voicevoic - united farmers agents association · the hot seat for not hitting their numbers....

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VoiceVoiceA publication of the United Farmers Agents Association

Winter ’11

“Agents Helping Agents®”

Have you worked your claimhard for years?

Have you found a little“color” here and there?

SO . . . what areyou doing to

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The Voice • 3 • Winter ’11“AGENTS HELPING AGENTS®”

Coming EventsDec 31, 20111 Chapter Elections Results Due

Jan 30, 2012 Designated Delegates List Due

Jan 31, 2012National Board Meeting New Orleans

Jan 31 - Feb 1, 2012 Chapter President’s Meeting New Orleans

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June 5-7, 2012National Convention Golden Nugget, Las Vegas

GOOD NEWS! UFAA’s Alternative E & O policy has now been available since February 2009. Many agents have changed E & O carriers and you can, too. If you need additional information on the benefits of this plan, please visit UFAA.COM.

If you have a tip, idea, or a piece of news,that could be helpful to other agents, let us know by e-mailing [email protected].

All agents and interested staff are welcome and encouraged to attend Local Chapter meetings. Check the back cover for contact names in your area or call the UFAA National Office at (800)275-8668.

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VoiceVoice

The Voice is published four times per year by The United Farmers Agent’s Association, a professional association committed to helping our members through education, communication, support and information and in establishing a true partnership with Farmers Group,Inc. The content of The Voice is the responsibility of the elected National Board Members who comprise The Voice Committee. Products and services advertised are not endorsed by The United Farmers Agents Association, Inc. or its affiliates. Complaints or inquiries should be forwarded directly to the advertiser. All purchases are at the complete discretion of the customer.

The opinions expressed by the authors published in The Voice are not necessarily those of UFAA,its offi cers,

directors or members,and should not be construed as legal advice.

FEATURESPresident’s Message 4Editorial 5How Wamu Got Lost 6DMs Good-By 7Do You Understand What’s Happening 8Choices, really? 10Live, Die or Quit 12My Contract Says WHAT? 15It Needs To Be Said 20Where is FIG’s Authority? 22Trust and Respect 25Agency Concerns 27Class Action Suit 29Are Non-Competes Legal? 30

Winter ’11

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When“they” areafter yourcastle . . .

Who areyou

gonnacall?

UFAA’shere

THE PRESIDENT’S MESSAGE . . . TAKE 5Every single day, UFAA receives emails and telephonecalls from agents around the country alerting us to thefact that their DMs are pressuring them to make a certainnumber of quotes a day. Many DMs state they don’t careif they are legitimate quotes, they just don’t want to be inthe hot seat for not hitting their numbers.

Several DMs have made the following statements to theiragents, “Yup it’s time to get rid of some agents so I canbring my year end averages up. If you are in the bottom20% of quoting agents in 2012, FGI is going to terminateyou. Yes the AGM is alive and well and agents will beterminated in 2012, if they don’t move within the agencymatrix.”

First of all, let’s once again set the record straight, agentsdo not have quotas, unless they are under the newagents’ contract. Agents are defined as IndependentContractors according to the IRS definition. This is adangerous game that DMs and DMMs are playing. If itcan be proven that quotas are being imposed on “Indepen-dent Contractors,” ( Farmers agents) then the DM andDMM could in fact legally obligate Farmers to reclassifythe agent as an employee and pay their back SocialSecurity Taxes and all the benefits the Farmers employ-ees receive. The FGI corporate counsel has stated inwriting that quotas shall not be imposed as agents areindependent contractors. Go to the UFAA website to readthe correspondence to the management company on thissubject.

I can’t even begin to express how morally and ethicallywrong it is of someone to say “Yup it’s time to get rid ofsome agents so I can bring my year end averages up.” It’sone thing to discipline or terminate an agent for violatinghis contract. It’s quite another thing to terminate an agent,to take away his livelihood and deprive his family of anopportunity to make a living just because someone wantsto bring their averages up. Honestly, I am constantlyamazed at the lack of morals and ethics of certainindividuals in the business world. If there is one thing that Ihave learned by my frequent conversations and emailswith successful DMs and Farmers company executivesover the years, the one thing they all have in common isthat they realize that positive words and positive rewardsbuild a successful Agent, District and Company. Theywork as a TEAM! Threats and intimidation never work withthe sales force; if anything they cause resentment andlack of trust.

We all agree that in order to be successful an agent mustquote. In sales, we all know it is a game of numbers. Butto punish an agent, terminate him, deprive him of hislivelihood just because he doesn’t quote an arbitrary figuresomeone decided was the number, is morally and ethi-cally reprehensible.

Last but not least, let us remember that agents pay all theirown expenses, so there is absolutely no reason to terminatean agent unless he violates his contract. Additionally, agentsare the only individuals generating revenue within Farmers,everyone else is a liability on the balance sheet. Yes evenDMs who are also independent contractors do not generaterevenue; they get an override on the agents’ production intheir District. Maybe, just maybe, everyone should show theagent a little appreciation and respect.

The AAA, excluding the new agents’ AAA, specifically states“nothing contained herein is intended or shall beconstrued to create the relationship of employer andemployee; rather, the Agent is an independent agent forall purposes.”

Therefore, stop treating Farmers agents as employees, asthey are not employees. Don’t forget that you can move your E&O at any time duringthe year.

Tom Schrader, PresidentUnited Farmers Agents Association


As I review some of the e-mails The VOICE receives fromthe field, I have found a number of comments reportedly madeby DMs, DMMs, and State Directors to our membership. I am amazed that these individuals, reportedly representingFIG, seem to have no concept of the idea that they are workingwith contracted independent agents. Some of the commentsfollow (FIG statements in bold with editorial comments in ital-ics). New AMP rolls most of your Agency marketing costs into one (very expensive, ineffective) easy to track monthlydeduction. (They are willing to spend our money). Your Agency is given priority treatment (over the agentswho don’t genuflect to our demands to do it your way with ourmoney) when customers respond to Farmer’s Internet ads. You will receive priority access to all 21st Century Leadsversus non AMP agents. (This should replace the policiesour agencies have lost to 21st Century) Dear DMs (message from a State Director) If you can’t getyour District up to 75% participation in the co-op, you willneed to notify your DMM of each Agent in your Districtwho hasn’t (voluntarily) signed up. Please copy your re-sponse to me by end of business tomorrow. (Floggings willcontinue until morale improves). Also report on how many 5xx policies are currentlyheld by these (rogue) agents. (And why would a State Direc-tor want to know THAT number?). Follow up from DM to listed agents- You are the onlyagents in the District who have not signed up for AMP.Farmers has built an extensive Marketing program at aGREAT PRICE (from whom?). I’m not really sure why any-one would not join. (Uh, perhaps we are independent con-tractors who have better ways of spending our advertising dol-lars). Obviously, per her e-mails, this is an important programto the State Director. (But is it important to me as an inde-pendent agent?) We WILL have 80% of the agents in (ourstate) participating. (See floggings above). You (rogue agents) might say, “I will market, just in adifferent (economical, effective?) way.” Does your program include all the following induce-ments (to be a “team player” and to make your State Directorand me look good). As your new DM, our office is going to lead from thefront and staff our office on Saturdays. Remember that“Agents who work like no other Agent will be able to livelater like no other Agent can!” (yeah sure, kid, I’ve beenthere and done that before you were born and certainly beforeyou got a fancy piece of paper that says you know somethingabout life and how we can live as no other Agent can as aresult of our hard work when we were your age. The yearswhen we neglected our families, came home late, worked

every Saturday and some Sundays, built our business only tosee all our “live as no other Agent can” go into the toilet directlybecause of the actions of people who have never had to de-pend on a sale in order to feed their family!). Our District plan for 2011 (as reported to our DMM)includes being on board for doubling Farmers by 2012.This is not a battle cry; it is a planned strategy that WILLbe accomplished. (OK, what part of Aim High and Work Hardto achieve a POSSIBLE goal don’t you understand?) Many agents will double their income as a result. (Withwhat products and at what cost to the agents?) IA s (independent agents?) must experience a 7.2%growth to be on target. (See ‘with what products’ above alsosee floggings in prior column). Every agent must get their CSS designation (what aboutLUTCF, CPCU, CLU, ChFC, FIC, FICF and 30 or 40 years ofexperience?. including a graded video of them presentinga CSS presentation. (Like that’s real life) Take 5 is NOT going to go away (see flogging) as part ofyour 7.2% growth is expectations that you will produce$300,000 from Take 5. (Uh, what about that “IA thing” in ourcontract saying we have no quotas and can operate our agencythe way we desire as long as we’re professional and follow therules? What about taking it easier in our old age. {See livingas no other agent can above!} Do you expect to browbeat yourway into a cushy retirement at Zurich while Independent Agentswork into their 70’s and 80’s to try to repair the train wreck youhave created?) It is no longer OK not to grow (says whose contract?)and agents who are not growing and have bad retentionwill not be with us by the end of next year! (And where doyou plan on being, with Farmers reputation of having an over-priced product and you’ve destroyed your District by canningall your experienced agents? It becomes difficult to be a chiefwhen you don’t have any Indians! If you believe that those whodig the latrines don’t have a place in your army, you may havean odorous problem.) IMHO (in my humble opinion) FIG seems to have fallen intowhat could turn out to be a death spiral of adverse selectionbased on wild hare ideas and grasping at straws enforced byimmoral efforts to intimidate the field force thus destroying ca-reers, lives, and families. We have a strong agency force that wants to be successful,wants to be a PARTNER in a program of providing quality prod-ucts at reasonable cost to protect our friends and clients. Justgive us the tools and breathing room and we can do it.

