Combo: Captive Agent Who Also Uses Wholesaler

[moneymaker1]

Hi, All:

I am a captive agent (prefer not to say for who but for example, State Farm, Nationwide, Farmers, Allstate), anyway, as you know, captive agents get subsidy from their company for the first couple of years to pay for rent, staff, leads, etc., which is part of the allure. Being independent means you foot the ALL of those costs yourself.

However, as you also probably know, you're pretty much locked out of the re-marketing game and if you take a substantial rate hike you have a high risk of losing your client. The other problem is that for new quotes, when your rates are simply too high, you more than likely don't win the business.

I have been kicking around a thought that if I play my cards right, just may work and help my overall agency retain business. I've been considering hiring another licensed agent to quote/write business for the prospects that I cannot help through a wholesaler. It would be a second stream of income for me and keep clients in my agency.

I have not looked at my contract yet so I am not sure if it forbids me to do that or not. Just wondering if anyone else out there has done this or not and if so, how has it worked out and what advice could you give me?

Thank you in advance.

 

[CaptiveGuy]

You can try Superior Access, they don't directly appoint you and their name appears on the policy. I'd bet that your captive contract excludes you from placing business they can write elsewhere but it will be hard for them track.

SA told me State Farm and Nationwide agents use them all the time. I wish I would have known how easy it was when I was on the way out from my captive. I would have had a nice book already built up.

Only other thing I'll add is that most wholesalers don't have substandard carriers like Progressive that can be helpful for those high risk prospects.

 

[moneymaker1]

Thank you for your reply. I figured other captives used SA and that it was hard to track. I think that's the direction I'm going to go. Thanks again!

 

[djs]

Chances are, your contract forbids you from doing this. The only captive that I know of that was a first right of refusal type of contract was Farmers, but I understand they have changed as well. Nationwide might be, not sure, I don't know any Nationwide agents personally.

That said, I can't tell you how many captives I know that work around this at least somewhat. In my area, its common to see a State Farm agent with an independent agent next door (definitely a relationship there). I also know a few who get their spouse licensed and appointed with various carriers, then write the other business under their spouse.

The way I see it, as long as you are not taking business away from your captive company to place outside, they will only terminate your contract once if they catch you. If you start raiding your own book or start writing business that should go to your captive, you'll get terminated AND hung out for others to see. I think this is why the State Farm agents do it out of a separate office. It keeps them clean.

Dan

 

[Newby]

I would never be taking a salary from someone and placing business elsewhere.
They expect you to sell their brand all the way to the end and that's what they are paying you to do.
I would either do what I'm paid to do or make a clean break and start fresh.
What you're talking about is stealing. Nothing less.
Anytime you start "sneaking around" and hope you don't get caught, you know you are taking the low road.
You have 3 honest choices:
1. Just stay loyal to your captive's products
2. Resign from your captive and then sell what you want
3. Have an honest conversation with your captive upline about business you lose due to price and how you can work together to resolve it.

 

[VolAgent]

If you can't abide by the terms of your contract, you are a lying thief. You deserve whatever your captive does to you once they find out. Additionally, you lost all standing to whine when your captive treats you unfairly now or in the future.

You knew the terms when you agreed to them. They certainly make sure you know you are strictly captive. You can argue you're only sending away business that they won't write. However, you knew that going in, captives have a reputation for being picky in the business they'll write. Every minute you spend selling away is a minute you could have spent prospecting for and writing their target market.

 

[WinoBlues]

One of the reasons I am my own man. I do what I want. If someone else's name is on my card I work for them. I owe them.

Vol and Newby are correct. All in or all out.
- - - - - - - - - - - - - - - - - -

One of the reasons I am my own man. I do what I want. If someone else's name is on my card I work for them. I owe them.

Vol and Newby are correct. All in or all out.

edit: as long as it is OK with the Mrs.

 

[djs]

I would never be taking a salary from someone and placing business elsewhere.
They expect you to sell their brand all the way to the end and that's what they are paying you to do.
I would either do what I'm paid to do or make a clean break and start fresh.
What you're talking about is stealing. Nothing less.
Anytime you start "sneaking around" and hope you don't get caught, you know you are taking the low road.
You have 3 honest choices:
1. Just stay loyal to your captive's products
2. Resign from your captive and then sell what you want
3. Have an honest conversation with your captive upline about business you lose due to price and how you can work together to resolve it.

I doubt he gets paid a salary, he probably gets a commission. I'm also guessing he is referring to business his company won't take (very common in the P&C market) and is just trying to find a home for it, rather than telling the client to pack up and find someone else.

Selling outside your agreement due to price alone will cause a LOT of grief. Even independents in the P&C side run into this problem because they ended up with a first right of refusal agreement with a carrier at some point. Enforcement isn't usually as strict though (if at all).

Dan

 

[VolAgent]

I doubt he gets paid a salary, he probably gets a commission. I'm also guessing he is referring to business his company won't take (very common in the P&C market) and is just trying to find a home for it, rather than telling the client to pack up and find someone else.

Selling outside your agreement due to price alone will cause a LOT of grief. Even independents in the P&C side run into this problem because they ended up with a first right of refusal agreement with a carrier at some point. Enforcement isn't usually as strict though (if at all).

Dan

Then he shouldn't have agreed to the contract. He is selling away, regardless of the reason.

I agree that you should avoid having to send away business you'd like to write as much as possible. The solution is to avoid entering a captive contract, not to break it and hope to avoid getting catch or having the contract enforced against you.

 

[moneymaker1]

Man, IDK why some people are so nasty. I am not a thief. I pay for my leads from my OWN COMMISSION and would ALWAYS ALWAYS ALWAYS try to place prospects with my captive first but do NOT want to lose those that I cannot place with them. I.E., $25,000 of WBU with our company is $427 and makes an ordinarily decent premium way out of the ball park and I HATE losing clients for those reasons so if I can place them somewhere else and keep them in my agency, it makes sense FOR ME.

So to reiterate...I AM NOT A THIEF - MY LEADS ARE PURCHASED WITH THE COMMISSION I EARN.

Really people, there's no need to be so hateful and nasty and call people thieves when they're not. This board is for posting questions and ideas, not for name-calling or making false accusations. So thank you to everyone who responded in an intelligent, non-threatening or name calling manner. To the rest of you, I think you're on the wrong board.