The State Farm opportunity has already passed. It peaked and is now on a decline and will never again be the opportunity that it once was. State Farm is a great company to insure yourself with but a less than desirable business opportunity. Just like every other captive company, they are willing to throw as much mud at the wall as possible.
My opinion: brick and mortar will be dead within 10 years.
This could be true for MANY retail type of businesses. I've had this same thought also. However this means only web designers and people that have a niche online will be able to survive. So I hope its not the case, for I begin soon....and if it is the case well I have 10 years to make as much as I can and re-invent myself towards the decline or open a business that won't be affected by online/tele-sales.
Retail in general will thrive. I remember 10 years back when a lot of people predicted the death of retail and we had the .com explosion.
Of course, everyone was dead wrong and the .com's crashed. When I go clothes shopping I was to see the clothes. If I want a new TV, DVD or phone I want to see them first. Also, what was not taken into consideration is the fun people have physically shopping.
Insurance, however, is not retail. You can't walk into a SF location and compare auto, life and homeowners. Research is done online. This is not to say carriers like SF will go under. They won't. But their business model will have to change as more people shop, compare and buy online.
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For health policies, I completely agree. Outside of helping somebody really understand the differences in policies and guiding them on what to look for when shopping for a policy, health is actually better served online than in the local Blue Cross Store. Okay, this has pretty much happened already.
Life policies tend to have to be sold. Not so much the $250K term life, but higher face amount and permanent policies could be done online, but, people have to be sold these policies, they don't go get them themselves.
For P&C, I get very torn. MOST carriers still want some visual underwriting done. Not all, but it really is a good first line of defense. The cost of client acquisition for the carrier is significantly less with the agent model than the online model. There is nothing to say it can't be done online, and there is a bit of a trend in this direction, I'm just not sure about the 10 year timeline.
If State Farm didn't have offices everywhere, they would lose a lot of their name recognition. Since they pay the agents to not just sell the policy, but to service it and the agent needs staff to do this, they tend to have an office. The reason people go to State Farm / Farmers / Allstate is simply because they have a local agent, not just an 800 number, to call.
With health and life, staff isn't usually a requirement. No office is needed and rarely exists except for the convenience of the agent. With P&C, staff is a requirement if you want to turn a profit, meaning the office has to exist.
Carriers use a local agency force as a benefit over the 800 number carriers. The biggest benefit to the carrier is the marketing that the agents pay for They don't want to give that up.
While I'm not associated with State Farm, I do agree with Bitnis that the State Farm opportunity has come and gone. But then, I feel that way about insurance as a whole. There is still opportunity for those who really want to dive in and make something out of it, but few will succeed out of the many who try.
The State Farm opportunity has already passed. It peaked and is now on a decline and will never again be the opportunity that it once was. State Farm is a great company to insure yourself with but a less than desirable business opportunity. Just like every other captive company, they are willing to throw as much mud at the wall as possible.
I believe you are correct!
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Originally Posted by healthagent
My opinion: brick and mortar will be dead within 10 years.
Healthagent what is your vision of the future in the insurance business. Do you see the computer causing more companies to go direct and eliminate agents?
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Originally Posted by djs
For health policies, I completely agree. Outside of helping somebody really understand the differences in policies and guiding them on what to look for when shopping for a policy, health is actually better served online than in the local Blue Cross Store. Okay, this has pretty much happened already.
Life policies tend to have to be sold. Not so much the $250K term life, but higher face amount and permanent policies could be done online, but, people have to be sold these policies, they don't go get them themselves.
For P&C, I get very torn. MOST carriers still want some visual underwriting done. Not all, but it really is a good first line of defense. The cost of client acquisition for the carrier is significantly less with the agent model than the online model. There is nothing to say it can't be done online, and there is a bit of a trend in this direction, I'm just not sure about the 10 year timeline.
If State Farm didn't have offices everywhere, they would lose a lot of their name recognition. Since they pay the agents to not just sell the policy, but to service it and the agent needs staff to do this, they tend to have an office. The reason people go to State Farm / Farmers / Allstate is simply because they have a local agent, not just an 800 number, to call.