Larry P. Restalrig-Logan, CLU Chartered Financial Consultant UFAA Board Media Director

FROM THE EDITOR . . .


Posted on September 26, 2011 by Mark C. CrowleyNote: This week’s blog post was first published in the Editorialsection of The Seattle Times on Sunday, September 25, 2011

In a stunning coincidence, today marks the 122nd anniver-sary of Washington Mutual’s founding – and the thirdanniversary of its demise WaMu survived the Great Depression and a crisis thatwiped out a quarter of all US thrifts in the 1990’s. It becamea national brand. With such endurance behind it, how is it possible thisonce stalwart institution ended up as the largest bank failurein American history? Within the answer to that question areimportant lessons for leaders about building and maintainingsuccessful organizations. Its spectacular collapse has been reported to be the resultof extraordinary loan losses followed by a massive run ondeposits. What really killed WaMu, however, was a changein the company’s century-old culture and values – a mis-guided move that marginalized its historic regard and care foremployees and customers in the interest of driving an ever-expanding bottom line for shareholders. Washington Mutual had been “a friend of the family.” Andemployees felt they were part of a family. A former seniorexecutive told me his co-workers sent so many care pack-ages when he served in Vietnam he couldn’t wait to return toWaMu. In the late-90’s, the bank launched an aggressive period ofnational expansion. By 2003, WaMu’s ranks swelled tonearly 50,000 employees. To preserve the culture that boasted a century of success,Killinger decided to reintroduce the bank’s five enduringvalues (Fair, Caring, Human, Dynamic and Driven). At “brandrallies” held across the country, employees were immersedin everything WaMu. They learned that the first three valueswere the foundation of our culture and the final two made uscompetitive and successful. However, we only “lived ourbrand” when all five were in balance. The brand rallies took place until mid-2003. In 2004, WaMusuffered a significant financial loss. Convinced the bank hadgrown too large for Killinger to run alone, the Board ofDirectors named Steve Rotella as President and ChiefOperating Officer. Rotella acted quickly. He believed certain high-rankingexecutives needed to be replaced in order to succeed at anational level. He also openly disregarded the first threevalues. Making an all-too-common error about what kind ofcorporate culture drives the greatest and most sustainableproductivity and profit (and what could have restored the firmto high achievement), he asserted that too much emphasishad been placed on being “fair, caring and human,” andnowhere near enough on “dynamic and driven.” Not fully appreciating the fine balance with which WaMu’svalues had been so purposely created, Rotella’s direction

had immediate consequences: employees concluded theyno longer mattered and that he had effectively declared salesat any cost.” Tied to Wall Street’s pressure to produceprofits, Killinger acquiesced.

And so the fall began.

WaMu became fixated on short-term results. In 2006, thebank experienced an extraordinary 50% turnover in its keycustomer-facing positions. Customer complaints soared. A senior-level employee relations manager told me,“Employees rarely depart for more money. They leavebecause they believe the company they work for has lost itsheart.” In confirmation, exiting workers routinely told HumanResources “My manager doesn’t care, you don’t care andthe company doesn’t care.” While it might be appropriate to blame Rotella and Killingerfor destroying the bank’s legacy of success, WaMu was inno way unique in choosing to rip the heart out of its culture.The bank is just another example of how we collectively seekto motivate human performance in the American workplace. According to a 22-year ongoing study, 55% of all Americanworkers hate their jobs. They’ve made it very clear that allthey want is to feel valued, appreciated and cared for – towork for a company they respect, and to feel their contribu-tions matter. Ironically, WaMu’s five values offer us a blueprint foreffectively managing people in the 21st century. Whenorganizations begin by being fair, caring and human, theycreate a foundation for employees to thrive. And when humanbeings feel esteemed and supported, they very naturally andinstinctively repay that care with extraordinary commitmentand productivity – by being dynamic and driven. Some companies already know this. Seattle-based REI,Starbucks and Nordstrom are among them. Howard Schultzis a great local example of a man who insisted that hiscompany’s original values must be the foundation for growthand success. These companies are listed as great places to work. Theyboast extremely low employee turnover and high engage-ment. That all of them are flourishing is precisely the point. Infact, Wharton Finance Professor Alex Edmans recentlyproved that when compared to their peers, American compa-nies that authentically value and care for employees provideinvestors consistently and substantially higher returns. While the fallout from WaMu’s massive failure continues toripple across the country, and most dramatically in Seattle,the lesson leaders hopefully will learn, before they fail, is thatsuccessful leadership requires a balance…between ourminds – and our hearts.

VOICE EDITOR - Hello, FIG/Zurich, does the tune thatWaMu was using while “Marching to Pretoria” soundlike one where the companies would want to fall in andmarch along to? Over the cliff of self destruction?

HOW WASHINGTON MUTUAL LOST ITS HEART


This is an email from a District Manager that wasrecently terminated. The termination of Agents andDistrict Managers has taken an accelerated pace in thefourth quarter of 2011.

Team,

As you all have been informed by the StateOffice, I have been let go without cause and willno longer be your District Manager.

This was not a decision I saw coming from theCompany and is certainly not my choice. Beingyour District Manager was a real pleasure. It wasthe highlight of my career.

I am so fortunate to have had you all on myteam. I probably was seen as a liability for theCompany. Production is the only thing that isimportant.

They say we are all Family, but those that havebeen with the Company for a long time can attestto the fact that we are not Family...it is all busi-ness.

I believe by removing me they have positionedtheir finances better for their corporate interests.By removing DMs and Agents, the Companygains financially and can show their shareholdersand Zurich that they are growing agencies andDistricts but as one of my friends use to say...it isall just fuzzy math.

I hope long term success for each of you andthat the Company will not go after your agenciesas they have stated they will be doing across theCountry. They have also stated they will be lower-ing Agency commissions in the next year as well.

I hope this does not happen as well as all of youhave suffered enough financial hardships justkeeping your Agencies afloat during this difficulteconomic cycle. I truly care for each of you andwish you all the most success possible. GoodLuck and God Bless.

Thanks for everything,

Your former DM

If what he says is true, and we have heard the samestory from quite a few sources, this is troubling. Agents arealready struggling with high rates and a bad economy andthis would hurt all Agents. Let’s take a moment and analyze the implications of sucha situation, should it occur. AGENTS please understand thatif FGI lowers the commission rate, not only will you get paidless than the prevailing insurance industry rate, but yourContract Value will be lowered by the same percentage. Butthe plus side from Zurich’s perspective is they will makeapproximately $300,000,000 more dollars annually from theAgents and also lower their Agent Contract Value liability. Now do you understand why Zurich is really consideringlowering the commission rates? Assume FGI, for no other reason than to feed Zurich moremoney, forces agents to take a 2% commission reductionfrom 10% to 8%. Now assume the average agent makes Farmers$1,000,000 gross premium per year. At a 10% commissionrate the agent makes $100,000 for soliciting, servicing andmaintaining the business and must pay himself and alloperating expenses out of that $100,000, including advertis-ing expenses. Farmers, on the other hand, makes $900,000 from theagents’ hard work. But that is not enough; they lower thecommission rate to 8%, so now that Agent must pay allexpenses to operate his business out of $80,000 instead of$100,000. Then assume there are 15,000 agents times $20,000, thatis $300,000,000 more dollars for Zurich. This is pure andsimple greed. There is no justification for lowering agents’commissions. If it is done under the pretext that if the Agentsells more life insurance, he will get the 10%. How aboutusing a carrot and not a stick, pay bonuses for increasedproduction, not destroy the base rate. There is no way the reduction in commissions can bejustified other than corporate greed. Hey Zurich, here’s an idea, use some of those BILLIONSof dollars of management profit you make a year off Farmers’agents and use 2% of the gross to lower the premium rate. If you do that, production volume will go up; you will makeyour money back and more. It is a win win for everyone. You see it’s not that agents don’t want to write businessall day long, it’s that agents have competitors (Allstate,American Family, State Farm, Progressive, Geico, Nation-wide, AAA, etc.) and agents understand that consumers areprice driven and are capitalizing on the fact that Farmers isover priced in the market. Everyone knows this; it’s all over the internet. Oh yeah, and they are not talking about commission cutsfor their agents, why are you?

-UFAA talking - (are you listening?)

DM BIDS TEAM GOOD-BY


First of all, let me state that I am not an agent, but I amwriting this article anonymously because I think it is impor-tant that agents understand a couple of things about what isreally going on with Farmers.

So let me lay it out for you and you draw your own conclu-sions as to what the final game plan is for the agencydistribution system. I will say that I work in the Home Officemanagement, and have done so for the past 20-30 years,and I am tired of the lies.

When the top level management team reads this articlethere will be a witch hunt in the Home Office. Most agentsknow that several years ago, Farmers developed a programthat makes it virtually impossible to convert 500 seriespolicies to 300 series policies. This program was developedfor one reason and one reason only and that is to developmore renewal premium for FGI (Management Company/Zurich) and less service commission premium for theservicing agent.

FGI has been telling the Farmers agents that they are thepreferred distribution channel, but all the while they havebeen going out of their way to increase the IndependentAgency distribution to approximately 40,000 agents. Theyhave bought 21st Century to compete directly against theFarmers agency force.

