Starting or Purchasing an Agency with AllState

[SFGuy415]

Hello everyone,

I am in the process of becoming an approved candidate with AllState in California. However, I am not sure whether to start a scratch agency or purchase an existing one yet. If I want to purchase an existing book of business, can you please let me know what to look for in the seller's reports in order to determine whether it is a good purchase. Also, how does the negotiation work? Do you negotiate directly with the selling agent or via AllState?

Any information/suggestion you could provide is appreciated.

Best,

 

[xrac]

Hello everyone,

I am in the process of becoming an approved candidate with AllState in California. However, I am not sure whether to start a scratch agency or purchase an existing one yet. If I want to purchase an existing book of business, can you please let me know what to look for in the seller's reports in order to determine whether it is a good purchase. Also, how does the negotiation work? Do you negotiate directly with the selling agent or via AllState?

Any information/suggestion you could provide is appreciated.

Best,

There are 42 posts on this subject in this thread. There are many other threads on this subject on here. If I were you I would read what others are sayings.

Allstate Agency
- - - - - - - - - - - - - - - - - -

Hello everyone,

I am in the process of becoming an approved candidate with AllState in California. However, I am not sure whether to start a scratch agency or purchase an existing one yet. If I want to purchase an existing book of business, can you please let me know what to look for in the seller's reports in order to determine whether it is a good purchase. Also, how does the negotiation work? Do you negotiate directly with the selling agent or via AllState?

Any information/suggestion you could provide is appreciated.

Best,

Here is another thread:

?? Allstate agency opportunity

 

[xrac]

We are the #2 agency in the Northeast Region of Allstate and I can certainly speak on the matter. DO NOT BUY INTO OR EXPAND WITH ALLSTATE AT THIS TIME. To go the scratch route will be suicide (do not let the FSL pitch it any other way) You will make essentially a 10k bonus if you hit 2.5x baseline, 44% commission commission the first 6 months which then ticks down to the standard 10/10 after 3 years (IF YOU ARE HITTING 2.5X BASELINE) You also get a per policy bonus but trust me...trust me...trust me...DO NOT DO IT. Here's the next best part...

Allstate has RFG (resources for growth) which is their current way of evaluating agencies from everything to keeping your contract to a sliding NB/RENEWAL commission scale. That's right...in 2012 your NB commission will floor at (it's rumored) 6% and same w/ renewals. It's currently 10/10. If you max RFG (only 10% of offices will) it will shoot to 11/11. Otherwise they are only slashing. Guess what RFG IS? P&C rentention, P&C growth (policies in force over previous year) LIFE/FINANCIAL production and "ALI." Now what is ALI you ask? AGENCY LOYALTY INDEX. The newest anal raping device from Allstate. Policyholders (selected at random...or so they say) get a 3 page survey from Allstate asking a handful of questions. Only 3 questions apply to your agency (how likely are you to renew, how satisfied are you with your agent and how likely are you to refer your agent) The scale is 1-5...if they don't answer a (5) which is the best...your LOSE. Next best part...insureds are killing us on this survey (afterhours call center speaks broken english, why should i pay my deductible for a hit and run non fault...my agent isn't pulling for me (in that hit and run circumstance) why did my premium go up etc... WE ALL KNOW THE INEVITABLE GRIPS OF INSUREDS and guess what? on that survey these insureds hold OUR OFFICE to these unavoidable common day personal lines service gripes. And allstate is coming down w/ an IRON FIST. We hire telemarketing companies to call every insured at every renewal, we call every insured with a claim, we do everything we can do. But when your company claims service is run by abu in india....your insureds policy increases and our web program says "unable to identify reason for premium increase" and there is no support...that survey is going to hammer you. They are shutting down 30% of agents in 2012 based off this ALI. Scratch office will need minimum of 18k life/afs production (ok shouldn't be a problem) and after that you are looking at 40k+ life production every year just to NOT LOSE POINTS in that category. If you can buy a book that cash flows (2mil or more)...has an unrealistically low loss ratio and the seller will sell for 2x or less....OK MAYBE....MAYBE. But trust me...this company is wicked, ruthless, sinister and you will have 50% of your agency running on un-controllable "what if's" I would pursue other carriers. We have earned phenominal income over the years and we cannot complain for that..but moving forward it's just not what is used to be. We are that TOP agency that the FSL will show your OUR results and pitch how well off you will be after years of growing your book. Run my friend....RUN
- - - - - - - - - - - - - - - - - -
You need to look at the PIF trend over the last 5 years...you must look extremely hard at the loss ratio and ALI. Retention...well obviously. Look at the overall % of AIC, APC, AFCIC, INDEMNITY and other line 10 PIF. Older AIC retains well but your sitting on over priced premium, etc. If the ALI is 70 or below on an existing book RUN. If the loss ratio is over 55 RUN. Interview the EFS's in the market and when that's all done....find the nearest brick wall....bang your head off it and shame on you for even considering Allstate.

Need anything else be said. This is the word from the horse's mouth and only confirms what I have been reading everywhere.

 

[ryeates1]

I agree with above posts. I was a financial services specialist with allstate for over 4 years. lots of agents dissatisfied. If there was a choice between scratch agency and buying an agency, I would look at buying an agency first. then look hard at the books, retention is really important. see how many customers have a financial product, if it is a low percentage, that book hasnt been worked very hard and you can make your financial numbers. it is really really important to make financial numbers or you lose big chunk of bonus.
I am in arkansas and there are a ton of agencies for sale, so now may be good time to low ball an agent and get a good price on a book. You have to know how to cross sell or refer to your financial guy or you are going to have problem. The other problem i see is most allstate agents dont have good support staff person. pay support staff person more than going rate, give her/him performance bonus incentives and you will be miles ahead
just my two cents

 

[SFGuy415]

Thank you all for your replies, especially insurance1822 for your very insightful information. I have a call with the Field Sale Leader in my market tomorrow, so I will make sure to ask about all these important points you mentioned before deciding whether it is worth my time and money to invest in it.

 

[asfan]

They are all cut throat in this biz. Turning up the heat on agents like never before. SF is the same. You either make with Allstate, SF, etc, or you die a horrible, financial death / debt.
Great advise to look hard at the books of an existing agency. What is on paper today, will float away tomorrow when you open your doors.
Never, ever do a scratch agency with Allstate. They will suck the life blood out of you to promote financial services and anything else you can sell. No other carrier is different at this time either.
Until the dust settles between SF, Allstate, Progressive, Geico, Nationwide, etc...get used to writing policies to watch them leave tomorrow for better price. Or another agent with your own company.

 

[Julieslife]

I sold my agency to another agent a few years ago for over 3 times. Best decision I ever made. This company does not respect their agency force. It's all about moving targets and raised bars for no good reason other than their productivity and profits- yours be damned.

I'd rather live in the indy life world where companies want my business and will pay me well to prospect and advise my clients.

For me, the game changed big time around 2002 when the net became the place to do price checks, and the call in/drive in quotes started to die.

 

[xrac]

Here is a resource be sure to read the article on page 40 of the Focus:

http://www.napaausa.org/Upload/EF%20Winter%2010.pdf

Business Opportunities | National Association of Professional Allstate Agents, Inc.

 

[b61mack]

also check this web site [email protected]

 

[xrac]

also check this web site [email protected]

That is not a website it is an email address.