’s fault.
I’m sure, as professional agents, we all have watched the addition of agents to the GEICO brand, Progressive has actively pushed its dual access model to the insuring public since inception, Zurich sells direct through 21st Century and earlier this year, Allstate bought e-surance.
Sure, calls will go to the captives because of the name on the door but just like the independents, callers are calling about price and if that is all the agency is selling, it doesn’t matter what type of agency you have, you are destined to fail.
As captives cut commissions, the agents that sell insurance will be driven to the independent side of the business where selling is better rewarded and they will take a good number of their clients with them because they have sold themselves and their knowledge rather than a brand and a price.
I agree with much of what you say. Allstate, State Farm and Farmers Group have been their own worst enemies with their captive agents who are mostly depressed with their situation. Allstate just had a major uprising and the agents formed a guild/union to voice their complaints to management. Now they have to put up with the unveiling of Esurance and even more problems dealing with that issue. Esurance may appeal to some geeks, but not most insurance customers who need advice about their protection. We, as Independents will benefit from captive troubles and pick up a lot of their business. Also, these agents have no where to go if the cost on the renewal escalates where the Independent just goes shopping until he finds a market that will work.
“Amazed” is right on! The captives are in position to dictate reduced commissions with little fear of retribution. Contracts and compensation issues impact the successful producing agencies who can no longer plan a sound business strategy. As a captive we have no place to go when company strategy and policies drive customers out the back door. I know my “independent” buddies are glad they have me around. There business has grown at my expense. Unfortunately, I don’t see that getting better as we move forward.
I can’t speak to any particular company or any particular contract (because some captives have many different contracts) but most have a provision where they can’t compete for the same business within a set period of time or distance. Other than that there are no issues getting out.
Our agency has been a captive for over 25 years and we see the handwriting on the wall-reduced commissions which translate to a lower contract value, which is already a third of the average independent value. As captives go independent in our company they normally recapture an average of 40% of their old book, and you can bet many of the policies left behind were the high loss and high service clients which will further erode the company’s loss ratio. Greed is good-but only for a short time. :)
As an Independent, I have been approached by some desperate Farmers agents and one Allstate agent wanting to broker business to us for a commission split. Their companies are not treating them right on commissions or competitive products and as I said before, they have nowhere to go on quotes other than their one market. Some of my marketing reps say they have been contacted by several of these captives hoping to get an appointment. I have heard of some captives opening an Independent Agency down the road under a different name and channeling their business to it. I suppose there is more than one way to skin a cat and they will find it.
I get it all of the time. Not that I would mind the added business, but I can’t work with someone to violate their contract. My advice is always the same…drop your contract, wait your term, win back your customers. If you don’t want to go to the trouble of getting independent appointments, I’ll give you a fair split here.
I left Farmers Insurance in the 1980’s and went Independent. I have never regretted it. I had been one of the better producers and could not break $6000 a month back then. In the first three months as an independent I broke $10,000 and that was on my old customers,so the Farmers accounting had some problems too and every time I questioned why a customer had to have as many as five commission entrys over a three or four months period I was just told that I had to trust them or leave. So I left,and got my answers clearly. The owners of the direct writers are like buzzards picking over the earnings of their people. Glad I left when I did.
Say what you want about Farmers they haven’t changed commission rates in dozens? of years. I’m shocked Allstate is getting away with what they pay now much less reducing commissions. Farmers is paying 10% on Auto new biz & renewals, Fire pays 20% new / 14% renewals. No nonsense it’s just how we pay.
I hear some other states are struggling with rate but in Ohio our rates are hot.
With everyone jacking rates up in 2012 I am looking forward to taking clients from the whiners next year.
Keep on thinking like that and just sitting there. I can tell you have really bought the program. Well your day of realization is coming too. Farmers used to pay 20% when I started ..and lets see….now you are satisfied with 10%. Just keep the blinders on…Down the road you will be looking back and saying that, “I should have used my head.” As it is now it is just another company stick pin…
If you were Independent Michael, you would be doing better on commissions, contingency and would have more options to offer your customers than you have currently. By the way, the Farmer’s University commercials are among the worst and run neck and neck with Nationwide as the most stupid. They appeal to the OWS crowd I suppose.
