Is it true that State Farm will soon reduce agents' service comp by 50 percent? I assume that recent rate increases resulting in higher payout to agents is the reason.
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They are represented in every independent agency in the company and benefit when they have a carrier exit a state, those independent agencies transition that to progressive. They also have a very user friendly internet presence, State Farm does not.
@q5 makes sense. From an agents perspective, how idid Progressive gaining 7 million polices? Our executives talk about Progressive all the time and how much they grew but never an answer as to what their secret sauce is that we are missing the boat on. . As a company we wrote about 9 million auto and lapsed almost 9 million to eek out a tiny amount of growth in 2024. Are they not lapsing nearly 1 policy for every one they add like we are?
Also, you have to remember the average cancellation rate for agencies somewhere in the neighborhood of 12 to 15%. So if you have say 5000 policies which is not a super large book of business, but just for an example you losing 750 policies a year. You have to sell that many just to stay even before you have growth. A price increase or decrease affects the agent book of business. All at once, that’s why decreases are so detrimental to the financial health of an agency and why we welcome price increases. We may not sell as much, but your whole book of business just got the benefit of that price increase. Oversimplification I know, but I hope this helps.
@p4 You have clearly not been an agent during rate decreases. Five straight from 2017 to 2021. My take home pay dropped over 25%.
That never happens to any employee.
@kk I thought during that period our growth wasbthrough the roof so the volume of new business wouldnt offset lower rates? Isn't new business commision greater than renewal comission? So in periods of low rates and high growth agents comp grows and now we know in periods of slow growth and high rates agents comp grows. Where is the down side for agents if the company is doing well or not doing well? Seems like agent comp goes up no matter what.
What is your metric for “growing you book” scooter? If I add 200 renters policies I may look like a hero but I added very little revenue. If I add 20 home policies the premium is greater for much less effort. I don’t know any agents that have not grown significantly revenue wise the last 5 years. Your business acumen su-ks dude. You would last about 6 months as an agent and be broke. Same old BS.
The only agents that complain about rate decreases are the lazy ones that haven't grown their book of business in decades. When you look at the numbers, 80% of our agents haven't seen a net policy gain in over a decade and that was during times of unprecedented growth. That tells you all you need to know about agents! 70% of customers never file a claim and more than that never ever hear from an agent once the policy is written. They provide zero value. I might keep the 20% that are engaged, but the rest should have been shown the door 25 years ago when everyone asked Ed to do it . He refused! MT saw it as a way to cover his tracks and take around $140 million in compensation for a 9 year period! Not to mention what the other Execs stole! MT made more in 2 years than Ed did in 30 years as CEO. Let that sink it, SF is basically a criminal organization!
@bt Quality Compensation became automatic about seven to ten years ago. It made sense, since the agent lost all authority to decide what goes on the books, and therefore lost all control over their loss ratios.
I retired in 2024, so am no longer in the loop. But agency was becoming frustrating as well. We had zero control over anything, yet we were THE ONLY contact point for upset customers. Agency used to be rewarding in the sense that if I did what was right for the customer, it was also right for the company, and vice versa. That is no longer the case. Now, agents constantly apologize for things they did not do and cannot fix. That's why I saved like crazy and retired early.
@k1 When we had six straight rate decreases from 2017 to 2021......I didn't hear you worrying about the agents taking paycut after paycut. Which they absolutely did.
As a capitalist, I have no issues with agents income increasing 40-50% based on rate increases alone. I know agents work their a$$es off, commit their own capital to grow a business and spend hours on hold tring to get a simple answer from SF call centers. On the other hand, can you imagine if the public found out that these rate increases were increasing their agent's income by 100K+. The outrage would be swift and severe. Think of politicians like Pritzker in Illinois (27% increase), or insurance commissioner Lara and Gov. Newsom in California. They would certainly use this info tontheir advantage. They would claim agents are getting rich without providing any additional value to their policyholders. As I said, Im a capitalist and and I believe market forces will take care of this in time.
Let me guess scooter, you got turned down for agency and you are bitter? Yep, I thought so.
This affects the Quality Compensation on the AA 97 contract basically making agents sell more to obtain what always was supposed to be a bonus segment of compensation based on loss ratio. It makes the 97 contract very similar to the newest agent contract that has been around 20 plus years now. In a nutshell agents could lose 20% of comp but as a previous poster mentioned we are all pretty much up 40-50 % income wise so we won’t get too excited if they take some back, net/net we are all making bank right now. Where it gets ugly for the economics of agency is when the company gets stupid and decides to cut rates significantly. I almost had to sell my beach house the last time that happened. Try to tell the wife the new Benz is on hold and that bo-b job has to wait, talk about unhappy.
Agent here, my compensation is up over $125,000 in the past two years! In my area we have seen an almost 30% increase in rates! Since everyone is raising rates, my lapse/can is unchanged and I'm still adding policies! They are screaming about paying us more up front to write new business so we can go after Progressive! I think CS and KC can talk JF into it, he is that stupid. I will take it as long as they give to me but eventually agency compensation will be the end of SF and we all know it. We just hope we make ours before the music stops playing! I started out in Auto Underwriting and went Agency 2000 so don't have much longer. You folks in Operations are basically getting sc--wed, while Agents and Execs, make themselves rich at your expense! No secret.....we all laugh about it at Ambassador Travel trips....they view you as basically disposable trash.
Post ID: @a6+1k07knaj4.
Not true! They are decreasing their pay by alot! I know several agents that have seen major decreases and not giving them enough notification so, they can make arrangements for the decrease.
Ship as many jobs to HCL as possible. Take that burden off SF’s shoulders.
At least 30% of every department should be outsourced to HCL.
Or you can sit back and enjoy the number two spot.
Actually no that is not going to happen, actually just saw a recent proposal to try to raise commissions! The two former SF Agents running State Farm can talk Baby Huey into anything as he is just happy to get the CEO generational wealth paycheck like his hero MT. They think if we just give agents MORE money then somehow we can beat Geico and Progressive. Keep the constant pressure on employees, outsource as much as we can, and find new ways to avoid paying claims through sleight of hand, then they can pay agents more and increase SMIP! You have to remember, you are the problem, agent's know everything, and this business model they created if perfect! Any id-ot
can handle claims!