Here is a letter from Agent Matthew R, I'm witholding some information identifying him for his own protection. I will gladly include contact information if he requests to me to. His letter is noted in blue, my comments are in red. I greatly appreciate input like this and I encourage anybody out there that has anything to say on this subject to write in!

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I am a Farmers agent in (witheld), and I have to say I respectfully disagree with most of what you are saying.

Maybe it is different in here in (witheld), but I am always encouraged to sell the glass buy back deductible.

As far as higher deductibles; why on earth would you want $500 when you can save a ton of money on $750?  If you submit small claims you are going to increase your rates anyway, so you are better off as a consumer with higher deductible…..in most cases.  If I had a new expensive car, I would probably want lower deductibles, but for the average Mini-Van driving family a higher deductible makes since.

Response: When you refer to saving a ton of money from the $500 to $750 deductible.  That refers to saving money off of Farmers $500 deducible, not off of what a consumer pays for a $500 deductible with a competitive insurance carrier.  I’m sure you’ve heard of and are sick of the “Apples to Apples” comparison.  Farmers created the $750 and the $1250 deducts so that you cant compare their rate structure with that of other companies to make their product easier to sell and to inch the deductible upwards to discourage the claim.  Another problem that I personally have is the company that finances my car, requires that I have a $500 deductible.  When I was an agent with Farmers, I had the Auto-Home-Life and Affinity discounts but with the $500 deductible my rate was far from competitive.

The target market that you describe is virtually every insurance companies target market.  Companies are in business to make money, and insurance companies make more money when there are fewer claims submitted.  That is business 101, that target market is the most profitable for insurance companies, so why would they not go after it?  Do you think we should give great rates to someone with a DUI or a bunch of tickets, or an at fault accident?  Those people are high risk, so they should pay more.

Response: I think you might be a little confused as to what a “Target Market” is.  High Risk or Assigned Risk people are in fact a Target Market and they do pay more than the average “Preferred Risk” client. Preferred Risk is another Target Market, the term Target Market refers to they type of client a company has an appetite to write business for. In your example of a person with DUI, accidents, tickets, etc.. The amount they pay with Farmers as opposed to another company that specifically targets that type of client are vastly different.  An 18 year old male would pay in excess of $1200 per month with Farmers and $400 a month with a company that targets that type of driver.  That is the difference between what type of risk appetite a company has. A Target Market is a group of potential clients that a specific insurance carrier focuses on writing the business of.  The board of directors, CEO or whoever is in charge of determining what type of client their company would like to carry as a risk.  Then the actuaries of the company determine the number of claims or loss ratio the company might have on that type of client and come up with a corresponding rate with a margin of profit built in. Some companies focus on DUI’s, Infinity is one for instance.  They’ll write a person with a DUI all day long, but they don’t like other things like accidents and speeding tickets.  They don’t do well on “Preferred Risks”, which by the way is Farmers Target Market. The point i was trying to make on that is Farmers Target Market is a very narrow range of potential clients. This is specifically bad for your situation because Farmers has the option of changing their Target Market at any time which is bad because you have a book of business that specificaly containes a certain type of client. A company like Farmers Insurance with an appetite for Preferred Risks, certainly would not like to write people with DUI’s, Tickets, AT-Fault and Not – At Fault Accidents (you left that one out unless you disagree that you can have as many comp claims as you like to get into preferred rating brackets in Farmers).   I disagree that the sole purpose of an insurance company is to “Make Money”, the real purpose of an Insurance company is to spread the risk of loss to multiple people.  Profit is a byproduct of being a company owned by shareholders Mutual type Insurance Companies are not as concerned with profit. By design there has to be at least a break even expectation on overall profit.  Insurance companies are forbidden by the Departments of Insurance in every state from making an excessive profit. Farmers recently got in hot water over this in California and were ordered to reduce premium because the were making a ridiculously high profit. See this link for the reference.

