My boss does not tell me the truth all the time. This is the current story, please help me untangle it. My current boss is a State Farm agency owner. He signed the newer State Farm Agent Agreement years ago and has his own agency. He has a friend who also signed the newer State Farm Agent Agreement years ago and has a local State Farm agency. The "Friend Owner" wants to retire without giving up his agency. I am being transferred to "Friend Owner" who will teach me to be the office manager. I also have my P&C, Health and Life licenses. "Friend Owner" stopped selling and just writes policies if they walk in the door. I know that State Farm has production goals that need to be met. I also know that State Farm has the right to close agencies that are not selling or have absentee owners. My current boss said that State Farm does not close agencies and doesn't have the right to close agencies. I believe that he is not being honest. Does State Farm actually close underperforming agencies? Is there any proof that they do?
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Have you look at the growth numbers YTD the Fall off of policies is unbelievable!!!
This is before any new agency changes!
The problems look to be over estimating reserves, pricing instability, customer loyalty issues and leadership accountability.
@t4p how big is the change in renewal premium expected to be?
Yes agents get terminated for under producing normally in the first 3 years. Established agents do not, but as others pointed out then a new agent is appointed next door. Agents do not own their policies, SF does. So an agent can’t sell or give away their policies. In the past agents have always been allowed to either take the newest contract or stay with one they have. That explains why there at least 6 versions of contracts.
This next new contract will be a first. ALL agents will be required to take it and it will be heavily weighted for new production and very little renewal comp. It will be public before convention.
I just googled this and this page came up. I noticed at least 3 long time agencies in my area suddenly gone. i know one big agency the old guy died, but the other two coulda been the age for a youngish retirement as I sorta knew the owners too. In my area, some streets had an agency a block or two from each other on opposite sides of the street, which still increased after they implemented Agency2000 in the mid-90s. IDK what they do bcz if you call for anything, they immediately transfer you to the 800 number main office. They at least took your info before and they called/emailed it in.
@epk sort of.
You're going to see a lot less agents running a lot more agencies. Total office count will go down because we've got too many, but the big change is going to be the expectation that agents operate multiple locations.
If your agent is selling enough of the products, they will likely put another agency in your area with someone who will market all of the products.
Oh it’s happening. Just spoke to my “SL” be prepared to see agency count drop from 19k to 12k in a hurry. Thats phase one. And agents will be expected to carry a 65 to remain “aligned”
Any updates?
@e9 You’re out of touch Scooter. TICA isn’t even a thing anymore. Nobody has to “earn” their contract with first year life production. New agents have their contract on day one.
Agents are complete dead weight for the company and have zero future! Basically all sales people will be done in the next 5 years with AI bots. They don't make mistakes, aren't at the deer lease all weekend, are actually more empathetic, don't steal, lie or con like agents do. Agents make up about 33% of our 30% expense ratio and are by far and away the largest expense. Yes Progressive sells through agents but it is IAs and it only accounts for about 35% of their business written, the rest is done on-line. Plus a lot more of their on-line presence funnels people to the IAs then SF. 80% of agents haven't had a net policy gain in over a decade! 20% of the agents produce over 90% of all growth and it is usually the really big agents or new agents trying to survive. Almost 70% of policyholders will never file a claim. With P&C mod work the agent will become even more useless as basically any transaction can be done without any human contact. That is what most people desire these days! Amazon vs The Mall! State Farm can terminate any AA05 or AA97 or any of the older contracts with a 30 day notice by either party, less if there is cause. Agents get fired and new agents, that su-k, do not get offered a contract or stay a TICA. SF has never had a business practice of just laying off agents but that is coming. Starting in 2026 agents will see a pretty big reduction in renewals commissions. As soon as AI gets really good you will see almost all carriers move to that format to sell insurance and agents will only be a tiny niche market. It will be like a select group of people that like handmade boots vs running down to Boot Barn and grabbing a pair of Justin's that everyone else is wearing. AI is taking most customer facing roles, most people hate interacting with sales people, and agent's your days are coming and hope you saved you pennies there scooter!
Agency is way too fat in more ways than one.
I do think they can choose to not renew a contract. I had friend go into agency and she came back to claims three years later because well she wasn’t good.
@ca BS!
@a8. Agency is not much of an expense to SF. With the 8-10% that goes to agents, they employ more people serving customers face to face than SF does. No other money spent by SF has such an enormous impact.
No they dont close underperforming agencies. 92% of production comes through agencies and a quarter of the sgencies dont produce much. The majority of the service side of the company is done thru agencies at agents expense, and the main reason for retention. Imagine the cost of in housing that to the company. Once mod happens, and if transactions are streamlined, there will be agency attrition- agents will self select. You may see less total offices but perhaps bigger. Agencies arent goibg away. Even half of Prog premium comes thru agency channel.
@OP get out while you can, Agency’s are going to be a thing of the past. Honestly with how much bullsh-t these agencies cost SF I’m surprised they still keep them around.