State Farm Agents are Fighting State Farm for Economic Survival
State Farm has a tremendous agent organization. Some of the best trained and motivated personal lines agents are found at State Farm. Amy Bach, of United Policyholders, sent a comment to yesterday afternoon's post, McCarty Claims State Farm Trying to Work Out Deal and Expects Property Insurance Rates to Go Up, which asked:
Will more State Farm agents start diverging from the company line a la United Farmers Agents Association?
Below is an item from the National Association of State Farm Agents' website. The letter she referenced provided:
Florida Fallout
Florida agents statewide are in a controlled panic over State Farm's recent decisions concerning its desire to remain in, or leave the State of Florida. Whether the problem is driven by underwriting issues or political considerations really does not make much difference at this point. The current underwriting restrictions alone are enough to drive many agents out of business.
You are all familiar with the more recent facts. State Farm requested, among other things, a sizeable rate increase. When that increase was denied, it filed a request to withdraw from the fire market in Florida. That request was met with a remarkable opinion from Florida Insurance Commissioner Kevin McCarty (see the entire opinion, and other related documents on NASFA.com). In a 14-page order, Commissioner McCarty not only denies State Farm's request, but takes strong exception to the Company's conduct to date. State Farm has until March 7 to appeal the order.
The order highlights the strong difference of opinion and approach being taken by Florida and State Farm. One glimmer of light for agency is the finding in paragraph 24 of the order that State Farm is placing too great a burden on Citizens Property Insurance Corporation by only permitting agents to rewrite the policies there. The order goes on to require State Farm to permit it's agents to write homeowner's coverage for other carriers. We would expect State Farm to vigorously oppose this idea.
At this time, there are far more questions than answers. Each type of agent contract faces different issues and challenges. Entitlement to or continuation of termination and extended termination benefits being paramount to the AA3/4 agents. However, other critical questions, most directly affecting the agent's ability to survive, still loom large. Most cannot be accurately answered until Florida and State Farm determine if, and how, State Farm will stay in Florida.
NASFA continues to collect information concerning State Farm's actions, the State's actions and company releases to agency.
I suggest that if you want to see whether all of State Farm's agents truly trust State Farm "to be there," as it advertises it will, you visit the National Association of State Farm Agents website.
Again, for many different reasons, I hope McCarty and State Farm can work out a deal. And, as indicated in my post, Is the State Farm Policy Really Worth Anything?, the current advertisement campaign by State Farm suggesting that it will be there for policyholders after a disaster is a joke.
First, I am a State Farm agent in Florida.
Second, NASFA does not speak for me and it does not speak for the large majority of State Farm agents, especially in Florida. Within my own market area of 35-40 agents, I don't know one agent who is a member of NASFA or subscribes to their poison rhetoric. From my perspective, NASFA is a group of agents who are bitter about one thing or another and consistently bash State Farm for everything they do. Take a look at all their officers and you'll see that most of them are from other areas of the country, not Florida. I'm frustrated with NASFA because they could be doing a lot better job of representing agents, but they have screwed it up and lost all credibility. Their never-ending whining is tiring. Your suggestion that their website provides a reliable measure of State Farm agents faith in State Farm is way off base. By the way, the NASFA reference included above is 6 months old. Why are you writing about that now?
Third, I'm not happy about some of the decisions State Farm has made. The impact on me financially has been devastating. It's hurting my business tremendously. I've had to lay off 2 people. I'm worried about paying my bills and sending my kids to college. But in spite of all that, I understand why they made some of the decisions they made, and I chose to work in a positive way with State Farm to get them to stay in Florida. I don't see myself fighting State Farm for my economic survival. I think I'm fighting Charlie Crist and Kevin McCarty. They are the ones who have screwed up the entire Florida property insurance system and they are the ones who have badmouthed State Farm, and therefore me.
Artwork,
Thank you very much for your comment.
I can appreciate your view although disagree about who is responsible for your plight. I think most of the problems have been made for the agents as a result of what is said and decided in Bloomington and not Florida.
The suggestion that NASFA may not have credibility with agents may be very worthwhile, and I must confess ignorance on that topic.
I am somewhat familiar with the Operational Guides and training that State Farm agents are placed. While it may not be what you want to do, I am certain that those high quality skillsets you have obtained through your work with State Farm could be applied to other insurers that would love to have you selling insurance for them and want to do business in Florida.
Hopefully, this will all work out. I am sorry that you have had to go through this ordeal which none of the agents created.
I also have internal State Farm memos regarding suggestions on how State Farm political interests can be furthered by agents becoming involved in the democratic and public relation process. Given what is at risk for you, I can understand how diligent you and other State Farm agents have become in this matter. I imagine the situation is quite stressful for all and truly hope McCarty and State Farm can make a reasonable and fair resolution.
Mr. Merlin;
I have to respectfully disagree with your comment regarding State Farm Florida's problems starting in Bloomington and not Florida. If the problem's were in Bloomington, then why did Allstate and a few other large insurance companies make the decision to leave Florida in some capacity as well. Moreover, if the problems were derived in Bloomington, then how come most of the homeowners insurance issues (most large companies)seem to be in Florida and not other states?
I would much rather have had a 40% rate increase on my homeowners policy, then the 60% rate increase I received when I went to Citizens....not to mention the 10% increase that will happen next year.
The property insurance market is not competitive and no competition will lead to higher prices to the consumer....if prices are artificially held down...then the losses to the state will be made up in higher taxes and/or fees. Like the surcharge to my auto policy for the hurricane fund....which I feel is absurd.
I agree the market needs oversight and regulation....but it doesnt need to be socialized.
Tony