Did you all know your AAA states that you are contractu-ally obligated to sell, service and submit business for allcompanies in the Exchanges? Do you all remember the bigpush to force agents to accept Foremost as part of theExchanges? FGI went out of their way to make sure theState Executives used pressure to make the agents conformto this idea, even though most agents already had contrac-tual agreements with Foremost.

Then FGI forced agents to move existing business out ofMid-Century (Part of the existing Exchanges). The reasonfor this move was calculated because FGI had negotiated ahigher management fee for placing business in Foremost asopposed to Mid-Century. This was definitely not in theExchanges best interest, but the Board of Directors approvedthe transaction.

If you will look at Farmers objectively over the past 10years or so, you will see that FGI has become a holdingcompany for FIG by buying companies and allowing FGI tocharge higher management fees.

Many agents are now questioning the Take 5 program andwhy the big push for the continued influx of leads. If theagents will go back and look at the leads they have keyedinto the system and were not taken they will see that 21st

Century has contacted them and written business. Manyagents have already discovered this because they did testquotes on friends and family only to find that those friendsand family were soon contacted by 21st Century. This hascaused concern because no one expected that agents wouldcreate false quotes just to make their daily Take 5 quotes.You all do understand that you are Independent Contractorsand don’t have quotas under the law, don’t you?

Well the agents under the new contract do have quotas, Ishould clarify that. The biggest FEAR that FGI has is thatone day you will join forces, like join UFAA and they will losecontrol. You see there is power in numbers and if the agentsbanned together and refused to do the Take 5 and othermisguided programs, there is nothing they can do becauseyou are Independent Contractors.

There is one more important item that I believe you need toknow to really understand what is going on. I know that youall know that FGI is terminating veteran agents and givingtheir policies to new agents, but I don’t think the agencyforce really understands the real reason they are doing it.

Let me explain. FGI eventually wants everyone under thenew contracts as they are very repressive to the agent andDM, but they give FGI total control. The production quotasare built into the contract, leaving no question as to whetheror not there are production quotas.

Secondly, on the DM side the DM has deferred pay unlesshe hits certain goals. If he doesn’t hit them he loses theincome.

Bottom line, if the DMs don’t hit the goals set for themtheir income is drastically reduced. This naturally sets up anadversarial relationship between the agent and the DM.

Thirdly, and this is the most important thing you need tounderstand is why veteran agents are being replaced.

The subsidy program for the DMs and new agents changedto put more of the liability on the DM, instead of FGI eatingthe money. When a DM signs up a new agent, if he can givehim policies in the 04% series then the agent will need toborrow less subsidy and this puts less liability on the DistrictManager.

The failure rate of new agents is very, very high. The otherthing you need to know is although it hasn’t been publicizedFGI intends to reduce the DM population from around 450 to150. FGI intends to create super District Managers andeventually super agencies comprised of policies that payless service commission.

DO YOU ALL UNDERSTAND WHAT’S REALLY GOING ON?


All you have to do is read the periodicals and you will seethat this is the brain child of Allstate and FGI has decidedthis is the future of the agency force. If you look around youwill already see the DM runoff occurring.

If you look on the State Executive level, you will notice thatFGI is going back to the old system of having State Execu-tives being responsible for two states instead of one.

If you have a good relationship with your DM and he istruthful, he will tell you he is scared for his job with what isgoing on with the recruiting centers and the super DMprogram.

2012 will be an interesting year, because the DistrictManagers are going to be aggressive, because they want tobe part of the 150 surviving District Managers.

The reason I decided to write this article through UFAA isthat I knew UFAA would publish it and get it out to theagency force. They don’t know who I am, but I know they willpublish my article, because everything I have said is true.

If it helps at all, the employees of FGI and managementare very sympatric with the agency force.

This is not the company it used to be. The people at thetop do not listen anymore. They are only focused ongenerating monies for Zurich. They don’t understand thatpurchasing insurance is price driven.

Unfortunately, Farmers now has the reputation of beingoverpriced. Our commercials are entertaining but they don’tgive consumers a reason to call the agent.

However, if you will notice 21st Century commercials areprice driven commercials.

Why can’t the Marketing department coordinate the twomarketing programs and make them both price driven?

You know, the new CEO Jeff Dailey is a student and a firmbeliever of the Progressive model and we are being told majorchanges are coming that will make a lot of employees andagents very unhappy.

So it’s time for you all to stand up and unite. Rememberno agent is safe, regardless of his tenure or production level.

Luckily, I have my time in for retirement and I felt that Iowed the agency force something for providing my livelihoodall these years.

And so, I shall fade into obscurity understanding change isinevitable, but it breaks my heart that the company that Ihave loved and labored to support for all these years hasbecome what it is.

- Heart Broken Management-

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Renee holds both a Property & Casualty and Life & Health license and has been a CIC since 2002.

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We have new and unique single entry web interface that enables you to rate your customer’s business online and earn competitive commissions! Our website will allow you to produce small commercial and personal lines insurance policies with nationally recognized carriers.

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Being mindful of then compared to now, a person wouldhave to conclude that the world is changing. That means eventhe insurance world is constantly in flux, making it very difficultto recognize what the choices we made 10 or 20 years agoimpact what we do today. So just what on earth are we talkingabout here?

It is a different business and personal environment now,with new technology and electronic gadgets that are supposedto make life simpler to communicate, forcing all of us awayfrom intimacy. Individualism is being replaced with corporateentities, personal contact is giving way to electronic media,cell phones and text messaging that slaughters the Englishlanguage. The good old time tested basic 3 R’s taught inschools, “reading, writing and arithmetic, are said to be ontheir way out. The question that is looming overhead is whetheror not we will be allowed to personally or professionally makethe choices that we want, choices that we feel are still neededin order to keep any semblance of order in our personal lives orour businesses world.

We are Farmers Agents, devoted to serving our family,friends, neighbors and a multitude of folks we never knew be-fore. On the whole we are loyal, supportive independent agentcontractors who made the choice to partner with Farmers In-surance and sustain a long lasting career of our choice. Noone twisted our arms, no one threatened us if we didn’t signthe 1984 version of the Agents Appointment Agreement. Infact, we were so loyal, grateful and trustful that we all signed adocument most of us didn’t understand, a document we feltneeded no legal scrutiny before affixing our signature. We be-lieved the folks at Farmers Insurance Group Inc. We assumedthey were trustworthy and would honor, as we did, that theintent of the AAA contract was to allow each of us to operateour agencies in any manner we chose as promised in the verydocument presented by Farmers Group Inc. on behalf of theFarmers Insurance Exchange, Truck Insurance Exchange, FireInsurance Exchange, Mid Century Insurance Company andFarmers New World Life Insurance Company, solely owned bythe management company, Farmers Group, Inc.

In good faith we made the choice to provide for our familiesthat which we believed would be necessary to guarantee Life,Liberty, and the pursuit of Happiness. And of course we cannotforget Success, because Success truly is in the eyes of thebeholder.

So now, today, our past choices which promised the chanceof success, independence and family security are being chal-lenged. Today, Farmers Group Inc. has taken it upon them-selves to dishonor the AAA by literally changing the intent andmeaning of the contract so they can treat us like employees,demanding quotas for production and quoting. All of this just tomake a foreign corporation more money. FGI is terminat-ing agencies with no conscience as to how their actions willimpact not only the agent but his or her family. FGI actions areunforgivable and are not only morally wrong but are a violationof the very contract meant to guarantee WE ARE INDEPEN-DENT CONTRACTORS WITH NO QUOTAS AND THE RIGHTTO RUN OUR AGENCIES ANY WAY WE SEE FIT.

CHOICES, really?

We are excited to make a return visit to the beautiful GoldenNugget Hotel & Casino for our annual event on June 5-7, 2012,which is UFAA’s 45th Annual National Convention. Located un-der the canopy of lights, this four diamond hotel has recentlycompleted a $350 million dollar renovation, which includes theaddition of the “Rush” Tower. For those of you who haven’t recently experience one of ourpast Conventions in Las Vegas, the Golden Nugget Hotel &Casino now offers more than 2,400 deluxe rooms and suites, a55,000 sq. ft. casino featuring all the latest slots/video pokermachines and table games. You also will enjoy “The Tank,” ayear-round outdoor swimming pool complex complete with a200,000-gallon live shark aquarium along with the three storyslide thru the shark tank. If you want more entertainment, juststep outside to Freemont Street and enjoy the Freemont StreetExperience under the canopy-covered pedestrian mall featur-ing free nightly light shows, live entertainment and shopping orjump on one of the new double-decker buses for a short trip tothe Premium Outlet Mall or the Vegas Strip. Each year I try to find the most informative, knowledgeableand entertaining speakers and this year won’t be any different.Our keynote speaker this year will be Vinny Verelli. We inviteyou to this year’s UFAA National Convention to meet VinnyVerelli, the Goomba Guru of Negativity Management. Vinnywas born in Brooklyn when the Dodgers were still in town andreceived his education on the streets of New York. Author ofMotivate This, Vinny has been called the Tony Soprano ofmotivational speakers. Vinny takes on the sacred cows andtells it like it is, “You don’t touch my cheese, let alone move it.”Capeesh! Take back your cheese, take back your life. Visitwww.ufaa.com to learn more about Vinny and the upcoming2012 UFAA National Convention. At this year’s Convention on banquet night, international va-riety artist Robert Strong will be performing his amazing magic,breathtaking juggling, and outrageous comedy for our enter-tainment. Prepare to be wowed as he reads your mind, es-capes from a strait jacket, and juggles flaming torches. Andthat’s the easy stuff. Twice voted “San Francisco’s Best Co-median,” he has appeared on every major television network,in all 50 states, in over 30 countries and for two Presidents ofthe United States. You ask yourself, “When was the last timesomeone danced with danger just for your entertainment. Youknow, a guy who stands on stage and juggles knives, floatsspectators, and sticks fire straight down his throat. It’s beenawhile, hasn’t it?” Don’t wait to register for the 45th Annual UFAA National Con-vention. A registration form is located in this issue of The Voiceand on the UFAA website at www.ufaa.com. Don’t miss out,come join the fun, entertainment, meet new friends and learnuseful information about what’s going on within the insuranceindustry, Farmers and most importantly within your own agency.You won’t regret attending!

