SERIOUSLY

UFAA (United Farmers Agents Association) is being overwhelmed by members and non-members concerned about the unrealistic goals placed on the Farmers Agent by FGI (the management company).

In many states the premium rates are increasing on homeowners insurance and business insurance by 20%, 30% and in some cases 40%. The new rating system on auto households when adding youthful drivers or removing a vehicle/driver from a household can sometimes cause massive negative premium adjustments. There are constant meetings and threats about agents not keeping their agencies because they are not living up to the arbitrary quotation program, AGM (Agency Growth Model), that FGI established. All the while the average agency is spending more and more time explaining the massive rate increases, why premiums go up on all cars when you make a change with the new auto rating system and the new imposed wind/hail deductibles with buybacks. In other words, more and more service work, more policyholder retention work and less time to make quotes and sales to new business clients.

Now comes word from a source in Colorado that FGI will start giving a 30 day notice to the bottom 01% of agents in Colorado and the next 01% of agents will be DARGED. Anyone in the bottom 05% over the bottom 02% are next in line. The justification for violating the AAA, which requires 90 days notice instead 30 days? FGI is hanging their hat on the phrase in Section J of the AAA that states: "Provided only that the Agent conform to normal business practices." Their definition of normal or good business practices can be found in the Agents Guide. If you will recall, UFAA recently sent FGI a letter stating that "The Agency Force does not accept that the Agents Guide as part of the AAA.” Furthermore, the Agency Force does not accept that just because FGI updates or changes definitions in the Agents Guide, it affects the AAA. So FGI, just because you change the definition of normal business practices in the Agents Guide, to fit your subjectivity, does not give you the legal right to violate the AAA.

Let's clarify something once and for all. Does FGI have the legal right to evaluate the annual business results of the Independent Contractor? Yes they do, and that is why you keep hearing them say "Acceptable Business Results." But, what they don't tell the agent is that because the agent is an "Independent Contractor" FGI does not have the legal right to direct or guide the agent through meetings, quotas, etc. to get the agent to their end result…"Acceptable Business Results.” In truth, it seems that in many ways FGI actually treats the Agency Force more as Franchisees than Independent Contractors.

So the average agent will sit back after reading this article and say, "Well I'm not in the bottom 07% right now, so why do I care?” Well in fact, you should care because what affects one agent ultimately affects us all. FGI keeps raising the rates, changing the rules, requiring you to do daily quotas, etc. If they don't get the end production results they want, you know they will increase your daily quota requirement. They keep tweaking their interpretation of the AAA and what it means, and for the first time, we are now competing against ourselves through the acquisition of 21st Century. FGI states that they are not competing directly against the Agency Force because 21st Century is an internet writer. Ask any agent if he/she buys that argument and whether they believe it is a violation of the AAA that Farmers Agents can't write business that is listed as part of the Farmers Exchanges.

The Agency Force hopes that the information coming out of Colorado is untrue. And FGI, if you're going to terminate an agent, then at least have the courage, decency, morals and ethics to honor the language and spirit of the AAA. To do otherwise is to let the rest of the Agency Force know that they may work for a less than honorable company.
 

Tom Schrader
President