Farmers, AmFam or Nationwide ... with a Twist.

[wfs]

I would work under a broker, preferably an Indy broker so that you can learn each of the carriers, etc... since Indy is the end-game, may as well start working in an indy business.

If you had no sales experience, I'd say perhaps Captive is fine to start, but you will maximize your potential by working as close to what you will want to mimic in the future - that is, an indy shop.

I would not, however, become a Captive agent for the "training experience". Captive is fine if you are going to invest 100% of your time, money and efforts. But to enter captive when your goal is being indy doesn't make much sense IMHO.

To summarize (in order of preference):
1. Work for an indy agent
2. Work for a captive agent
3. Work at Wal-Mart (instead of opening up Captive only to switch to Indy. Will COST YOU TOO MUCH $$$)

 

[CarShowGuy]

Thank you WFS for your reply and advise. I'll definitely take a look at the options again. I went to the Chamber event, but the Indy owner was not there tonight. Maybe I'll take him to lunch and ask him some questions.

If anyone else has any input, I'd love to hear your comments / thoughts also.

 

[wfs]

Thank you WFS for your reply and advise. I'll definitely take a look at the options again. I went to the Chamber event, but the Indy owner was not there tonight. Maybe I'll take him to lunch and ask him some questions.

If anyone else has any input, I'd love to hear your comments / thoughts also.

Good luck. I shouldn't be hard to get something going with an indy or captive agency. AND you will most likely get a base salary + commissions.

BUT on the P&C side, I would expect to have to produce about $20,000 of premium monthly.

 

[CarShowGuy]

Thanks WFS but, as you've been in the industry longer than me, and since I cannot even begin to answer the question, I must ask ... Is that amount ($20,000/month in premiums) doable?

The minimum production required by the captive companies are roughly 40 P&C policies per QUARTER and 2 Life policies per MONTH. Is that also doable?

I know, I know ... with hard work and yadda, yadda yadda ... ANYTHING is doable, but being realistic, are those requirements doable for a newbie who can sell but doesn't know insurance??

 

[shawnmwalker]

WFS,

If you don't mind I will take a crack at this. Car show guy, let me know if this is doable and you can get with me on these numbers.


Each house hold is worth how much in Written Prem? lets say $2,000.

Can you write 10 house holds a month? I think so. That is one every other working day. In some states a households WP is more like $3,000. That is 6.6 households a month. Throw a few Commercial policies in there each month and a life policy or two and you are gold.

WFS, i think has a producer right now struggling, it will be interesting to see how he answers. Is it possible yes, absolutely. But you have to work.

 

[wfs]

Thanks WFS but, as you've been in the industry longer than me, and since I cannot even begin to answer the question, I must ask ... Is that amount ($20,000/month in premiums) doable?

The minimum production required by the captive companies are roughly 40 P&C policies per QUARTER and 2 Life policies per MONTH. Is that also doable?

I know, I know ... with hard work and yadda, yadda yadda ... ANYTHING is doable, but being realistic, are those requirements doable for a newbie who can sell but doesn't know insurance??

$20,000/month in P&C would be my expectation for a salaried producer working for me. I don't think in terms of "number of apps", as we get paid on premium, not per app. If you went to work for someone, their expectations may certainly be different than mine.

But to directly answer your question, 40 P&C policies per quarter and 2 Life policies per month is extremely fair. My producers average between 40-60 applications each month, with an average of $18,000 - $25,000 of P&C per month and 5 life applications each. And we are writing decent life premium. It's not about app count, it's about premium.

The key to writing good business is to work the referral market. Make a sale, make the customer happy, ask for referrals. Every time. In 3 months, you will have more warm leads than you know what to do with. Try not to depend too much on the internet lead game. That business is usually not the best business - price shoppers, high lapse/can, state minimum, etc...

----------

WFS,

If you don't mind I will take a crack at this. Car show guy, let me know if this is doable and you can get with me on these numbers.


Each house hold is worth how much in Written Prem? lets say $2,000.