Mike Ward, Vice PresidentUnited Farmers Agents Association

UPCOMING 2012 UFAANATIONAL CONVENTION


I believe you can see wherethis plan will provide foryour family’s needs . . .

Yes, I can see where we needit and we certainly

can afford it . . .

Sure, we can NOW, butwhat if somethinghappens to me?

Are you SURE you haveclearly explained how

THE PLAN works?

LIVE, DIE, QUIT . . . As we discuss our clients’ needs and desires we needto be very clear in our position. Mr. Client, would you agree with me that in the next 40or 50 years one of two things will happen . . . you will liveor you will die? It may surprise you to learn that in my many years ofexperience in this field I have found that my clients havea 100% mortality rate . . . the only unknown factor isWHEN! If there are three of us here today. according to recentreports from the US Census, ONE of us will not live toage 72. The question now becomes which of us willsurvive? Do you expect to live a long and healthy life? Thenyou need to plan to live in retirement for 20 - 30 - per-haps even 40 years and you had better store up somemoney for those years . . . I think you will agree thatSocial Security won’t pay the bills. If no one in your family has survived after age 40, thenyou probably should get some of the least expensiveterm life insurance available . . . and lots of it while youcan . . . to provide family income dollars that you will beunable to. <pause briefly> However if you are unsure, perhapsyou should get our “unsure how long I’ll live plan.” Thisplan supports your family if you die too young and helpssupport you if you live too long. It also has flexibility builtin so if you need to “quit” for a while, after the first year,it will carry forward without you! We have reviewed your hopes for the future, what youexpect to achieve and what is needed if you are unableto contribute to that future. Those plans (review point-ing to each item on the list: pay off home, adequateincome for food and other necessities, college, final ex-penses) totaled $XXX,XXX. Do you agree that Is aboutright? At your age, (35) you can buy those guaranteed dol-lars for about 2% per year and IF your family doesn’tneed the money because you get to be old, you get thosedollars back for your own use! If you quit . . . you will only have “lost” about one year’sinterest for the safety of your family’s life style.TO REVIEW THE OPTIONS - LIVE . . . you have transferred dollars from today intothe future for your own use! DIE . . . there is no other plan where you can investpennies for so many dollars in return! QUIT . . . you have no obligation to continue the planand once you have overcome the initial cost of acquisi-tion, you have access to your cash values. Do you see any part of this plan that you don’t like?


FA2, ANOTHER SELLING POINT Learned something interesting about FA2 in WashingtonState this evening.

If you have a teen driver on a permit (in this case twin 16year old boys) he or she is “permitted drivers” at no increasein premiums until they turn in their learners’ permits for fulltime licenses. OK, we’ve seen that for years.

HOWEVER, with FA2 the next time the policy renews theyouthful drivers on learner’s permits are charged as full timedrivers! In my case with a 256% increase in premiums ontwo cars with (now) four drivers.

Somehow, this just doesn’t seem quite right or fair to ourclients, particularly in these tough economic times.

Especially when, before the policies turned to FA2 (with-out any input or request from the clients) their trusted agenthad told them that it was OK to let the boys get theirlearner’s permits and if they followed the rules under theirLegacy policies, there would be no cost to them.

Don’t you just love FA2 and the “new, client friendly way”of doing business?

From a very tired and exasperated agent

ARBEIT MACHT FRIE

Some people today might not remember this sign that wasposted over the entries to the death camps . Looselytranslated it means that WORK WILL MAKE YOU FREE butwe all know that on the other side of the gate death awaitedthose deemed undesirable by the Nazi masters.

Here is a new and longer sign with the similar implications:

Last year you participated in the Farmerscorporate trademark program in

your area Yellow Pages directory published by DexBecause you are not participating

in the AMP programat the Career/Bronze level or higher

you will not have representation in theFarmers trademark ad

Loosely translated it says, “If you do not subscribe to a veryexpensive, ineffective program ‘suggested’ by the regime,you will not be considered a ‘real’ agent and will be subjectto removal at the whim of the regime.”

Have we heard the sound of those marching boots before?

A NOTE FROM THE UFAA NATIONAL BOARD -

At a meeting the other day a Zone Senior Vice President stated the Company will be making the AGM available to agents inJanuary, or soon thereafter, and that the Company will be using this model to terminate agencies who are not productive witheither PIF or activity (quotes on new business). He also stated there is a proposal at Home Office to reduce agent commis-sions on their lines of business.

They will consolidate Districts and create Mega Districts that they will be giving to their favorite DMs, cutting those out thatthey don’t want on the team.

They will limit override percentages to the Mega District DM, allowing the Company to retain more commissions.

They will also make policy transfers from 500 series to 300 series more difficult, if not impossible, for agents. This will resultin the Company receiving full service for half commissions for the life of the policy.

The Company wants to consolidate smaller Agencies creating less overall Agents . . . resulting in the average Agency with2000 or more PIF in size so they can report to Zurich that the average Agency has doubled in size.

Also, the company may start selling agencies on the open market similar to Allstate where the company, not the agent, cansell the agency to the highest bidder and/or sell the agency to an existing Farmers agent who is willing to pay the highestprice.

QUESTION, isn’t Farmers undervaluing the Contract Value payment if they are then reselling it at a higher dollar amount thanthe contracted one year value, thereby cheating the original agent out of the true value of the Book of Business?

THOUGHT, why would Farmers need to cook the numbers by reducing the agency force, doesn’t this point at somethingfundamentally wrong if agencies can’t grow without the “merger” of agencies? (Merger is used loosely here)


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AND MY CONTRACT SAYS . . . WHAT?

OK, it was years ago, you were as green as spring grass, the guys on the other sideof the table were your new best friends, the DMM and your DM. You had jumpedthrough their hoops and now were ready to make your fortune selling insurance toyour friends and neighbors. The contract was presented to you and you were askedto sign, here, here, and there.

Read it? NO PROBLEM! We are dealing with fine upstanding folks here who tell me that the ONLY way thiscontract could be a problem is if you steal the money, steal insurance policies, abandoned my agency, wasconvicted of a felony or made a willful misrepresentation on an application, which almost NEVER comes up withthe fine folks we have working with our companies. If it does, there is this little 3 month clause, and of course youcan leave the contract with the same 3 month notice.

So, we signed and put our heads down and started building our agencies. The buff contract (if we filed it) safelytucked away in a back file cabinet, never to be seen again.

As my grandmother used to say, “The devil is in the details.” Maybe it’s time you dug out that old contract and reallyread it word for word. Can’t find it? We’ve got a basic copy of the Form 32-1106 on our website at ufaa.com. Wehave found that there are very minor differences in some copies; you really might want to dig out that copy withyour youthful signature attached.

The contract clearly lists who are party to the contract . . . the “Agent” and the “Companies” listed. My copymakes no references to FOREMOST, BRISTOL WEST, or any brokerage operations.

The Companies agree to pay commissions for business submitted to them and to provide some minor benefitsincluding Agent education and sales training programs developed by the Companies.

The Agent agrees to sell insurance for the Companies and to submit to the Companies every application that iswritable under their published Rules and Manuals, placing all acceptable business with the companies.

The Agent agrees to provide facilities necessary to furnish insurance services at a location that will not undulyinterfere with the business established by another agent.

If the contract is terminated by the Companies the Agent may request a termination board of review.

The Agent or the Agent’s heirs have a right to sell all or any part of the Agency to family members acceptable to theCompanies.

There are contracted values for the Agency payable at the end of the contract. The Agent may elect to receive thepayments in three or more annual payments. AS COMPARED TO ONE PAYMENT?

The Companies have the right to the Agency phone number and leased locations on the end of the contract.

NOTHING (under item J) contained in the contract is to be construed as creating the relationship of employee andemployer. Time to be expended, persons solicited, areas solicited are solely within the Agent’s discretion as longas the Agent exercises normal good business practices.

NO CHANGE, alteration or modification of the contract can be made unless it is in writing and signed by the Agentand an authorized representative of the Companies.


FARMERS 2012

It is fairly common knowledge that Farmers is playing with the idea of letting agents buy other Farmers agents agencies in 2012, if they wish to sell. On the surface this appears to be good news, as many agents have expressed their interest in selling their agencies due to the what they see as an uncompetitive position in the insurance business. The common rumor being fl oated around is that the buying agent would be able to pay as much as 1.5 times the contract value and Farmers would fi nance with 20% down and folio payment of 2-5 years or the agent could pay 100% of the purchase price. While this all seems to be a viable option for those that want out, it has raised many questions from the agency force that they would like FGI to answer.