I have some friends who are independent agents and have been for years, and I agree that it is beneficial to have the ability to place business with multiple companies.  If someone walks in your door, chances are good that you can put them with a good company.  That doesn’t mean that Farmers sucks…Farmers is good at writing certain target markets, and I live in an area where we have a bunch of those.  You suggest that there are only 1 in 50 people who meet the target market you suggest, but you can’t back that up with facts.  I would say that it is closer to 1 in 20, but I can’t back that up either, so it is a mute point, but you shouldn’t pass something off as fact when there is no basis for it.  You should say something like “in my experience I feel that there is only such and such…”  Not a big deal, but I wanted to mention that.

Response: The ratio isnt stated as fact it is stated as an opinion.  My entire story is stated as opinion based on my experience, the fact that I represent here is that I purchased thousands and thousands of leads in the form of direct internet leads, Take The Leads from Farmers and many other sources.  I tracked the progress among all of them and came up with ratios based on that. The most important thing you do as an agency owner is maintain accurate tracking of what it costs for you to get a client.  What I mean by cost per client is, how much money I need to spend to get one new client.  Anybody is welcome to dispute or compare your individual experience with my figures as you have done in your letter.  That said, the 1 in 50 ratio is to get an “Ideal Person” by Farmers Standards.  What I mean here is a person that perfectly fits the Farmers Mold of a Targeted Client.  that is someone who has a FACET score of A,B,C.  Owns a home, 2 cars, needs an umbrella, has children and wants to get Life insurance on the whole fam damily. If I were to hazard a guess at what a Writable Client would be, you are correct in that I can probably write insurance in at least one line for 1 out of 20 people I talk to while a Farmers Agent.  Now how does that help me when I’m trying to work with Centers of Influence?  Is a mortgage broker going to try me out on 19 different people and I come back with a horrible rate on all of them waiting on that 20th person that fits the mold?  No they are not, they’ll give you a shot, maybe you can explain it off as bad credit or something and they might give you one more try.  But they are not going to waste their time forwarding referrals to you over and over that you cant do anything with.  As a Farmers Agent, I had to put much more effort into getting that one client I could write.  Lots of follow up, handholding and selling of higher deductibles and premium to make them feel better about paying more than they should.  An Independent agent has far more opportunity to accommodate a wider range per people.  Because our Target Market as an Independent Agency is much more broad.  What if I could confidently tell you that I can write 1 in 4 to 1 in 5 people that I talk to that are a purchased lead?  I can write 95% or 20:1 ratio of people that are referred to me from another customer or contact?  That means that I have to put in a great deal less effort to obtain a client.  My cost per client is perhaps $.5-5.00 instead of $40-200. You are correct, for this reason Farmers doesnt suck, it means they suck to be a Farmers Agent. There are other reasons for which Farmers sucks and those are noted by those who hold the standards of service and claims for all insurance companies. Companies like JD Power and Consumer Reports. They conduct surveys with people that use the products and services and offer their experience. The sum of all the surveys are tallied and they companies that rate best and worst are ranked. Farmers Consistently ranks low in all favorable catergories. 

Whether you start out as an independent or a captive agent you still are going to have a struggle for a few years.  The benefits of being captive with farmers are it costs you less money.  You don’t have the cost of a management system; you don’t have the cost of learning multiple companies systems, or keeping them up.  You only have to deal with one company, so you can learn the ends and outs of them easily.  I think Farmers training program leaves a lot to be desired, but it does give you the basics.  Either way you have to build up your book of business in those first few years.  I suck and haven’t done a good job; I barely make my numbers every quarter, but I am still here, because I do a good job of keeping my current clients, so in a few years I will be making more than I could of in my previous profession.  It sucks that it takes time and money, but that is how every business is.