Michael…Probably should not share this with you but I will. My income has grown since I left Farmers from a gross of $60,000 to just over $1,000,000 last year. I would like for you to share what that magnificent 10% is now making you under their accounting system as we sit. As stated my income in three months …on my old customers exceeded $10,000 per month and went up from there. Any Comments? Think it over.. Now I lose very few customers because of bad company policy because I have other markets to take them to. Something Captives also do not have. Incidently I have Encompass(Allstate), Foremost, Zurich, and 21st Century (Farmers ) which are set up to compete with thier own agents from the independent agent side. Is picture getting clearer yet?
They way of the captive is a dying breed. If you are to survive you need to go IA. What Allstate is doing is just another of many examples of the movement in this direction.
I’m retired from the insurance business. In close to 45 years I had both direct and independent agencies and was also involved in management with direct and independent companies. No matter which side of the fence you’re on, the future being pushed toward you is the same. The companies are actively pursuing ways to market without paying commissions. In the past there was no way to effectively market without an agent. This is no longer true. In the very near future only niche markets will require the expertise of an agent. Auto, HO, boat, etc. will be the first dominos to fall so build your niche while you still have time. Eventually the companies will work out the process for even these niche markets. I loved the business and I was fortunate to be in it at the best of times but, sadly, I believe those times have ended.
Richard, you’re like every other old time and retired agent I know. They’ve been screaming about the sky falling since Geico started advertising a 15 minute phone call in the early 90’s. When Progressive (a company that was very agent friendly at the time) put out a user friendly web interface with comparison pricing they screamed louder.
People going direct is not as a result of their desire not to have an agent. It’s as a result of some bad actors in the industry not presenting their value. When I win from a direct writer, I win for life.
I do agree with some of your logic, but the on line business is a growing sector of the market. According to an article that I read a year ago of the online shoppers about 76% will call an agent when they get an idea of who they want to go with. They still want an agent to be responsible for the placement and have not yet gotten comfortable with taking the risk themselves. Over a period of time though I think that will go away. The companies long term plans are to take over with on line quoting and direct sales on personal lines. Commercial is another story. I do not believe they will ever be able to replace the agent there.
I never “screamed” about Geico or Progressive because I knew they were not a threat. The technology just wasn’t available and it was too new for people to be comfortable with it. Furthermore, I have an advantage that most of the folks writing in these comments haven’t had. I attended a large number of insurance company staff meetings (independent and captive) and I can tell you that, though the company people may buy you lunch, take you golfing or, if you’re a really big profitable producer, maybe provide a trip to Cancun, the overall attitude in those closed meetings can be summed up in one word, “adversarial.” Now the technology and the use of the technology is rising higher and higher each year. I restate my original premise. The companies’ aim (both independent and captive) is to reduce the commission overhead as much as possible. Eliminating it completely will take time but it is inevitable.
Your not the first person I have heard say this. I know others who are in the inner workings that have made similar statements. I do not believe commissions can be completly eliminated but carriers will eliminate what they can.
Well let’s see, a captive agent usually gets perks (expenses paid) from the Insurer, this can be support staff, rent or any other expense the insurer decides to cover for the agent. The independent agency bears all the expense for running his/her business.
The independent agent distribution system is a much more cost effective for the Insurer as nothing is paid until the policy is sold. This is why the independent agency system is the fastest growing sector in the industry!
Most captive insurers seem to be top heavy in structure, resulting in the need to slice the profit pie in their favor, hence cutting commissions for their income producers (AGENTS)!
You are not very informed. This “independent” Allstate Agency gets nothing. I pay all overhead, this includes computers, office equip., lease, support, etc. You really need to get with the program.
Allstate has a union that represents only 10% of the agents?
The union is not working very hard because they can get this up to 90% with very little effort. Allstate agents across the country are very discouraged and ready for someone to represent them. Allstate should give the same contract they have for Independent Agents to each and every agent and treat them as true Independent contractors. This would allow the agents to represent any Company that will plant with them.
State farm only pays an 8% base on auto and fire with a Max of 11% for new contract agents. Morale is is the lowest it has ever been and the failure rate of new agents is almost 50%. When many of us looked sf agency mgmt showed us the old agents and what they made. We felt as if we were lied to to come to.sf. Many new agents are taking part time jobs or just abandoning their agencies since the opportunity doesn’t provide the income we were all told. I wish this trade mag would do an article about state farm and their compensation structure. Its the worst in the business.
They have been into Financial Services for a number of years and they have let the P&C slide, which is good news for Independents. I have picked up several State Farm clients in the past year who had been with them for 20-30 years.