1.) What would the interest rate be? Would it be fi xed or variable?

2.) If an agent buys another agents book of business, would there be conditional attachments, such as the agent must participate in AMP, etc.?

3.) Will the agent have to sign a new AAA to purchase the policies? If not, who owns the policies if the purchasing agent is under the older BUFF Agreement?

4.) Since Farmers is not paying the departing agent contract value, the purchasing agent is, so is the departing agent still bound under a non compete clause for one year towards Farmers?

5.) If an agent sells his agency to another agent and then violates a non compete made with the buying agent, who will enforce that breech, as that is a very expensive process and not being held as valid in some courts?

6.) Since the agent is buying another Farmers agents book of business, who owns the policies?

7.) If an agent is in the process of buying another agents policies and paying on a 2-5 year loan through Farmers, if FGI ever decided to force a commission cut on the agents, would these policies be exempt?

8.) Does the agent immediately have a vested interest in the contract value of the purchased agency, should he decide to retire?

UFAA National Board

FARMERS FINANCIAL SERVICES AGENT’S

UFAA has received many calls lately regarding the FFS renewal fees and wondering why they are paying what they are paying. It appears that there is a $695.00 renewal charge, plus a $300.00 charge for the FFS license renewal. An investigation into the renewal fees shows that $250.00 of the $300.00 goes to Farmers and yet no one at FFS can explain to the agents why they are being charged the $250.00. Several FFS agents have called Farmers and can’t get an answer. Come on now Farmers, if you’re going to charge someone $250.00 for part of the license renewal fees and have been for a long time, don’t you think you can at least tell the agents what it’s for? No one is saying it’s not a legitimate charge, they just want to know what it’s for. FFS admits there are approximately 3,600 FFS agents, at $250.00 apiece that’s about $900,000.00. Where’s that money going?

UFAA National Board


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I have been an “AGENT IN GOOD STANDING” for over 22years and I need to say a few things. Every single year that Ihave been an agent, I ask representatives of Farmers (my DM,DMM, Marketing, etc.) why is it that Allstate, American Fam-ily, Nationwide, State Farm, etc. can consistently offer lowerrates on their insurance products and Farmers can’t. And Ialways hear the same old line, they will eventually have toraise their rates, because their products are not sustainable atthose lower rates and yet 22 years later, it is still going on. The FA2 conversions are hurting my PIF, usually because ifthere are young drivers in the household it causes the rates toincrease dramatically, as well as other unexplainable situa-tions. A couple of examples: I have a household that had 5cars and 4 drivers. Two of the drivers are a 24 year old femaleand a 28 year old male. Clientwise, this was a perfect house-hold. The father is a doctor, the mother is a nurse and therewere no tickets or accidents. They also have a very nice house,umbrella and boat with Farmers. When we could see their FARAscore it was an A. The 24 year old daughter got married andmoved out of household. When we cancelled her auto policyand removed her from the household, the rates on all the re-maining vehicles went up about $25.00 per car. Do you knowhow hard it is to explain THAT to a client? Second example: Another perfect household with 4 nice newcars and a beautiful home. The household has a 22 year anda 23 year old female student with 4.0 GPA’s. The auto policiesconverted to FA2 and the household took a rate increase of$500.00 for no reason at all. The insured tried to work with me,but Allstate took the entire household and was $500.00 lesson the auto insurance. I also lost the $3,828.00 homeowner’spremium, which I wouldn’t have lost if the cars hadn’t increasedfor any reason at all. ServicePoint looked at it and said, “Wellthere are no rating mistakes, that is just the way it is.” I have a lot of friends in the insurance business, actually allover the country, (I am a member of the PIA. Life Underwriters,many achievement clubs with Farmers) inside and outside ofFarmers and the general consensus is that FGI has become aholding company, and it is really not an insurance businessanymore. Zurich is interested in developing management feesand not properly pricing the Exchange’s insurance products.The bottom line is that the FGI management fees are what isand always has been why the insurance products are over-priced. Its common sense, if you think about it, FGI takes approxi-mately 15% off the top of every premium dollar the Exchangestake in. As long as this is Zurich’s and FGI’s one dimensionalthought process, Farmers Agents will continue to struggle togrow or maintain PIF. This is evidenced by FGI’s own admis-sion that they have hired 2,000+ new agents in 2011 but duringthe same period 2,100+ agents left the field force. Which begs the question, if the agency force is leaving inunprecedented numbers and the net PIF of Farmers continuesto decline, who is looking out for the Exchanges? Or is thisreally about the management company enriching themselvesat the expense of everyone else?

IT NEEDS TO BE SAIDTo begin with, let’s review what was said in the Fall VOICE. A GUILD is an organization of persons with relatedinterests and goals . . . especially an organization formed formutual aid or protection. A GUILD is usually limited to thoseindependent tradesmen who have developed great skill intheir field of endeavor. GUILD members are usually whitecollared type workers working within larger labor organiza-tions to maximize political and related power. A UNION is an organization of salaried, “blue collaredemployees” formed to negotiate wages, benefits and workingconditions collectively with “employers.” UFAA is an ASSOCIATION of persons having a commoninterest with little political power on a state or national level. Recent conversations by UFAA Board members withNAPAA (Allstate) officers and OPEIU (Guild) has providedinformation in regard to the first six months of that relation-ship. NAPAA had been working in New York for some yearstrying unsuccessfully to get hearings to solve problems theiragents have had with the state. OPEIU stepped into thebatter’s box and had 6 insurance commissioners in atten-dance and working on the problem within weeks. NAPAA Executive Director, Jim Fish, indicates that hedoesn’t impress easily, but he is impressed with the resultsthat OPEIU has been able to provide. Michael Goodwin, (OPEIU) also referred to the New Yorktrip and mentioned that while NAPAA has 1,200 voices;OPEIU has 108,000 and is backed by the 13,000,000members of the AFL-CIO. The implications of ten thousandtimes as many voices can be “heard” in the halls of our statehouses with a little bit more force. Bottom line . . . NAPAA hadn’t been able to get throughthe door for years, OPEIU was not only able to open thedoor, but quickly entered the room and made progress withthe problem. The report from Michael indicated the two of the greatestadvantages of the guild are dealing with the courts and thelegislatures. They have lobbyists at their disposal in everystate that will go to bat for the guild if and when they needit . . . not only to pass good bills, but to defeat bad ones. It was reiterated that while unions have clout with courts,legislatures and across the bargaining table for benefits;guilds and associations do their negotiating through thecourts and the legislatures.

SO, WHAT’S GOING ON WITHTHE GUILD/UNION THING?

“If you don’t design your own life plan, chances areyou’ll fall into someone else’s plan. And guess what theymay have planned for you? Not much.” — Jim Rohn

”Every evening, write down the six most importantthings that you must do the next day. Then while yousleep your subconscious will work on the best ways foryou to accomplish them. Your next day will go muchmore smoothly.” — Tom Hopkins


Allstate Corp.’s chief executive says the compensation givento agencies is changing to give more money to agenciesperforming the best.

Thomas J. Wilson, Chairman, President and Chief ExecutiveOfficer, says he understands the change will “obviouslycreate concern” for some agencies, but Allstate will notchange the amount they have given to agencies—only themanner in which the amount is doled out.

In the past, compensation has been 10.7 percent of premi-ums, with 10 percent locked and a 0.7 percent bonus, orincentive, which amounts to $200 million to $250 million peryear.

Starting in 2013—a date moved back from the company’sprevious plans to change the compensation structure in mid-2012—compensation will still be 10.7 percent but 8 percentwill be locked in and 2.7 percent will be given based on theperformance of the agency.

During a conference call on the company’s earnings, Wilsonsays agencies “don’t need to jump over the Great Wall ofChina to get the money.”

The Northbrook, Ill.-based insurer is encouraging largeragencies by giving loans for acquisitions in a move Wilsonsays will increase agency capabilities to serve customersbetter.

The size of Allstate’s agencies has increased 10 percentsince 2009 but the overall number of agencies has de-creased 14 percent, reports Wilson, adding that he expects“some agencies will be unhappy” with the changes butAllstate’s goal is to “make as many agencies that want to besuccessful,

“Their success is tied to our success,” Wilson says. “We’rein this together.” Allstate is not making the changes to createa fight with agencies, he adds.

Wilson says the company elected to moved back the start-date of the compensation changes to “give a runway foragencies to adapt” to them.

The chief executive says he misspoke when he told ananalyst earlier in the call that agencies had the option to optin to the new compensation structure in July 2012. Thatoption has been eliminated, he says, due to lack of interest.

Wilson placed the blame for a decline in new auto insuranceapplications not on agents, but on the company’s overallstrategy to increase homeowners’ insurance rates andreduce exposure in some less-profitable areas.

Allstate agents are going through big changes with the new

compensation structure and the integration of Esurance andAnswer Financial, an acquisition completed during the thirdquarter. Some agencies joined together to acquire unionaffiliation.

However, the agents will be counted on to generate businessin order for Allstate to meet its goal of 13 percent operatingreturn on equity by 2014.

Improving results in homeowners’ insurance is vital, saysWilson. Average rate increases of nearly 14 percent wereapproved in 15 states during the third quarter. As it looks toget rate, Wilson says Allstate has not gotten any troublefrom regulators or competitors.

“We’re all losing money,” he says.