With health and life, staff isn't usually a requirement. No office is needed and rarely exists except for the convenience of the agent. With P&C, staff is a requirement if you want to turn a profit, meaning the office has to exist.
Carriers use a local agency force as a benefit over the 800 number carriers. The biggest benefit to the carrier is the marketing that the agents pay for They don't want to give that up.
While I'm not associated with State Farm, I do agree with Bitnis that the State Farm opportunity has come and gone. But then, I feel that way about insurance as a whole. There is still opportunity for those who really want to dive in and make something out of it, but few will succeed out of the many who try. Dan
What do you think about the future for P&C.
Last edited by xrac : 09-25-2009 at 02:02 PM.
Reason: Posts merged
Based upon what I hear coming out of the TICA's I would not do SF. There are too many variable beyond one's control for my liking. Like if you are not scratch what size book of business you are assigned, where you will be located, and whether you keep the powers that be happy enough to make the grade or not. There is too much money to invest to have other people controlling those variables for my liking. I think starting anywhere and getting 1-3 years under one's belt and then going INDY is more attractive. I think Farm Bureau, American Family, or Nationwide may be as or more attractive as State Farm. I know it didn't use to be that way. SF use to be the premier P&C job.
Hi, I'm a long time reader, first time poster here. I have read all the posts in this thread from start to finish (took quite awhile). I am currently going through the SF process and my next step will be the panel interview. I really appreciate all of the honest feedback that I see here that I know the SF recruiters won't tell anyone.
I have a question that I don't think has been answered yet. It appears that a lot of the agents that have really struggled are those that received the first version of the TICA04 and AA05 and came on in '04-'06. I know that there have been some modifications to the contract since then. Is there anyone out there that is on the newest incarnation of the agreement or who can discuss the differences between the earlier agreement and the current one. I am looking to have a little light shed on how good (or bad) the opportunity is right now? I have no problem with busting my butt to grow my business (what startup business doesn't require that?). However, I would like to know that the deck isn't stacked against me from the beginning.
Additionally, I believe that the contract that I would receive at the end of the TICA period would be whatever contract is in effect at that time. Does anyone know if SF will be changing the contract for 2010 or 2011(which is when i would be coming off my TICA contract)?
I started on June 1, 2008. After I started, they changed the contract so that once you signed your deal (i.e. June 1, 2009) they would give you $12,000. They also kicked up the commission to 11%, which was a 1/2 percent increase. It all sounded good to me at the time. What I should have been thinking is why would they do this?
I did EVERYTHING they asked me to do and they did not offer me the contract. I hope this helps and good luck with your panel interview!
TICA if you had gotten your contract would that have put you into good shape?
[quote=TICA;192897]They gave me a huge book ($2,000,000) and I still didn't make any money. At least I didn't go into debt like some of my peers. My plan was to get my contract and then cut back on my expenses.
Tica,
Thank you for the information. I am wondering though, if my calculations are correct, 11% of a $2,000,000 book of business would have given you $220,000 just off your book of business alone. That doesn't include the commission you would have received from the business you personally produced. What were your expenses like?
On my comp tool worksheet I estimate expenses for the first year at around $170,000 which includes start-up costs. I realize this can fluctuate a little in the real world, however, I even inflated my numbers a little to see where that would put me. I'm not expecting to make anywhere near $200,000 in my third year, however, if my numbers are right it seems like I should at least be able to take a modest paycheck home (around 30-40 thousand) right from the first year and that should grow a little each year.
I know there are some agents who take nothing home and others that are able to take a little home. I'm guessing it really depends on your individual business expenses (i.e., office rent, team member salaries, etc.)?
Excellent post Huck. Some are able to see through tangled words, others just read. I don't think you'll need it, but good luck to you. I wish you much success.
I've recently spoke with a State Farm recruiter. I am planning on trying to pursue the opportunity that State Farm has to offer...