What you all need to fear is the transition to direct sales and the internet by Allstate. Do you really believe the kids of today are going to buy their insurance from a brick and mortar business? Please go visit your travel agent the next time you take a vacation. Why do you think Allstate purchased esurance? Allstate can do what the agent does for 6% leaving billions in profits on the table. Fifteen years ago, their was no Progressive. No esurance. Geico sold to government employees only (Government Employee Insurance Company). California has gone from 1500 to 900 agents in the last ten years by design. When the industry truly does turn to internet driven sales, as Generations X & Y replace the older customers, the values of these books will be nil
Its kind of funny to look back at this and realize how many lies, how much deceit and “omissions of truth” the statements are that come from from this company. Even rock-star LeNeve is gone at this point in time and not for reasons as have been reported. Lacher is also long gone due to an amusing but also improperly reported reason. I’d like to thank them for their moronic ideas of how to build a company by reducing the workforce and, as noted by Independent, reducing commissions.
I was allstate agency owner for 12 years. Cashed out. Blew them off. Too top heavy. I can make much more money faster with my independent agency. I have the captives sending my their poor profile home business (based on credit) guy owns a home and cant buy insurance through the captives. I have Surplus lines companies that fill that niche. I have independent auto home carriers that can take captives business. you can also out work and out x date the captive agencies. generally the captives become demoralized and quite working or start pursuing business to fulfill a company goal. Stupid. I pursue business to make money.
has it hurt your business not to be part of a brand name company? I’m still deciding whether i should go with Allstate or open my own independent agency? which is more profitable and the pros and cons?
New and renewal commission’s are always an issue, but what about when an agent wants to sell his book of business to another Allstate agent? Is that the same for captives, as it is for independents?
Remember when they used to pay 15% new and renewal comp on homes and then they did a transition which gradually lowered it to the 10 and 10 they pay now and management said that 10 & 10 new and renewal was sacred and that they would keep it there. Well that’s all this is, is another lets boil the frog slow and steady move,this way they don’t jump out of the pot to soon and hurt them, thats why the other guy who was in charge of comp. got fired because he let the cat out of the bag too soon and to quickly, instead of what(They) do best and thats bleed them slow and steady.
mark my words come 2014 they will lower the comp to 8 & 8 and if these agents have a half a brain they will run out now while they can still get something for their book, if not they will eventually take a 20% cut on their book value as well. So in closing if these agents are content on being sheep then don’t cry when the wolf is at your door ready to eat you and your profits, because you let them in instead of standing up for yourself and leaving to greener pastures, because lets face it, you can’t even write homes any more through them either, so what good are they especially when all their going to give you is 8 & 8 serves you right to lose your butts if you let them do this to you! But most will not leave becasue (they) know most of you are sheep….
Our agency is shying away from actively pursuing homeowners policies in Florida, We currently are only getting 10% of the non-wind premium on a homeowners policy. that might meen 4% of the total premium. If you dont pay much in commission eventually you will make it unattractive for your salesforce to go after good business.
Maybe you need to go to an independent agency Sarah. You’d probably be better compensated.
@Old Agent – I’m sure most of the agents aren’t content about being sheep. Granted there are most likely much better opportunities out there, but in the meantime I’m quite sure many of them have non compete clauses for a MINIMUM of 12 MOS, sometimes as long as 36 mos. So, it’s not easy for a captive agent to break away and start completely fresh. Especially so for agents that have been with Allstate for 15-20+ years and have established books, for them I’m sure this is devastating. :/
I disagree. I left, started from scratch in a differnt town after 12yrs. Non compete was not even an issue. New town, new clients and total success. If agents are afraid they can’t start over again and need their old clients to be successful then agents have no faith in their own abilities.
Allstate captives benefit from strong advertising that drives customers to their door. Their independent counterparts gain little from the marketing efforts of the company. Prospects find the local Allstate Agent, it’s a different insurance buyer than the Independent Agent customer. Captives need to factor in the benefit of the carrier’s marketing. It’s the difference between having customers come in your door, and you having to go out and find them.
Independent agents do not need advertising, they make it on their own and provide proactive services not provided by the captives.
Marketmaker, you’re clueless. Doesn’t matter how many prospects get driven to the door by Allstate’s advertising. The guidelines in S Fla are so restrictive, we couldn’t write them. It was a total waste of time to try…
you can’t write Allstate auto in S Florida? I know homeowners is a no go, but you should be able to write auto (although, from what I’ve seen, Allstate isn’t that competitive on auto).