Allstate has worked to increase the spread of its rateincreases (a home in one area of a state might see rates goup slightly while others see a steeper increase) as thecompany work to improve pricing, particularly as it relates toroof damage cause by wind and hail, Wilson says.

“The goal is to get returns up,” Wilson says. “We’re going tokeep banging away as aggressively as we need to, to getreturns up.”

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Recently I contacted the regional Sales Department aboutUser Administration in Dashboard. While working on theproblem, the person on the phone noted I had the sameresidence address, under the “Home” tab, as I did for myagency address, and warned me “Farmers doesn’t allow anagent to work from their residence.” I explained I don’t workfrom my home, but as I want all mail going to the office,personal and business, I had entered my office address inboth sections. Nonetheless, I changed the address to avoida problem. Since then I have been thinking over this subject, given my35 years as a Farmers agent. Frankly, Farmers, where I liveis none of your business. In 1981-1983, as a new andstruggling agent with a large family, I did in fact work from ahome-office. I would never have done it if clients had to walkthrough my living room to get to the office, or see otherunprofessional conditions. But my home was one block off amajor city road, in a nice neighborhood, and the office had acompletely separate staircase and outside door (a nicefrench door, I might add). Neither my DM had a problem withit, nor my DMM, who was also my client and came by onbusiness. (He is now, incidentally, a mid-west State Execu-tive). During these short years working from a home-office, Iwent to Life Round Table and Toppers twice. I am now in my35th year, and I raised that large family, successful, in partbecause I did what I had to do to pay for it all, including acritically ill child. During my years, I have known a number of other agentswho worked from home, and the same DM and DMM knew ofit. They may not have liked it in many cases, but the com-pany respected an agent’s right, at least in those days.Indeed, one agent was working from his kitchen table andthey still refused to act, other than cajole for a resignation. So I now ponder the question, “what changed?” Under whatauthority does FGI now imperially declare “we don’t allowthis?” I consulted my agent contract, and the only thing itsays about an office is that I agree “To provide the facilitiesnecessary to furnish insurance services to all policyhold-ers…”, and, “The location of the Agent’s office cannot undulyinterfere with the business established by another Agent.”(section B2, Buff contract). I agree with the contract when it says in B2, “[the agentshall service] all policyholders of the Companies in such amanner as to advance the interests of the policyholders, theAgent and the Companies.” But what does “in such amanner” mean? Does this preclude an office in the home? Ihave known agents who routinely bring their dog or childrento work. I can’t say I like this, myself. But does FGI alsohave the power to veto this for the agent, as well? If so,where did it get the authority to? Interestingly, FGI historically ignores its clear contractualobligation: to act against the “undue interference” of an agentmoving too close to an established agent. Yet FGI will invent

authority against a home-office (and other subjects, as well). In the end, the answer is what we all already know. Wepossess a nebulous contract written solely by FGI, one thatis selectively enforced, bent (even run over) when desired. (What? You are shocked?) It is, as the Oklahoma Su-preme Court found long ago, “cut-throat contractual dealingswhere the law of the jungle is thinly clad in contractual lace.”(FGI v. Hall, May, 1985) If you are management, reading this article, agents willforgive your ignorance in treating us as employees, becausethat is what you were taught on your first day of employmentwith FGI. Your ignorance from this day forward, however, isno longer an excuse. To understand the evolved conflictbetween FGI and the agency force, you need only go toUFAA.com and download the History of UFAA under the“Publications” tab. We even invite you to call us to askquestions, let us explain things, and we will absolutelyrespect your confidentiality. As an American, you aresupposed to be about freedom, fair play, holding to a dealyou made. Maybe it is time to step up to the plate as amember of management and start telling your bosses “whatwe are doing isn’t right, and I think we should rethink it.”

Paul MitchellGig Harbor, WA

Where Do You Get Your Authority, FGI?

Aloha, Dano

One afternoon you have a client, in good standing formany years, come in to tell you he is retiring to Hawaii andas he has been satisfied with the great work you havedone for him over the years, he wants to transfer hisFARMERS policies there. Sadly, you tell him that FARMERS is not in Hawaii. Heis surprised and shows you a FARMERS business cardthat he picked up the last time he was there. Hmmm, you say, sure looks like my FARMERS cardwith a little Hawaii near the logo. So, what ZIP code areyou going to be in and I’ll look up a local agent andintroduce you to him or her. We plug ZIP 96732 into FARMERS.COM and go tolocate an agent. and POOF; up pops a 21st Century adlike a genie out of a bottle. No FARMERS agents inHawaii. There must be an error, so we Google FARMERSHAWAII. BANG! Up pops a beautifully done web site withall the bells and whistles I wish we had on our localFARMERS site. Good graphics and lots of local color. Hmmm, I wonder what would happen if I went to theDashboard, management tab, and searched the name onthe Hawaiian business card . . . BANTILAN? WOW, notonly is she listed as a FARMERS agent, but she has amanager and that manager is over a flock of folks. Will wonders never cease? Too bad FARMERS doesn’thave a presence in the Islands.


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FARMERS AGENTS ASSO

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Being a tenured Farmers agent, I hate to admit that I wasnaive enough to believe that the information in the The Voiceabout the pitfalls that having the Farmers/Arch E&O policycould prove dangerous. Like many, I figured it was propagandawith the sole intent to divert agents from participating in thegroup policy in favor of the UFAA plan.

How could anything so preposterous be true that your owncompany would file an E&O claim against one of their agents? Well, I can attest it can happen, it does happen, and it hap-pened to me. While I prevailed in the claim, it was a torturousseven month process that started with the initial notice thatthe claim had been filed.

I remember the feeling which I can only relate to the be-trayal a spouse must feel when they discover their belovedhusband/wife has cheated on them. Betrayal of any kind isunpleasant and when it comes after years of dedicating your-self to responsible, diligent performance of your duties, as chal-lenging as they have become, it is both disturbing and devas-tating. Even after years of constant uncertainty in the marketwith less than competitive rates, a closed market for home-owner policies, FA2, Express, Next Gen Home policies ver-sion I and II, vanishing discounts, and all the challenges thateach brought, never have I had a day where I felt so defeatedas the day I was notified about this claim.

It has been challenging enough with all the company sys-tem errors, lack of direction, lack of consistency, lack of lead-ership, and the politics that prevail in many Districts by the DMand DMM, for Farmers to pay a questionable, at best, claimand then seek financial recovery from their own agent’s E&Opolicy was an unbelievable event.

Feeling so confident that they would prevail from the minutethe claim was filed, and the fact that Lancer Claims would liedown and just write the check like they were told, their initialclaim notice to Lancer Claims included remittance instructions.

How bold, how arrogant, and how pretentious! Is that dueprocess?

During the claim process, I learned that Farmers and LancerClaims negotiate on how a claim gets resolved. After muchresearch the process seemed to fit the definition of “collusion,”which by definition means an agreement between two or morepersons to defraud a person of his or her rights to obtain some-thing that is prohibited by law and is very much an illegal activ-ity.

There is the issue of discrimination. There was no commu-nication to the agency force at any time prior or since agentsare “REQUIRED” to inspect both the interior and exterior ofevery home prior to binding coverage on a homeowner’s policy.

In fact there have been discussions in select agent/com-pany sponsored “outings,” to the contrary, of course these “out-ings” were not made public and only for the select few agentsthat belong to the “in” crowd who are not held accountable tothe same standards as the rest of us.

In 2010 the interior inspection was a voluntary processwhich entitled the homeowner to a discount, and then theAgency Operations Manual was revised with a print date of2011 which incorporated the verbiage that interior inspections

were no longer voluntary, but now mandatory yet no communi-cation or bulletin was ever disseminated to the agents.

When one calls ServicePoint he/she will still be told byunderwriting that no interior inspection is required unless thehome is a 360 High Value dwelling.

Why? Because the company, your District Manager, andyour Division Marketing Manager know that they all want theircake and eat it too. If they push the requirement for interiorinspections it will impede production and believe me it does.

My production has been significantly hampered because ofthe time I am required to spend conducting these inspectionson every home we quote before we can write it; unfortunatelymany do not qualify.

I have been subjected to aggressive dogs, half-dressedpeople, people with criminal records, only to mention a fewwhile other agents are not being held to the same standard,why? Because Farmers wants to reserve their option to fileagainst your E&O policy if they are forced to pay out a claimthat they want to get restitution on without having to face anylitigation against a client.

Clients have rights and wouldn’t tolerate it. Farmers’ agentshave little recourse which puts them in just the position of asitting duck waiting patiently for attack.

I must say I have slept much better since I learned that I donot have to agree to provide a recorded statement without anyprior notice despite how old the policy in question may be andwithout time to research my records and files.

I also have slept much better since I changed my E&Ocarrier to the UFAA plan; I know that any such future frivolousattempts to file an E&O claim against my carrier without justi-fication will be denied quickly without providing Farmers theluxury of participating in the claim review process.

It was a tough seven months, but I’ve learned a lot throughthe process and I want to share the experience not to retaliate,but to save any other agents the grief I went through during thepainful process.

An organization’s values and its reputation are determinedby the conduct of its people, regardless of their position orstature. There is an expectation that all agents perform theirduties with the highest regard for ethical conduct and rightfullyso, however we should be able to expect nothing less from ourleadership. Proper dealings with all people which includes theexpectation that agents should be able to count on being treatedwith fairness and respect.