Response: I completely agree that there is a learning curve and a struggle in the beginning.   A few years of struggle isnt always true.  Are you aware of the programs that other Captive modeled companies offer?  Country pays you a salary of close to $50k while you establish a new book.  MetLife gives a 70% commission structure on new business until you decide to switch it to a renewal type structure, Met also gives you $500 a month towards an office.  State Farm hands you an established book, a staff and an office.  That’s just picking three that I know about.  I also plan to publish competing agent packages on this site for other companies so you can compare the Farmers Program to it.  Mr Robertson, I’m establishing this website to explain to you that you need to educate yourself on what is going on outside of Farmers.  You do not suck as an agent it is Farmers that is failing you. As a Farmers agent, I made Toppers Club and also ranked highest in sales of Life and Auto of the whole district for a month while still in the Reserve Agent program. I also was the only agent in the district to ever get 2 Blue Vases. I was a great Farmers Agent and guess what, I still lost money. If you are a below average success story with Farmers, that means you have 140% of what it takes to be an extremely successful Independent agent.  You don’t have to wait 3-5 years to break even like Farmers tells you.  You can be there in 12 months.  I’m on track to hit that number right now.  Farmers purposely structures it so you’re stuck with them for 5 years, reference in point here is subsidy payback program.  They stack you up to your eyebrows in debt to discourage you from leaving Farmers.  No other insurance company does this to their agents.  If they hand them money, the agent doesn’t have to pay it back.  The Farmers Captive Agent program is a joke in the rest of the industry.  In fact it is so bad that its next to impossible for you as a Farmers Agent to just up and go Independent.  Companies will not even talk to you until you’ve been a working Independent Agent for 12-24 months.  I didn’t start my own agency for this reason but I found that it keeps my startup expenses low and I can work out of my home until I make enough to start up my own office.  Will I start my own agency again?  Maybe so, maybe no.  I’m pretty happy with my arrangement as a producer agent and perhaps one day will be a part owner of the agency if I help it grow.  I’m not worried about that part though.  As long as I have ownership of my client book, I can go anywhere I want if I need to.  Farmers does not give you ownership of anything but debt.

If I had had as much money as you had to start an insurance business I may have gone independent too, but who knows.  If I had spent the kind of money you did on buying leads and such, I would have double the policies I have. 

Response: I didn’t spend all the money on getting new clients.  I spent much of it on requirements Farmers put on me.  FYI, it takes upwards of $100,000 to establish an independent insurance agency on your own.  That still doesn’t guarantee success.  Its all up to the individual.  But given all facts being the same, an equal person going down either road, the Independent is going to be much more successful and will have ownership of their book.  Here is a short estimation of what I spent money on:

Rent while at District office: $500/month for 12 months = $6,0000
Contact manager: $1200/month for 15 months = $18,000
Leads: $1200/month for 18 months = $21,600
Rent at leased office in career program including utilities: $825/month x 6 months = $4950
Phone bills: $180/month for 18 months = $3240
2 Desktop and 1 laptop computers = $2800

Wow, that comes to $53,350!!!

Even if I’m wrong on some of the counts, subtract some of the figures off.. what do you pay for rent and utilities per month?  What do you pay in leads?  Do you have staff like you are supposed to by Farmers Rules?  So in net, I earned a few thousand in commission while also racking up debt in the form of Subsidy.  I paid the rest of the money out of my pocket and what do I now own from that farmers endeavor?  Well, I still got my computers.  Farmers gave me $3600 for the clients I wrote which was happily subtracted and issued to me in the form of a bill for $10,600 called subsidy payback.   I challenge anyone to dispute the expenses I have listed above as outlandish and excessive for someone who were to try and build a successful Insurance Agency.  If anything, I didn’t spend enough!

I am lucky because I have a great DM; he is helpful and takes care of us.  There are plenty of new agents that come through and fail, but that is how it is in every business. 
Response: I’m curious how he talks about those other agents.  Does he ever have anything good to say about the job they did or does he run their name through the mud? 

Bob Ratkovich the DM in Arizona had not one good thing to say about anybody that was an ex agent.

You mention that agents in TX I think was can’t sell fire policies….well that is a blessing in disguise, because they can then go out and get appointed with independent companies and sell through them until Farmers starts writing it again.  That is where Farmers in superior to other captive companies…it Farmers won’t write it, you can go outside of Farmers.