In my area Allstate is all over the map. Sometimes they’ll be so low I can’t find a carrier to come close. Other times I can present 3 or 4 proposals that are less. I’m not sure what market they’re chasing.
A few years ago it seemed I couldn’t beat Allstate’s auto rates. Now I beat them all day every day. For me, GEICO is the coin-toss carrier. Sometimes I crush them and sometimes they crush me. I can never get a good grasp on it.
Liberty Mutual is non-renewing a bunch of homeowners. Getting a few calls every day. Usually beat them handily on the auto which makes up for the increase they’ll see on the homeowners side.
What they are chasing is the Esurance crowd of online sales, not their agency force market.
What a joke MarketMaker. Have you seen any Progressive or Travelers commercials lately? How about Trusted Choice commercials? Independents don’t enjoy the SAME marketing advantage, but we make up for it with customer service and a variety of markets.
This is a valuable contribution because its introduces a crucial element. Would I rather receive 10 percent (or less) for a pre-sold customer that shows up at my door, or 15 percent for one I have to go out and find. Presented this way, the answer is a bit more difficult to discern.
It does not matter how many come to the door if your rates are double everyone else’s. Every time I complete a quote I know there are at least 10 more people that know I am not competitive.
Not a very stable work environment since Mahem took over at the helm. How about rewarding those that got you where you are. I woulld think that Allstate has had a pretty good level of success. Allstate, State Farm and Farmsers, I believe have made poor business decissions regarding their workforce in the last few years. Their efforts to grow profit at the expense of their workforce actually works against them. So instead of the brightest and most capable workforce they are attracting the lower performing rejects from the large independent brokers. Not like it used to be. It used to be if you wanted a great living and stable work environment you went to work for one of the large captive carriers who had a tremendous pay structure that the independents could not compete with. Those days are gone and we in the independent agency world will be there to benefit from the poor business practices of the captives.
MarketMaker’s point is dated. The availability of online quotes and insurance has significantly changed the playing field.
It used to be that the captives gave the customer a known brand that could provide service to a policyholder even if the policyholder was not in their home market because other agents for the same carrier could provide assistance even in another state. The independent agent provides a variety of carriers and could tailor a policy that better met the client’s needs and be more affordable. The direct writers and the online market has turned the product into more of a commodity than it should be; everyone believes they know enough about insurance to confidently buy their own until they have a claim and even then, it is someone else’s fault.
I’m sure, as professional agents, we all have watched the addition of agents to the GEICO brand, Progressive has actively pushed its dual access model to the insuring public since inception, Zurich sells direct through 21st Century and earlier this year, Allstate bought e-surance.
Sure, calls will go to the captives because of the name on the door but just like the independents, callers are calling about price and if that is all the agency is selling, it doesn’t matter what type of agency you have, you are destined to fail.
As captives cut commissions, the agents that sell insurance will be driven to the independent side of the business where selling is better rewarded and they will take a good number of their clients with them because they have sold themselves and their knowledge rather than a brand and a price.
I agree with much of what you say. Allstate, State Farm and Farmers Group have been their own worst enemies with their captive agents who are mostly depressed with their situation. Allstate just had a major uprising and the agents formed a guild/union to voice their complaints to management. Now they have to put up with the unveiling of Esurance and even more problems dealing with that issue. Esurance may appeal to some geeks, but not most insurance customers who need advice about their protection. We, as Independents will benefit from captive troubles and pick up a lot of their business. Also, these agents have no where to go if the cost on the renewal escalates where the Independent just goes shopping until he finds a market that will work.
“Amazed” is right on! The captives are in position to dictate reduced commissions with little fear of retribution. Contracts and compensation issues impact the successful producing agencies who can no longer plan a sound business strategy. As a captive we have no place to go when company strategy and policies drive customers out the back door. I know my “independent” buddies are glad they have me around. There business has grown at my expense. Unfortunately, I don’t see that getting better as we move forward.
Do you, as a captive agent, have a way “out” of your arrangement with Allstate to become an independent yourself? Is that even desireable?
I can’t speak to any particular company or any particular contract (because some captives have many different contracts) but most have a provision where they can’t compete for the same business within a set period of time or distance. Other than that there are no issues getting out.