Has the time passed when we should be able to expectand demand that the people who are in positions of leadership,whether at the corporate, division, or district level be of highmoral character with virtues such as integrity, courage, forti-tude, honesty and loyalty? I think when these characteristicsare once again placed on top of the list our company will like-wise rise to the top, without that happening all the advance-ments in technology or product development and delivery willbe lacking and the company’s financial results similar.

Good begets good, and well… you know the rest.UFAA Member

TRUST AND RESPECT FROM ABOVE . . . MY EXPERIENCE


Every month thousands and thousands of agents call andsend emails to UFAA expressing their concerns with the direc-tion of Farmers and the behavior of certain management indi-viduals that impede and interfere with their ability to serviceand sell insurance policies. It is probably fair to say that themajority of management individuals are academics in the sensethat they have no real concept of what it takes to sell andservice clients in an insurance agency. For them it is all aca-demic, something they read about or learned in a classroom. They are given quotas from upper management and their onlyconcern is achieving their quota by whatever means neces-sary. Which brings me to the purpose of this article. Most agentsknow that December is hump month for Life insurance so thatDMs, DMMs, State Directors and other management individu-als can try and hit their assigned quotas. This is critical tothem personally as their bonuses, maybe their very jobs, arebased on the achievement of their quotas. So the pressurehas begun. Agents are starting to report that they are receiv-ing letters from their State Directors informing them that theyhave only sold X amount of policies in the last 12 to 18 months.The agents have noticed that the letters are being copied totheir DMM, District Manager and agents file. Let us be clear, agents should always strive to sell life

AGENCY CONCERNSinsurance protection, auto insurance, homeowners insurance,disability insurance, etc. whenever there is a need by theirclients. That is the professional responsibility of every insur-ance agent. Agents are also starting to receive letters fromtheir DMs concerning the same issues. This infuriates most agents as it is implying that the agent alsohas some type of quota. Most state they could care less if acopy goes in their agents file, as it doesn’t really mean any-thing. UFAA will be watching the behavior and actions of manage-ment individuals very closely to see if any of their actions vio-late the Independent Contractor ruling. To refresh your memory,that means that production quotas, mandatory meetings andmandatory reports are a violation of Federal law. If any of theseactivities are breached, then the agent may be reclassified asan employee by the IRS and FGI could be responsible for theagents Social Security taxes, paying vacation, etc. The AAAalso specifically states that there are no production require-ments and nothing in the contract shall be construed as anemployer/employee relationship. Please inform UFAA, whether you’re a member or non mem-ber at [email protected], if you feel your Agency Contract or In-dependent Contractor status is being threatened. Tom Schrader, PresidentUnited Farmers Agents Association

THERE IS STILL TIME TO ACT . . .

UFAA National is running a Winter Warm-Up until January 31st. ANY AGENT THAT JOINS BETWEEN NOW AND THEEND OF JANUARY WILL RECEIVE $100 OFF THEIR FIRST YEAR OF MEMBERSHIP. Only Applications for Full RegularMemberships paid annually will qualify for this discount. In addition to the $100 discount for the joining member… If a member recruits 3 new regular member between now andApril 30th they will receive $100. There is no ceiling on this part of the membership drive, recruit 3 regular members get$100, recruit 6 get $200, recruit 9 get $300 and so on. Payouts will happen at the end of the Membership Drive and beprocessed on the May 15th check run. This membership drive only applies to REGULAR MEMBERSHIPS. This is does NOT include Career, Associate, Affiliateor Limited Members, but is for any payment mode; annually, semiannually or bank draft. Any rejoining member must have a MEMBERSHIP LAPSE of 90 days or more. The recruiting agent must be noted on the application. Again, this membership drive is only for regular memberships, this is does NOT include Career, Associate, Affiliate orLimited Members, but is for any payment mode; annually, semiannually or bank draft. If the chapter elects to send out a membership drive email through the National Office, the chapter must compose theemail that is to be sent, any resulting member will be placed into the recruiting chapter.

Libby BersettAssistant Office Manager

PS…

• Regular Member: Farmers Insurance Agents with an in force Agent Appointment Agreement.• Associate Member: Former agents of Farmers Insurance Group who no longer have an in force Agent Appointment Agree-ment and who are not employees, agents or representatives of an insurance company that offers one or more of the samelines of insurance as Farmers Insurance Group.• Affiliate Member: Any person or organization not qualifying under Regular Membership or Associate Membership• Career Agent: An active Farmers Agent Still in the Career Program, Renews at Regular Member rate


COFFEE BREAK PITCH . . . Say, Bob, I had something come up in a meeting theother day that I’d like to show you. Help me out will you? I want you to take one of my business cards and writeon the back of it the name of your best friend or yourbrother, someone who you really believe that would helpyou out if you asked. No, I’m not going to ask who it is or ask for my cardback. In fact, I want you to hang on to the card and thinkabout what I’m going to say next. There are two names on that card now, right? One of the people named on that card can make surethat if something happens to you . . . like maybe a drunkdriver takes you out on the way home from work . . .

ONE of those people can:Pay off your mortgagePay off all your credit cardsPay the hospital bills from the accidentPay for the funeralSend your kids to collegeProvide a stipend to you spouse

Look at the name on the back . . . don’t show it to me. . . can he or she do that? I can! Perhaps we need totalk about how.

HAPPY VETERANS DAYI am a Veteran of the Farmers Field Force Army and the voiceof many who have 20+ years in “service” to the company.

I, and others, have the old Agent Appointment Agreement andthink what the company is doing is wrong. We aren’t inter-ested in Quote, Grow, GO!

We’re here to provide customer service to our clients and en-joy the fruits of years of labor.

Why are you trying to drive us out of business? There arecompany employees (executives) who don’t have a clue aboutwhat customer service is, only the bottom line. This is notwhat Farmers Insurance WAS all about! We’re not the “Farm-ers Family” we used to be!

Maybe some of us old-timers could do better if we had moreand/or better training in our “SYSTEM.” Personally, I am in-timidated by our quoting system and would like some classeson all aspects of what we can do on our dashboard.

And, what we should be doing each day to make everyonehappy.

Instead of hassling us about “Take 5”, AMP, new business andPIF growth, help us do better with ECMS and all the tools.

Maybe we could help “The Company” reach its goals and feelbetter about what we are all here for . . . Doing the right thing!

An unhappy Farmer’s Veteran on Veteran’s Day

LITTLE TRUTHS . . .

Sometimes, when I look at my children, I say to myself, ”Lillian, you should have remained a virgin..”

Lillian Carter (mother of Jimmy Carter) <><>

I had a rose named after me and I was very flattered. But Iwas not pleased to read the description in the catalogue: -

“No good in a bed, but fine against a wall.” - Eleanor Roosevelt -

<><> The secret of a good sermon is to have a good

beginning and a good ending; and to have the two as close together as possible

- George Burns -<><>

By all means, marry. If you get a good wife,you’ll become happy; if you get a bad one,

you’ll become a philosopher. -Socrates -<><>

I was married by a judge. I should have asked for a jury.- Groucho Marx -

<><>


I just read my notice of class action settlementwww.MNFarmersFCRAsettlement.com for Auto renewals inMinnesota from November 25, 1999 to June 2, 2000 and April1, 2000 to July 31, 2003. The settlement offers $35.00 and a free credit report. WOW,a very compassionate gesture to offer a free credit report thatanyone can acquire for free to begin with. And, in order to getthe money you have to order the credit report. Sounds fishy tome and thirty five dollars doesn’t come close to some of theincreases we saw on renewals during that time. Black boxunderwriting and credit scoring is undoubtedly the biggest rea-son for client runoff, cutting the largest number of Farmershouseholds in Minnesota history. Month after month we watchedFarmers number of households go from a high of 299,748 re-ported in November 2001 to 196,620 reported in June 2009when Farmers (we believe out of embarrassment) stopped re-porting numbers of households. More bad publicity for Farmers adding fuel to the fire thatFarmers Executives just seem to ignore. How many of theseclass actions will we see in the near future? They seem to bepopping up with more frequency than ever. The strategy to shootfirst and ask questions later may sound easy but often back-fires in the end. On the other hand, actuaries can anticipatethe number of people they expect to submit a claim as mem-bers of each class action. I am sure it is never even close to100% as many people refuse to have anything to do with it.So, when Farmers is able to make the most of a seeminglybad situation and settle for literally nothing but a little bad pub-licity and possibly an opportunity to cherry pick the peoplethat apply it only makes good sense. Now Farmers makes the customer study a claim form, re-member or look up their policy numbers, and jump through allthe hoops to collect. Class members that submit a claim formwill receive a voucher that allows them to access a free credit

report. Those that use the voucher to review their credit reportwill receive the $35 payment. Keep in mind that if Jr. just got their license back then andMa and Pa had a couple of policies that went from Farmers toMid-Century or visa-versa, and/or back and forth a couple oftimes it just isn’t worth the effort. This guy was insulted whenhe got his renewal back then and now you’re offering a freecredit report, and voucher for his trouble. Back then we thoughtit was a big deal when Farmers sent 1 billion dollars to Zurichin profit for the year. They just reported close to 2 billion for thefirst half of this year. Times are tough.