What should I expect from this? Is there anyone that has had experience with this process? Does anyone have any advice regarding anything to do with becoming a State Farm agent such as likely hood of success, are the products competitive enough to sell without having to beg people, etc etc.
Sorry I'm so vague, I'm just kind of looking to find out anything and everything about this before I jump into this career change.
Congrats about your State Farm Opportunity. We're a State Farm Agency and have been around for 16 years. I will say that it can be a really good business. With the opportunity as it exists now, even though you are associated with State Farm and get a great benefit from that, you are also running your own business and will have to work hard and smart to grow your business and be successful. In our area there have been some agents that have been successful and seem to be thriving and some that have been in and out of business within 6 mos to a year. I don't know what the factors are for success except that some people are better at business; better at sales, marketing, running a team, etc. Also, you will have to have adequate financial resources to get your through, etc. Your main costs will be marketing and you have tons of options for that. I would also recommend trying to get an assigned book of business and try not to start scratch (with no policies)
I would recommend your talking to some of the two year agents in your area or perhaps nearby. I think that two years is a good cutoff...If they've made it two years they will likely survive and will be able to tell you the way it "really" is. Unfortunately, there are things that you might not even know to ask at your point and the recruiters want you on board and so might point a rosier picture. I would meet with some of these guys and ask them to be really honest with you....Almost all successful State Farm agents are really good people and will be glad to meet with you and do can to help you. In my discussions with them I would focus on their financial experience...how much money did they have to start how much they really needed, what was their growth like month by month, how did they market themselves and bring in new business? etc. etc.
I havent posted in a while and Tica this is by NO means a shot at you, as I think you're a good poster here and although youve had a very negative experience with StateFarm you still stay positive and are open to other peoples opinions. and others peoples thoughts that maybe for THEM SF might still be a good gig...so here goes.
2mil is a huge book. I'm looking to take a book of 1.5
[COLOR=#191970]In the last 6 months, we averaged 71 apps a month and NEVER a zero in any category:[/COLOR]
[/COLOR]However with numbers like that in the market I'm going to (which i wont disclose here just in case) I would expect to not get my contract either. I think 50 autos is the minimum I can do on a monthly basis followed by a similar downlslope of other products 25fire 15life etc...If I plan to stay above ground and expect to get my contract. I plan on trying to do almost a 100 a month in auto personally.
Could you have done more? Or is there no one in Michigan that does those type of numbers. Again this is'nt a shot as I dont know what town your in or what numbers is even possible.
You said your numbers were strong for your afo but I can see how they werent POWERFUL enough for some ass afc or afe seeing that there's a tica that doesnt have his contract that's working a 2mil book wouldnt love to get their hands on.
$45,000 in taxes! Tica, you have me a bit worried on that. Is your state insanely high on taxes? I'm wondering, did you take all the business deductions available to you? I'm not calling your business savy into question, however, with a whopper of a number like that I just want to make sure that I'm not missing something here. I would like to avoid any surprises come tax day.
I'm not exactly certain what taxes you included in there, however, I am assuming them to be the usual - Payroll Taxes (i.e., FICA, Unemployment Insurance, and Workers Compensation Insurance), and self employment taxes. My estimate of taxes on my payroll (where my payroll is very similar to yours by the way) is approximately $8,500. My estimate on self-employment taxes on an income of about $55,000 (using the "top 100" production numbers that my market makes you put into your plan) is just a bit over $9,000. Many if not all of the other expenditures in my plan should be deductions as business expenses. Now you have local, state, and federal income taxes on top of that, however, just going from my own numbers it doesn't seem that those taxes should cost over $27,000 on a $55,000 salary (which is where it would need to be to get me up to around $45,000). Some commercial leases may require you to pay a part of the building owners taxes. Are you including something like that in your figures?
Please let me know if I am missing something glaring here. Did you have a professional accountant handle your taxes? If not you might want to just double check with one. You could always file an amended tax return and maybe get some of that money back.
Re: Becoming a State Farm Agent
They don't want to give that up.
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