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The Farmers Career Agent Program
Who do you need to be?
Farmers District Managers hires anyone off the street just so long as they have no prior insurance sales experience. Note that they will hire people that were employed as Underwriters or other Staff within an insurance company. The target though is to make sure that new hires haven't been agents before.
Why not hire someone with prior experience as an agent?
Say for example you are a newly hired car salesperson at a local dealership. You worked as a salesman for the last 10 years and 2 other dealerships. During your training sessions with the new dealership, the manager tells the class that "the best way to sell a person a car is to walk down the street holding a pumpkin over your head". However you know by experience that people that really are looking to buy a car really want someone that is holding an apple in their right hand and an orange in their left. After the class you go and tell all the students that this is the only way it will really work, however the new car dealership you work for, doesnt allow you to carry apples and oranges! You've now created a problem for the dealership. Other students will look to you as someone with outside experience and begin to doubt what the new dealership will say.
Requirements (OR ELSE! - incomplete list)
- Must already have P&C and Life and Health Licenses (costs about $800 to get)
- You must have a list of 100 friends and family to solicit
- You must have sold 40 P&C policies to convert from Reserve Agent Program
- You must have sold 4 life insurance policies to convert from Reserve Agent Program
- Write Business Plan
- Attend University of Farmers for 1 week
- Training at District Office, meetings, district meetings, state office meetings
- Sell $2000 GDC of securities per year
- Sell 24 Life insurance Policies Per year
- Sell 300+ Property and Casualty Policies per year
- Hire Contact Manager
- Hire Customer Service Representative
- Have an office
- Telemarketing - Cold calling?!? (some districts)
What will I make in my first year as a Career Agent?
Farmers District Managers will give you a range. It isnt a set range because each district manager conjures their own figure for this. You can also say it is dependent upon the geographical area of the country. But that is less of a truth. They might tell you a range of $40,000 to $100,000 can/will be made in your first year.
What will I really make?
In the Career Agent Program, you are to sell in excess of 300 policies and 24 life policies in the first and second 12 months of the Career Agent Program. The average commission between new business home and auto is about 12%. The average policy premium amount is about $400. The average life policy is about $300 and return is on average 45% So the math works out as follows:
P&C: (400 x 300) x .12 = $14,400
Lets also add on another $4500 for renewals on auto business
Life: (300 x 24) x .45 = $3240
Gross earnings per 12 months: $22,120
Wow, $22,120 in my first 12 months?!?
This is based on hitting Farmers Lofty numbers for the Run to Daylight chart. As of the time of writing this article, we dont know the exact real number needed to begin the Run to Daylight. However it is now over 600 policies.
If you were an agent and your job was to sell 300 insurance policies to people that primarily must have good credit, clean driving records and no claims and also dont care if they pay more money. You will talk to approximately 20 Warm Prospects to obtain 1 client. 300 insurance policies is approximately 200 clients. So you will need to talk to 4000 warm prospects to get 200 clients sold.
Warm prospects, how hard are they to get?
Not too hard. If you are telemarketing, you need to dial approximately 100 phone numbers to obtain 1 warm prospect. If you are sending post cards, its just about the same ratio. If you are marketing face to face, you will get a warm prospect in about 1 of 10 people you talk to, depending on if you are good. Referrals are always warm prospects however involuntary referrals are not, they are also a 1 of 10 or so. You can purchase leads and those cost about $8-20 for decent ones. You can advertise in the phone book, magazines or newspapers.. anyhow you get the point.
Lets work this backwards then.
Telemarketing / Post Cards and Mailers:
- 4000 warm prospects = 400,000 phone calls
- Take The Leads = .50 per number 400,000 x .5 = $200,000
- Post Cards = .50 per address 400,000 x .5 = $200,000
- Either route you take, you will spend $100-200 per written client just in expenses. This doesnt count the time it takes to either call these people or make arrangements for mailings and design postcards.
Even if you were better than 1 in 20 or got phone numbers cheaper than .5 each. Work the cost backwards and see how much it costs you to get business.
Purchased Leads:
1 Client = 20 Purchased Leads 20 x $12 = $240
Referrals:
All referrals are obtained through relationships. It takes time and money to build relationships. Maybe you send out pens to existing clients and call them once a month. Visit Mortgage companies every week and bring 3 pizzas. Referrals are also rewarded to the referer as a perk. Each referral will cost you time and money. Instead of getting too analytical on this, we'll set the cost to $5 per referral.
8 Referrals = 1 Client (higher close rate?) 8 x $5 = 40 Per Client
Whats it cost to get a client?
Average cost per client using all of the above methods = $143 Per client
200 clients X $143 = $28,600 spent
See the key ideals materializing here? If your product is more difficult to sell because Farmers:
- Already has too many agents
- Has policies that are more expensive than most other companies
- Has Limitations on Credit Ratings
- Has Limitations on Driving and Claims History
Then your cost per client is much higher than if you had a more marketable product! We didnt even include the cost of getting those 24 life policies a year either. Would you like to know how difficult it is to sell an overpriced and difficult to approve life insurance policy?
Back to the Numbers
You also have expenses for the office.
Back to the figures of an average person who lives on planet earth and might be an insurance agent starting out.
Personal Expenses Per Month:
- Housing: $700
- Phone: $100
- Gas: $170
- Car payment: $300
- Insurance: $100
Business Expenses Per Month:
- Office Rent: $800
- Contact Manager: $10/hr X 20per week x 52 = $10,400 /12 = $866
- CSR: $10/hr x 30per week x 52 = $15,600 / 12 = $1300
- Misc Office Utils: $200
- Marketing costs (28,600) Annual / 12 = $2383
Total Expenses Per Month: $6919
NOTE: This is a conservative estimate, numerous expenses are left off of this list. Sounds high? Well in order to obtain 300 P&C and 24 Life policies in a year, you will need at a minimum to spend this amount.
But wait, I get subsidy. That will help me get by!
Correct! Ok say you're on track to make the 300 policies and you're getting max subsidy:
$1500-2000 month for new business
$700 for staff
$700 for office
= $3400 /month in subsidy + 22100/12 = $5241
Woohoo! It can be done! Well sorta. You're still sinking in the hole by $1700 even after subsidy is added in.
The Problem
Subsidy = Debt
Max everything out and it can be incurred at a rate of $40,000 a year. What happens if you dont make your numbers and get your contract cancelled? You owe subsidy back to Farmers.
- Can you honestly sell 24 overpriced Life policies to yourself for the next 24 months? Because it sure isnt easy to sell them to other people.
- Can you afford the additional $1700 a month for 24 months?
- Can you work 80 hours a week?
- How do you feel about owing $80,000 if you fall just barely short of Run to Daylight numbers?
- How do you feel about owing money if you dont make it through the program?
How many agents make it through the career program? 1 in 10? 1 in 5?
What makes that 1 person make it through? Do they have enough reserves? Did they get Lucky? Do they just work hard? Are you that agent? You have to be 100% sure, because you're financial future is on the line.
Now What?
Say you make it through the Career Agent Program and become a Full Time Agent. Are you profitable?
Next Article - Full Time Agents (coming soon) |
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