Can you write 10 house holds a month? I think so. That is one every other working day. In some states a households WP is more like $3,000. That is 6.6 households a month. Throw a few Commercial policies in there each month and a life policy or two and you are gold.

WFS, i think has a producer right now struggling, it will be interesting to see how he answers. Is it possible yes, absolutely. But you have to work.

If those premiums are in your market, then it is very doable. Our average auto premium is close to $700 and our average home is about $600. Since each HH has an average of 2 cars, it really doesn't take much for $20,000 monthly. My salaried producers avg approx. $20,000 per month. Some months higher, some lower, but still around $20K on a rolling 3 month average. And and avg of 5 life policies each producer.

As a newby in the business, if you can learn how to produce $20K under someone else, you will likely be very successful as your own indy agent. Success starts at the top and drips down.

 

[roxiepup]

If you are pretty certain you want to ultimately go independent, I'd probably suggest NOT becoming an "agency owner" with Farmers or the others. There is too much commitment and terms at stake if you wish to leave (which you should be able to make that decision based on whenever you feel ready vs when it works out best within your contract). Do not ever count on NOT paying back ALL the "subsidy" (traps MANY agents as they then can't afford to leave!). There are also various non competes as a captive agency owner and you can not "buy back" your clients, which personally, I think makes more sense to do vs waiting until your non compete expires.

Your clients / friends / family would probably appreciate that as well vs having to stick with an agent they didn't sign up to work with until you non compete expires.

That said, I'd suggest either becoming a "producer" focused on sales only, OR probably even better yet in my opinion would be a "customer service rep" so you can really learn the business (many CSRs are licensed and DO sell, and cross sell policies). I personally feel a CSR position would give you a more comprehensive education into all the in and outs. Then, take the CIC (certified insurance counselor) program through the national alliance. As a CSR, you will learn the complexities and nuances, but you will get paid a salary (which you never "pay back") and likely have the opportunity to sell polices and bring on new clients if you wish from your own Refferal markets, and make some commission on top. You won't have the pressure to sell sell, Sell.....and can better focus on learning the in and outs of what running an agency is all about, while earning a salary, a little extra commissions, and likely not have all the non competes etc so you get locked out of writing business for the time once you feel ready to make the move to independent agency owner.

I'd look at these producer AND CSR opportunities both with an independent agency (best if you are going that route anyway), or even check out State Farm (have you looked at them?). They do use their own specific systems but from what I know, they have good, thorough training. Just my 2 cents. Hope it helps. I know this is a big decision for you.

 

[CarShowGuy]

Thank you one and all for your replies and comments. I have read each comment but have not replied until now as I wanted to see if anyone else was going to post comments in the interim.

I'll take all your advise to heart. My biggest concern, which has been addressed, was: for a new person who has never worked in Insurance, I didn't know how possible the requirements/goals were that the captive companies were requesting form the newbies. I also was trying to figure out if you, the seasoned agents, were in my situation, which option you would choose from the three that are being offered to me.

Thank you again for your replies and input. I'll be reaching out to my Indy broker today and should have a final answer as to my decision by the end of the week.

Best and continues success to all of you.

 

[roxiepup]

Thank you one and all for your replies and comments. I have read each comment but have not replied until now as I wanted to see if anyone else was going to post comments in the interim. I'll take all your advise to heart. My biggest concern, which has been addressed, was: for a new person who has never worked in Insurance, I didn't know how possible the requirements/goals were that the captive companies were requesting form the newbies. I also was trying to figure out if you, the seasoned agents, were in my situation, which option you would choose from the three that are being offered to me. Thank you again for your replies and input. I'll be reaching out to my Indy broker today and should have a final answer as to my decision by the end of the week. Best and continues success to all of you.

The possibility of making the quotas, and the level of difficulty depend on a combo of things:

1. How competitive is the carrier of interest in your area? Find out what the average close ratios are. It also depends on how the policies are sold by each agent. I was captive for well over 5 years. Was my captive company most competitive? Most of the time not. I had to use consultative sales and sell on value most of the time. Because of this, I had higher close ratios than most. But, it also take more TIME to sell this way, and sometimes more money as well depending on how you are getting your leads. With Indy, you will win more times as Shawn said, with higher close ratios, based on what most people consider "apples to apples" quotes...even though in reality no two policies are the same and each has different legal language written within, along with different coverages and exclusions hidden in the policies that are not apparent on the declarations pages.