Response: Take a look at the United Farmers Agents Association website on that.  Its not as good as you think. There are very few things that fall outside of what Farmers will write. Farmers will write it, but for a rate that is so high, only someone that hated money would pay it. Also its not always just as easy to run out and just get an appointment with an independent company.  Especially if something catastrophic were to happen, the reps would be running all over the state trying to talk to Farmers Agents and you wouldnt have a chance of being signed up before your clients all left you.  You do have a quota with many companies and you will be able to get one or two at the most if this were the case and if they would even take you as an agent.  After Farmers decides to write Fire again, guess what you have to do or you lose your contract?  Bring every one of those clients back to Farmers.  At that point, its likely you will lose the appointment you had with the independent company and many of the clients wont switch.  Farmers is not superior to other captive companies.  MetLife also offers you the services of their General Agency which is its own in house independent agency.  You can pass leads off to them, they write it and you get a commission split.  It’s a service that is already in place.  Like I mentioned before, it is very important to get your education from people other than your DM.  Its not a personal attack on you, I know how Farmers works and I was in your same shoes before I educated myself.

As far as life insurance goes, I can’t really disagree with you – We don’t make crap off of it, but we are forced to sell the crap out of it.   It defiantly bothers me, but there is no perfect job/business out there, so this is just one of those things that I learn to live with.
Response: Its their bread and butter. They push life insurance sales down your through 5 times as often as they even mention Auto or Home insurance. Since ive gone Independent, I've spoken about life insurance one time and that was only referring back to the old days when i was forced to write it. As for there is no perfect job, I agree with you on this one bro.  I worked in IT for 12 years, made lots of money at it and was never happy.  You are completely correct in that nothing is perfect.  But it doesn’t hurt to make things a little easier on yourself and to ensure that in your future you have viable options in case something happens.  There was a rumor recently that Zurich is thinking of taking Farmers into an Agentless model.  Think about the implications if such a thing were true.  You as an agent have no ownership of your book.  You are essentially left with starting over again.

I am sorry that you had a bad experience with Farmers; I have had a similar path as you, but I am still happy with where I am at.  I would be in a similar position or worse with other companies, so I figure I am fine where I am at.  I have found the opposite is true when dealing with Real Estate and Mortgage Brokers – Farmers has a good name, but it is true if someone has a low FACET score then we are not that competitive.  That doesn’t give us a bad rep; it just makes people aware that they might need to look elsewhere to place credit challenged people.

Bottom line is there are problems with what ever place you choose to work – you can make the most of them, or move on, but if Farmers were truly as bad as you describe then no one would be a Farmers agent.

Response: Many of the problems I had were not specific to me or my state though.  It definitely wouldn’t hurt you to find out the truth and think about your options.  Start with the following:

What do I keep if I terminate or lose my contract?  How much do I walk away with?  Do not let the DM answer this one for you, he will hide facts.

What if Farmers goes Agentless?  Look at the support line that they put in place recently.  They are setting up a model right now where the agent is not needed for servicing policies.  They say its to make things easier on you but you have to be prepared for worst case scenarios at all times.

How much better could you be doing if you could write 5x as many clients as you do now?  If you made 20-30% more commission?  If you owned your book of business?

How many times have they changed things on you without saying a word about it?  Look at the FACET score change in 10/05.  They only vaguely explained it.  If you know all about it, please let me know what was said so I can compare the things that I personally came to conclusions on.  Look at the implementation of replacement cost calculations on homes back in 3/05 that raised all rates secretly on new home policies.

I like your website, and please don’t think I am trying to bag on you.  I simply disagree with your points….doesn’t mean you are right or wrong, just that 1 person disagrees, and I didn’t type any of this out of anger, nor did I mean anything to be disrespectful.

Response: Matthew, I didn’t take it in any way like that.  I am a completely reasonable person and I am willing to hear opposing views on any opinion I have.  I respect the fact that you feel confident in your standing with Farmers and you feel they have been honest and upfront.  I am here to educate Farmers Agents and potential Farmers Agents about what they do not tell you.  They purposely hire on agents that have no experience in Insurance for a specific reason.  They do now want the real truth to enter their Districts and cause controversy.  The Career Agent Program is a scam and I want Farmers to change their business practices because they are unfair.  I want DM’s to be more reasonable and not trash talk exiting agents, and I’m not even referring to myself because I don’t know what was said about me because I was gone!  I’m talking about what he said after other agents left when I was there. 

Good luck to you!!

Matthew R

You as well, keep me posted on your progress. It honestly doesnt hurt my feelings if someone is actually successful as a Farmers Agent. I still have friends that are and I always wish them the best because I know exactly what their up against.

-Agent 1 - farmers-online.com