American Family Insurance Agency Opportunity

[Midwesterner]

I have had an opportunity present itself to begins some dialogue with two Agency Sales Managers for American Family Insurance. The career track they are telling me is to go to work for an existing agency and learn their system. Then in about two years when an agency comes open I would have the opportunity to take one over. I understand that this two year period is sort of like an apprenticeship. I would love to hear thoughts on American Family Insurance as a company and how are they to be an agent for. On a side note I have owned and operated my own independent agency for four years and wound up selling to a competitor for a generous amount. I like the idea of no out-of-pocket purchase costs with the way American Family Insurance handles these transitions. Please share your thoughts.

 

[fed up]

The track presented to me on numerous occasions was work for an agent for at least 90 days, all the while writing down everyone you know. When they turn you loose you have 100 or so warm leads. How do you take over an agency unless the agent has failed or someone sells you a book?

 

[Midwesterner]

The company owns the book. It is my understanding that when an agent leaves the company after being there a minimal number of years they get paid a bonus based on previous years commissions. The new agent takes a haircut on renewals of the previous agent's policies. Successful agents either into management (two upcoming retirements in our area over the next two years) or retire. Failing agents simply leave the company I guess.

 

[fed up]

Agents who have failed did so because they were not making enough to make a living so I'm not sure what value the books of those agents would be worth. I've never seen an insurance company give away a book of business. Maybe you would get some seed accounts near your office address. Best of luck to you

 

[AZDave]

I have had an opportunity present itself to begins some dialogue with two Agency Sales Managers for American Family Insurance. The career track they are telling me is to go to work for an existing agency and learn their system. Then in about two years when an agency comes open I would have the opportunity to take one over. I understand that this two year period is sort of like an apprenticeship. I would love to hear thoughts on American Family Insurance as a company and how are they to be an agent for. On a side note I have owned and operated my own independent agency for four years and wound up selling to a competitor for a generous amount. I like the idea of no out-of-pocket purchase costs with the way American Family Insurance handles these transitions. Please share your thoughts.

They use to call it the AIT Program, 'Agent in Training' . Some of your pay is from AMFAM during this training period, some from the Agency. The Agency you work for has hit the AMFAM production requirements and is rewarded with an AIT.

AMFAM will provide you a good training platform. During your training period you will learn to sell and be expected to sell Life Insurance mainly, and personal lines. If you are ever appointed an an Agent, you will be required to sell Life, mainly. Your entire career with them will revolve around life production. All trips and financial incentives will revolve around Life production.

The Auto and Home products offered may or may not be competitive in your market. The commissions you are paid are much less than what you earn as an Indy. Last I heard, new business auto was at 9%, and home at 15%. However, today I believe those numbers are now based on IF you sold enough Life Insurance for the month.

You do not own your book, and never will. If you make it 15 years, then you will be provided with some "Termination Benefits". Old contracts would provide a MAX of 1.25 multiple of prior years renewals - AFTER 25 years of full time status. At year 15, it was .5, or 50%. You can not sell your book, EVER.

If you are "chosen" to receive policy transfers: you will receive 0 renewals on them for one year. (at least that is how it use to be) After one year, you are paid a reduced (5%) renewal commission. You will be expected to service these people for free and sell them - Life Insurance. An Agency will lose money at 5% servicing P&C.

Policy transfers are used to reward Agents that have sold a bunch of - Life Insurance. These transferred policy's come from Agents that have been terminated, usually because they didn't sell enough - Life Insurance.

Bottom line: you will make less commissions at AMFAM ( even on life the top commission products are 40% . Term was 25%), and you will be under constant pressure to sell life or be Terminated. There are also stringent profit and production requirements for auto/home.

But hey, if you sell enough Life Insurance you will win a trip and a ring!

Good Luck to you!

Dave

 

[billyb]

I would hate to know that I was just starting my career as a life agent in this environment. Who knows what changes are coming making it harder for an agent to sell.

 

[Midwesterner]

Thanks for the replies. AZDave are you a current or former American Family Insurance agent? You seem to know quite a bit about them.

 

[AZDave]

Former Agent for 22 years. Resigned and went Indy in 2008. No looking back!

 

[Cal Naughton Jr]

Many changes to American Family now and it looks lucrative finally, many agents seem to be retiring and old age needs to be dealt with. I've seem offers and 3 commission increases for new agents. I'll see if they're competitive

 

[Mighty J]

Why I think American Family Insurance is a Scam.

In my opinion, American Family Insurance scams its owninsurance agents. They profit from terminating their agentswho are local small business owners trying to build a business to achieve their dreams. American Family Insurance is all about protecting the dreams of their clients, but at the same time they are crushing the dreams of their agents.
Here are some facts:

• American Family Insurance agents are in a contract that can be terminated at any time for any reason.
• American Family Insurance agents DO NOT owntheir “book” (the policies) and have no rights to it if American Family chooses to terminate them.
• When an American Family Insurance agent gets terminated (no matter the reason, if any), all of theirpolicies get “bulk transferred” to another agent(s). American Family doesn’t pay commissions on these bulk transfers for 12 to 23 months.
• In addition to corporate American Family pocketing the commission for 12 to 23 months, the agent who receives these bulk transferred policies only gets paid 57% of the normal commission rate after that 12 to 23 month period.

American Family Insurance is literally profiting from terminating agents. Now, you would think that a growing insurance company would be increasing its agency force, but the amount of American Family Insurance agents has actually decreased by close to 25% over the last several years.
Why would American Family Insurance terminate good agents?
It doesn’t matter if you are a good agent or a bad agent, the company will profit more and help its bottom line by firing you. Even if you are a great agent, the company is paying you 100% of the commission rate on your policies. They can terminate you, transfer those policies to other agents, not pay any commissions at all for 12 to 23 months (the new agent is forced to service the policies for free) and then only pay 57% of the commission rate after that.
American Family Insurance pockets 100% of the commission for those 12 to 23 months, then pockets 43% of what should be paid out to its agents.

Long story short once you’ve built a successful agency, they create and look for ways to terminate you. Since you walk with nothing, it’s profitable for them. Don’t be scammed out of working for free for years to be left destitute and in financial ruin by this greedy company that AmBest just rated as negative and unstable. Look up the court cases in numerous states where they are being sued by former agents.