Our agency has been a captive for over 25 years and we see the handwriting on the wall-reduced commissions which translate to a lower contract value, which is already a third of the average independent value. As captives go independent in our company they normally recapture an average of 40% of their old book, and you can bet many of the policies left behind were the high loss and high service clients which will further erode the company’s loss ratio. Greed is good-but only for a short time. :)
As an Independent, I have been approached by some desperate Farmers agents and one Allstate agent wanting to broker business to us for a commission split. Their companies are not treating them right on commissions or competitive products and as I said before, they have nowhere to go on quotes other than their one market. Some of my marketing reps say they have been contacted by several of these captives hoping to get an appointment. I have heard of some captives opening an Independent Agency down the road under a different name and channeling their business to it. I suppose there is more than one way to skin a cat and they will find it.
I get it all of the time. Not that I would mind the added business, but I can’t work with someone to violate their contract. My advice is always the same…drop your contract, wait your term, win back your customers. If you don’t want to go to the trouble of getting independent appointments, I’ll give you a fair split here.
I left Farmers Insurance in the 1980’s and went Independent. I have never regretted it. I had been one of the better producers and could not break $6000 a month back then. In the first three months as an independent I broke $10,000 and that was on my old customers,so the Farmers accounting had some problems too and every time I questioned why a customer had to have as many as five commission entrys over a three or four months period I was just told that I had to trust them or leave. So I left,and got my answers clearly. The owners of the direct writers are like buzzards picking over the earnings of their people. Glad I left when I did.
Say what you want about Farmers they haven’t changed commission rates in dozens? of years. I’m shocked Allstate is getting away with what they pay now much less reducing commissions. Farmers is paying 10% on Auto new biz & renewals, Fire pays 20% new / 14% renewals. No nonsense it’s just how we pay.
I hear some other states are struggling with rate but in Ohio our rates are hot.
With everyone jacking rates up in 2012 I am looking forward to taking clients from the whiners next year.
Keep on thinking like that and just sitting there. I can tell you have really bought the program. Well your day of realization is coming too. Farmers used to pay 20% when I started ..and lets see….now you are satisfied with 10%. Just keep the blinders on…Down the road you will be looking back and saying that, “I should have used my head.” As it is now it is just another company stick pin…
If you were Independent Michael, you would be doing better on commissions, contingency and would have more options to offer your customers than you have currently. By the way, the Farmer’s University commercials are among the worst and run neck and neck with Nationwide as the most stupid. They appeal to the OWS crowd I suppose.
Michael…Probably should not share this with you but I will. My income has grown since I left Farmers from a gross of $60,000 to just over $1,000,000 last year. I would like for you to share what that magnificent 10% is now making you under their accounting system as we sit. As stated my income in three months …on my old customers exceeded $10,000 per month and went up from there. Any Comments? Think it over.. Now I lose very few customers because of bad company policy because I have other markets to take them to. Something Captives also do not have. Incidently I have Encompass(Allstate), Foremost, Zurich, and 21st Century (Farmers ) which are set up to compete with thier own agents from the independent agent side. Is picture getting clearer yet?
I didn’t think 21st Century was available to agents.
We have them in our system and use them very little. I don’t
like using Farmers for anything if it is avoidable after my experience with them.
They way of the captive is a dying breed. If you are to survive you need to go IA. What Allstate is doing is just another of many examples of the movement in this direction.
I’m retired from the insurance business. In close to 45 years I had both direct and independent agencies and was also involved in management with direct and independent companies. No matter which side of the fence you’re on, the future being pushed toward you is the same. The companies are actively pursuing ways to market without paying commissions. In the past there was no way to effectively market without an agent. This is no longer true. In the very near future only niche markets will require the expertise of an agent. Auto, HO, boat, etc. will be the first dominos to fall so build your niche while you still have time. Eventually the companies will work out the process for even these niche markets. I loved the business and I was fortunate to be in it at the best of times but, sadly, I believe those times have ended.
Richard, you’re like every other old time and retired agent I know. They’ve been screaming about the sky falling since Geico started advertising a 15 minute phone call in the early 90’s. When Progressive (a company that was very agent friendly at the time) put out a user friendly web interface with comparison pricing they screamed louder.
People going direct is not as a result of their desire not to have an agent. It’s as a result of some bad actors in the industry not presenting their value. When I win from a direct writer, I win for life.
I do agree with some of your logic, but the on line business is a growing sector of the market. According to an article that I read a year ago of the online shoppers about 76% will call an agent when they get an idea of who they want to go with. They still want an agent to be responsible for the placement and have not yet gotten comfortable with taking the risk themselves. Over a period of time though I think that will go away. The companies long term plans are to take over with on line quoting and direct sales on personal lines. Commercial is another story. I do not believe they will ever be able to replace the agent there.