2. What kind of a network and Refferal market do you have currently? How easy will it be to transition this to insurance leads and new insurance clients?

3. How much money are you willing to spend building a pipeline of leads? How much money are you willing to hire a customer service person to handle things such as policy issue, underwriting follow up, billing issues and taking payments, and so on, so you have more time to focus on sales? This isn't as important now for the service, but it will be in about 1 year. You also need to hire someone who is very good and knows what they are doing, vs someone who will frustrate clients - it will influence your agency's refferals dramatically.

4. How hungry are you to build this business? How passionate are you about insurance and helping people? This WILL come through as you interact with your prospects and clients and influence your sales and referrals. Especially as captive, people chose YOU....not necessarily the "best deal" or "rate". I had tremendous retention because of this, as loyalty and trust was earned.

5. Less of a factor but still a factor: how robust the company's agency management and policy issue systems are. They can be a real pain if they are not efficient and you end up spending a lot of time in minutia (trouble shooting with IT and so on). Some companies have better / more efficient systems than others. It may be hard for you to pull out this information though being "out of" the network so to speak.....you hear more of it with your insurance buddies once you are part of the "club" and you all are talking shop (I often networked and brainstormed with captives from competing carriers as well as Indy guys).


Again, going captive, there are probably also, less obvious things to consider than just making the quotas....you should really try to understand the contract and the position it puts you in (or binds you in), and at what specific time frame, because it sounds like you are already interested in leaving at some point in the future. Last I knew on the farmers contract, which seems to keep changing (and I'm really not certain on the most current one) the quotas you must make after about a 4 month "qualification" (first "test" round of quotas basically) is for another 2 years....but THEN you have at least two more years after THAT to keep building your business (more quotas) in order to see if you will qualify writing off any or part of the "subsidy" (aka loans that you will need to pay back). The quotas to hit these last 3-4 years of numbers while servicing your existing books and keeping the old clients in force IS difficult. I've known few to be successful with it. But, it also depends in rates in your area. No matter how great your service is, if rates are out of alignment (which you can't control or do anything to help your client with as you can in Indy), you WILL lose some clients - and it will be the right thing for those clients as well....in fact, I helped a few of my closets shop and leave my agency as the rate was just sooo out of kilter and some families just can't afford it (young children etc). There will be various "non competes" when you leave too. That needs to be clearly understood......I guess my thought process is why build your book with your best clients (friends, family, and primary center of influence) to only lock yourself out from them later. Why not become a customer service rep and REALLY leane the in and outs, screw up here and there, etc, with someone else's clients vs your own- while still earning a living (that you don't need to "pay back"!) and learn, and not being under any non compete or other future limiting contracts when you are ready to take the plunge on your own?? You may find you feel ready to open your own independent agency sooner than you think.
Btw the most successful captive agency owner I knew/know fresh out of the gate started as a CSR for the district office. She was able to grow quickly as all the other policy issue, billing, underwriting, and other nuances were already WELL understood by her. She was able to better focus on the sales, and her prospects new she wasn't a "newbie" which helps some friends and family (and your network) feel more confident and secure in giving you a chance.

Just some more things to potentially consider. Hope it helps.

 

[RicFlairII]

I would for sure rule out that American Family deal. If I read you right
and there is no renewals, that is the worst deal in the industry.

Of the other two, they look about the same, in that neither of them
look that good, either.

I would keep looking and try and find a local independent that you
could work under. That would seem to be the best route.

And keep in mind, those quotas that they have laid out are just for
now. They can raise them at any time.

When I started at Allstate, we had to do approx. 2 life a month. It
constantly went up, and when I left twenty-plus years later, it was
based on dollar premium and was the equivalent of probably 15 or
more small life policies a month.

And when you are in an office doing P and C, it is hard to do a lot of
life.