Purchasing Existing Book of Business with Allstate

[xrac]

Sure there is, plenty of people come along and read this stuff years after it's posted, especially on a hot item like this.

I think the scratch agent contract is great, but there is also something easier about taking an existing agency with existing CSRs and letting the book take care of itself and keep generating revenue while a new agency owner gets busy marketing and helping it grow quickly. I think you wildly overestimate the potential downside on purchasing an Allstate book at 2x renewals.



That's an interesting tone. I spent nearly a year managing an Allstate office and nearly purchased a $3mm book out west, do you believe that your most likely lengthier experience at SF makes you more qualified to talk about Allstate than my experience actually working as a de facto agency principal? I suppose that's why you used the words "probably more qualified"

Just the same, the Allstate Agency program does help agents get started and there are literally hundreds of Allstate agents if not thousands, that succeeded in the insurance industry because of the training, programs, and support that Allstate provides that most other ways of getting into the business simply do not afford.

How long has it been since you were with Allstate?

 

[Josh]

How long has it been since you were with Allstate?

Probably 6 or 7 years ago. Last time I talked to an Allstate agent was probably 2 months ago. There was a guy who had recently bought his agency about a year before I started and he's been struggling from day one and they still haven't taken his book back. Allstate is very patient as long as the agent/agency is trying to make it happen.

 

[Insurance-Guy]

Probably 6 or 7 years ago. Last time I talked to an Allstate agent was probably 2 months ago. There was a guy who had recently bought his agency about a year before I started and he's been struggling from day one and they still haven't taken his book back. Allstate is very patient as long as the agent/agency is trying to make it happen.

I am glad that you spoke up on this. Now I am a Allstate IA but there are several EA Allstate agencies that I know have not come close to hitting the numbers for years and the books haven't been taken back. IF they take the book they are finding a buyer or buying the book back... I personally wouldn't want to go the EA route but that isn't to say that it is a bad deal. The new comp from what I have heard from EA agents is actually going to reward those who produce and it can actually be better. So depending on the agent it could be good or bad.

 

[Bob Klee]

Medi,
I agree with most of what you are saying here
My background, I've stated two Allstate agencies from scratch & sold them both, most recently in Oct. '06. But I now have 2 good friends working for me that were both very successful Agency owners. One just sold his BOB as of March 1 this year. Over a $4 million BOB he built in just 6 years.

Agencies selling in TN are going for right at 3x annual commission with 2 times the line 19 auto.

Biggest hurdle for a new agency owner regardless if he's starting scratch or buying an agency is getting their Series 6 & 63 securities license. Then either selling the financial products themselves or partnering with an Allstate Financial Specialist.

Allstate has both P&C goals & Financial Products goals one must meet annually or there are some additional expenses.

It is not easy but IMO, very rewarding. BIG advantage over SF is that you own the financial interest in your BOB & can sell it. Allstate has a built in, but not guaranteed on the newest contract, that they will take your BOB back at 1.5 x annual commission paid out over 12 months.

Another advantage over the SFarm guys is as long as the client stays in a state you are licensed in, they can change the Name of the agent on their policy, but the original selling agent keeps the commission!! That is HUGE IMO. SF client can go across the street & request that agent & the old agent loses the commission.

Much more but don't feel like writing a term paper

 

[Insurance-Guy]

Another advantage over the SFarm guys is as long as the client stays in a state you are licensed in, they can change the Name of the agent on their policy, but the original selling agent keeps the commission!! That is HUGE IMO. SF client can go across the street & request that agent & the old agent loses the commission.

Much more but don't feel like writing a term paper

Bob this may depend where you are located at or things may have changed. I know for sure In MD the requested agent gets the full cxm. So when I do a AOR on a EA agents policy or another IA I get the cxm. Been this way for years here.

 

[Bob Klee]

InsuranceMan1,

"So when I do a AOR on a EA agents policy or another IA I get the cxm"
EA = Allstate Exclusive Agent?

Allstate does not do AOR's like in the IA world, at least not in the 5 state region I was in here in TN. The client can request an agent & Allstate will change the name on the policy & bills. But unless the agent signs off on the Commission, it will stay with him. [this was done back in the booth/employee agent days]

Many Allstate agents market for Renter's policies. The reason is that "property captures property." Thus my renter can move from Nashville to Memphis & buy a home by taking out a homeowners policy with the local Allstate agent. As long as the renter's policy had not lapsed over 90?120? days, the agent that wrote the Homeowners will get the new business commission, but all the renewals will go to me.

In some states in rural areas there are Allstate IA's. Maybe the rules are different for them? I do not know. But for the captive agents, I have not heard that rule has changed. I guess it might be different in a few states like NY for instance? I'll check on Monday when my Sls. Mgr. comes in. He was an Allstate agent until Mar. 1 this year. If different, I will post here.

 

[Sales71]

In term of premium it sounds good. 2 mil at10% comm is 200k + other policies the agent might have. The market is soft for agencies at this time they use to sell for 2.5-3.0 of renewals comm now ur lucky to get 1.5-2.0. I think the 308 guaranteed ur talking about is the TPP payments. 2 mil in any company is a very good premium to work with.

 

[IMO101]

IM0101, dude, use a little bit of common sense man, my God, we all know it is a two million in premium not commission.....

realize he is NEW and not entirely sure what he is saying or the words he is using.....

*** people with no common sense annoy the hell outta me

Thanks for that, very constructive.

 

[Guest]

Thanks for that, very constructive.

anytime!!!!

 

[togatown]

The Allstate agent down the street from me bought his last book fall at a price of $ 600k for 4 million in premium. I am in a New England state so not sure if it varies from different parts of the country.
Lots of scuttlebutt about Allstate wanting agencies of that size or larger and pressuring smaller ones to sell out.