Mr. Solvent,
I never “screamed” about Geico or Progressive because I knew they were not a threat. The technology just wasn’t available and it was too new for people to be comfortable with it. Furthermore, I have an advantage that most of the folks writing in these comments haven’t had. I attended a large number of insurance company staff meetings (independent and captive) and I can tell you that, though the company people may buy you lunch, take you golfing or, if you’re a really big profitable producer, maybe provide a trip to Cancun, the overall attitude in those closed meetings can be summed up in one word, “adversarial.” Now the technology and the use of the technology is rising higher and higher each year. I restate my original premise. The companies’ aim (both independent and captive) is to reduce the commission overhead as much as possible. Eliminating it completely will take time but it is inevitable.
Your not the first person I have heard say this. I know others who are in the inner workings that have made similar statements. I do not believe commissions can be completly eliminated but carriers will eliminate what they can.
Gotta pay for that Esurance acquisition somehow…
Well let’s see, a captive agent usually gets perks (expenses paid) from the Insurer, this can be support staff, rent or any other expense the insurer decides to cover for the agent. The independent agency bears all the expense for running his/her business.
The independent agent distribution system is a much more cost effective for the Insurer as nothing is paid until the policy is sold. This is why the independent agency system is the fastest growing sector in the industry!
Most captive insurers seem to be top heavy in structure, resulting in the need to slice the profit pie in their favor, hence cutting commissions for their income producers (AGENTS)!
You are not very informed. This “independent” Allstate Agency gets nothing. I pay all overhead, this includes computers, office equip., lease, support, etc. You really need to get with the program.
AMEN!!!!!!!!
Allstate has a union that represents only 10% of the agents?
The union is not working very hard because they can get this up to 90% with very little effort. Allstate agents across the country are very discouraged and ready for someone to represent them. Allstate should give the same contract they have for Independent Agents to each and every agent and treat them as true Independent contractors. This would allow the agents to represent any Company that will plant with them.
9% with a chance for 16%
State farm only pays an 8% base on auto and fire with a Max of 11% for new contract agents. Morale is is the lowest it has ever been and the failure rate of new agents is almost 50%. When many of us looked sf agency mgmt showed us the old agents and what they made. We felt as if we were lied to to come to.sf. Many new agents are taking part time jobs or just abandoning their agencies since the opportunity doesn’t provide the income we were all told. I wish this trade mag would do an article about state farm and their compensation structure. Its the worst in the business.
They have been into Financial Services for a number of years and they have let the P&C slide, which is good news for Independents. I have picked up several State Farm clients in the past year who had been with them for 20-30 years.
true
What you all need to fear is the transition to direct sales and the internet by Allstate. Do you really believe the kids of today are going to buy their insurance from a brick and mortar business? Please go visit your travel agent the next time you take a vacation. Why do you think Allstate purchased esurance? Allstate can do what the agent does for 6% leaving billions in profits on the table. Fifteen years ago, their was no Progressive. No esurance. Geico sold to government employees only (Government Employee Insurance Company). California has gone from 1500 to 900 agents in the last ten years by design. When the industry truly does turn to internet driven sales, as Generations X & Y replace the older customers, the values of these books will be nil
Its kind of funny to look back at this and realize how many lies, how much deceit and “omissions of truth” the statements are that come from from this company. Even rock-star LeNeve is gone at this point in time and not for reasons as have been reported. Lacher is also long gone due to an amusing but also improperly reported reason. I’d like to thank them for their moronic ideas of how to build a company by reducing the workforce and, as noted by Independent, reducing commissions.
From day one when our leader TW took over he has always dislike agents and thinks he (TW) should be the only person making money. Shame on you Tom
Andrew, you should revisit Allstate and get a second view on this initiative. It has become the biggest joke of Allstate in technical team….
I was allstate agency owner for 12 years. Cashed out. Blew them off. Too top heavy. I can make much more money faster with my independent agency. I have the captives sending my their poor profile home business (based on credit) guy owns a home and cant buy insurance through the captives. I have Surplus lines companies that fill that niche. I have independent auto home carriers that can take captives business. you can also out work and out x date the captive agencies. generally the captives become demoralized and quite working or start pursuing business to fulfill a company goal. Stupid. I pursue business to make money.
has it hurt your business not to be part of a brand name company? I’m still deciding whether i should go with Allstate or open my own independent agency? which is more profitable and the pros and cons?