Vice President Chapter 17

Another Class Action Settlement, When a Wrist Slap is Not Enough

Details from an agent contact memo -

FGI walked into his office today and gave him notice. Thereason given is affiliation with his son who is a independentagent. It appears that Keith gave his son his old fax numberand according to the Agent Guide that shows his affiliation.Keith does not give his son any FGI policies and they havedifferent offices with separate addresses. Keith has followedhis contract. The DMM said they could have given him a 30day notice. Keith is choosing to forgo the TRB and get onwith his life. We discussed all the tricks FGI uses to say anagent has broken his contract so FGI will not have pay the lasttwo checks. Sending Keith copies of the fair well letters and we dis-cussed how to protect his contract value. Also recommendedKeith call LT because Keith writes mostly commercial policies.

AND HOW DID YOUR DAY GO?

Police Stop Man At 2 am

An elderly man is stopped by the police around 2 am and is asked where he is going at this time of night.

The man replies, “I am on my way to a lecture about alcohol abuse and the effects it has on the human body, aswell as smoking and staying out late.”

The officer then asks, “Really? And who is giving thatlecture at this time of night?”

The man replies, “That would be my wife.”


Regularly, I have business clients tell me with confidence,“I don’t need to worry about hiring this new employee eventhough she has a non-compete with her former employer. Thoseagreements aren’t enforceable anyway.” Just as often, em-ployers complain, “He can’t go to work for my competition! Hehas a non-compete agreement with me.” Who is right? At therisk of sounding like a lawyer, I have to say, “It depends.”

Competitive activity

Covenants not to compete (non-compete agreements) are con-tractual arrangements in which one party (typically either anemployee or a business seller) agrees that he will not engagein certain competitive activity to the detriment of the other partyfor some specified period of time. In some jurisdictions, likeCalifornia, state law prohibits this type of agreement in theemployment context.

Other jurisdictions, including Michigan, expressly permit non-compete agreements by statute. However, even where theyare permitted, these agreements are typically subject to cer-tain “reasonableness” standards. The Michigan statute, forexample, provides: “To the extent any such agreement or cov-enant is found to be unreasonable in any respect, a court maylimit the agreement to render it reasonable in light of the cir-cumstances in which it was made and specifically enforce theagreement as limited.”

In practice, this means that any given covenant not to com-pete is presumed to be enforceable but it is also subject toattack under a claim that it is not “reasonable.”

Protect business interests

Because non-competes are legally permissible, employersshould take advantage of the opportunity to protect their busi-ness interests by seeking reasonable non-compete commit-ments with their employees. To minimize the risk of a chal-lenge, employers need to exercise restraint and craft restric-tions – especially as to duration and geographic scope – asnarrowly as possible. Additionally, employers should be leeryof hiring an employee from a competitor if that employee previ-ously signed a non-compete agreement with the competitor.

When an employee violates non-compete agreement

On the flip side, when an employer believes a former employeeis violating her non-compete agreement, it must evaluate thecost of enforcement against the actual harm it expects to suf-fer. To gain any meaningful benefit, employers typically willneed to file a lawsuit quickly and ask the court for some sort ofpreliminary injunctive relief. This means legal costs will becompressed and accelerated as attorneys ramp up for what iseffectively a trial within a trial at the hearing for the preliminaryinjunction.

Satisfying non-compete reasonablenessrequirements

My advice? Take a cautious approach. If you are consideringhiring a new employee who already has a non-compete agree-ment with her former employer, do not assume that the agree-ment won’t be enforced or that the former employer will notdrag you into court to fight over it. If you are the former em-ployer, and you wish to take action to enforce the agreement,you need to do a cost benefit analysis to ensure that the ben-efits of enforcement justify the cost of getting there. If you donot have non-compete agreements in place with your salesand management staff, you should. And if you do, conduct afull review to make sure they have in fact been signed and thatthey have been tailored narrowly to satisfy reasonableness re-quirements under the law.

As always, we welcome your calls about questions youhave. Please don’t ever hesitate to call us. Or, if you prefer,use our convenient online Contact Form and we’ll get ananswer to you right away!

Compiled for “Know it Now” by:

Dirk A. BeamerWRIGHT PENNING & BEAMERThe Power of KnowSM27555 Executive Drive, Ste. 165Farmington Hills, MI 48331(248) 477-6300(248) 477-7749 Fax(248) 893-1401 Directwww.wrightpenning.com

Non-Competes. Are They Legal?

TEAM - from your state leader -

Farmers agents received 4.7 million leads from 21st Cen-tury so far in 2011! This has resulted in over 20,000 sales! These leads come from 21st Century customers whowant Farmers Home, Life insurance and other products(Cross Sell) or from prospects who chose not to take 21stCentury Auto offered to them (QNT), but want FarmersAuto. Home, Life and other products. 21st Century lead prospects and customers receive thisNICE Farmers life offer (attached) in letters and billing state-ments. Take advantage of this free marketing opportunityto cross sell your 21st century leads/clients. (with somereduced commission rates)

Response - from one of his followers

Does this mean that out of 4,700,000 leads, we wrotealmost .005 % of them? That’s sure something to beproud of! A real success story for the agents ANDthe companies.


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FARMERS AGENTS ASSO

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9785 Mackenzie, Suite 104St. Louis, MO 63123

Address Service Requested

UNITED FARMERS AGENTS ASSOCIATION9785 Mackenzie, Suite 104

St. Louis, MO 63123Offi ce Hours: 8 am to 5 pm Central Time

E-mail: [email protected]: 314-631-7898 For Members: 800-275-8668 Fax: 314-631-7963

FARMERS AGENTS ASSO

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Executive Board

Chapter Presidents

President—Tom Schrader(P) 913-631-1202 (F) 913-403-8636E-mail: [email protected]

Treasurer—Steve Hooper(P) 406-752-4357 (F) 406-257-5190E-mail: [email protected]

Legal Activities—Allen Yerxa(P) 877-393-8532 (F) 303-469-3659E-mail: [email protected]

UFAA Historian—Chuck Simpson(P) 913-788-3110 (F) 913-788-5593E-mail: [email protected]

Vice President—Mike Ward(P) 918-258-6611 (F) 918-258-6613E-mail: [email protected]

Membership Director—Cindy Eggert(P) 406-252-1644 (F) 406-252-1796E-mail: [email protected]

Governmental Affairs—Klaas Tuininga(P) 406-587-0765 (F) 406-586-3817E-mail: [email protected]

UFAA Technology Services—Alex Conger(P) 866-441-8018E-mail: [email protected]

Secretary—Bill Phillips(P) 530-895-1887 (F) 530-865-1604E-mail: [email protected]

Media Relations—Larry Restalrig-Logan(P) 360-659-4114 (F) 360-659-0750E-mail: [email protected]

Director at Large—Bernie Clark(P) 970-353-2208 (F) 970-353-2288E-mail: [email protected]

For information, contact the Chapter President nearest you or any Board Member

Visit our website — www.ufaa.com

ARKANSAS(30) Bill Miller, Little Rock 501-223-2661 [email protected](31) Deanna Parks, Barling 479-452-6491 [email protected]

ARIZONA(16) Murray Fink, Tucson 520-622-6405 [email protected](43) David Webster, Mesa 480-964-6414 [email protected]

CALIFORNIA(01) Phil Sutton, Paradise 530-876-8604 [email protected](02) Victor Acevedo, San Pablo 707-712-1228 [email protected](04) Dan Nelson, Bakersfi eld 661-831-4422 [email protected](05) Jan Neveu, Glendale 818-943-3995 [email protected](08) Damien Simeone, San Diego 858-459-3741 [email protected](10) Chuck Hall, Fresno 559-225-6510 [email protected]

COLORADO(27) Terry Beatty, Northglenn 303-457-3333 [email protected](46) Ron Schmidt, Fort Collins 970-223-8700 [email protected]

IDAHO(28) Randy Frates, Fruitland 208-452-4011 [email protected]

ILLINOIS(21) Anil Sharma, Chicago 773-741-3549 [email protected]

KANSAS(13) Keith Turnbaugh, De Soto 913-585-1968 [email protected]

MICHIGAN (45) Mike Lillo, Kentwood 616-281-2888 [email protected]

MINNESOTA(17) Kim Rich, Minneapolis 952-929-8960 [email protected]

MISSOURI(41) Mel Hollandsworth, Granite City, IL 618-797-0070 [email protected]

MONTANA - WYOMING (51) De Ann Andre, Great Falls 406-453-1100 [email protected]

NEBRASKA - IOWA(19) Tom Dahulick, Omaha 402-572-9344 [email protected]

NEW MEXICO(24) Steve Collins, Albuquerque 505-275-2222 [email protected]

OHIO(44) Jeff Lamb, Centerville 937-435-3422 [email protected]

OKLAHOMA(12) Tony Reese, Lawton 580-355-1335 [email protected](15) Glenn Johnson, Tulsa 918-252-0561 [email protected]

OREGON(14) Merle Johnson, Wilsonville 503-682-1583 [email protected]

SOUTH & NORTH DAKOTA(52) David Leonardi, Grand Forks, ND 701-740-9870 [email protected]

TEXAS(33) Don Green, El Paso 915-593-4000 [email protected](34) Bruce Stone, Irving 972-986-8822 [email protected](35) Robert Fox, Houston, 281-920-2315 [email protected](36) Ruben Cantu, San Antonio 210-647-8552 [email protected]

UTAH(39) Carolyn Brock, Gunnison 435-528-7206 [email protected]

WASHINGTON(22) Steve Hall, Everett 425-379-7614 [email protected]

WISCONSIN(20) Ron Mikesell, Menomonie 715-235-6588 [email protected]

voicevoic - united farmers agents association · the hot seat for not hitting their numbers....

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