State Farm Agency Contract questions

[DieRichORHveALyf]

I've been working in the insurance industry for a few years and was curious about the current contracts being given to new State Farm Agents. I'm really just looking for a break down of their current benefits and commission structure. (ie What is the % on Auto, Fire, Life, Health, Bank, Mutual Funds)

Correct me if I'm wrong: the commission on a policy is based on the annual premium amount.

Does Commercial Fire/ Auto and Workers Comp. have the same percentage as Personal Auto and Fire?

I know they can write Vehicle Loans and Mortgages, do they earn commission on those based on a percentage of the loan?

 

[Hawaii Agent]

Please note that I have not been affiliated with State Farm for about 12 years now but here's what I remember about their contract (note that they may have had contract updates as they are always making changes):

1. Their base commission on auto & fire is 8% and can go up to 11% based on their variable bonus structure.
2. Life and health commissions and commissions on loans are much lower than industry standards; however, they do impact the bonus for both the auto & fire payouts as well as annual bonuses

Sorry, I don't know what the commercial commissions are. If this is a big part of your business or you plan to target this market, check w/ your local State Farm agents to see what their ability to write these lines are. The market for commercial insurance through State Farm in Hawaii is very limited.

The commission structure is probably not the reason you would want to join State Farm. It's more the reputation & strength of the company that drives business to the agents. The company rewards those that sell life & health. You'll need to sell the company since they don't have outside products. If you're able to do those things, State Farm agents tend to be the most successful in Hawaii (on average). Plus if you're taking over a book, that helps you to get a start. I enjoyed my time at State Farm and still enjoy talking with the agents so I am an advocate for those going to State Farm. Just know it takes sales skills and not just selling the lowest price option type of selling. LMK if you have questions

 

[DieRichORHveALyf]

Please note that I have not been affiliated with State Farm for about 12 years now but here's what I remember about their contract (note that they may have had contract updates as they are always making changes):

1. Their base commission on auto & fire is 8% and can go up to 11% based on their variable bonus structure.
2. Life and health commissions and commissions on loans are much lower than industry standards; however, they do impact the bonus for both the auto & fire payouts as well as annual bonuses

Sorry, I don't know what the commercial commissions are. If this is a big part of your business or you plan to target this market, check w/ your local State Farm agents to see what their ability to write these lines are. The market for commercial insurance through State Farm in Hawaii is very limited.

The commission structure is probably not the reason you would want to join State Farm. It's more the reputation & strength of the company that drives business to the agents. The company rewards those that sell life & health. You'll need to sell the company since they don't have outside products. If you're able to do those things, State Farm agents tend to be the most successful in Hawaii (on average). Plus if you're taking over a book, that helps you to get a start. I enjoyed my time at State Farm and still enjoy talking with the agents so I am an advocate for those going to State Farm. Just know it takes sales skills and not just selling the lowest price option type of selling. LMK if you have questions

Hawaii Agent thanks for your reply. I've been doing some reading of these threads and it sounds like the life commission rate is 20%. Does that sound right to you?

Also from what I've read online it sounds like the commercial auto/ fire and WC all fall under the same commission rate as P/C, so 8%, up to 11%.

Maybe someone else might know the commissions on bank products and Mutual Funds.

 

[Hawaii Agent]

I can't recall the life commission rate (I thought it was closer to 30-35%); however, you don't sell life for the life commission. You do it for your scorecard & variable monthly bonuses. State Farm had gotten rid of mutual funds for a while, but I believe they are now getting back into it. Same thing, you're not going to sell mutual funds for their direct commission, you do it to increase your scorecard & variable bonuses. These are the main ways to get your P&C commissions up to the 11%. It's a very complex system which is why no one has a direct answer for these questions. Not even the current agents can easily calculate it

 

[Markthebroker]

Don't forget to look at the big picture. The details of the commissions are important, but so is the big picture.

Where is the personal lines p&c and life market going?
Is State Farm share shrinking or growing?
How happy are the agents?
How many State Farm agents make it?
Which State Farm agents have had their contracts cancelled and why?
How much of the clicky click instayoutwitfacetubetok population will want to buy insurance from a live agent over the next 20 years?
Will there be more tv cartoon characters and clicky click websites competing with you over the next 20 years, or less?