ALL AGENTS WANT IS A LEVEL PLAYING FIELD 

FGI made it very clear to the agency force in meeting after meeting that it is their intention to maintain the base auto premium revenue at all costs and therefore there will be no rewriting or conversions of any Legacy auto policies to the new FA2 auto rates.  We will revisit this strategy later, but for now we need to discuss a problem.  UFAA has been receiving a ton of emails the last couple of weeks from concerned UFAA members, nonmembers, DMs and company personnel that some of the agents (usually newer agents on the career program) are not playing by the rules like everyone else.  This places those veteran agents who are playing by the company rules at a disadvantage over the newer agents.  The email's from the concerned individual’s state the legacy conversion abuse works like this: 

1.)   Usually a veteran agent leaves Farmers, passes away, retires or is terminated.

2.)   The district manager gives the polices to a new agent he has hired in 500 numbers at 04% commission to establish a core income base for the new agent and reduce the district managers financial liability on the subsidy program.

3.)   The new agent realizes that he can't convert the policies he has from a 500 series number into a 300 series number and therefore will only make 04% instead of 10%.  So he allows the policy to lapse at renewal, obtains an insured's cancellation request to cancel for rate reasons and then he scans it into the image center.  Twenty fours later he turns around and writes the policies as new auto business under FA2 rates into the 300 number series.  Two things happen;

1.) He is writing new business that count towards his subsidy and

2.) He is making 10% commission instead of 04% commission.  But a funny thing happens to FGI, they lose 06% on the deal. 

Now if this is true and there is no reason to believe it isn't true, because UFAA received the same story from many, many different sources from many different states and districts.  The primary reason given from veteran agents as to why they were reporting this problem was that they were frustrated that the new agents were being allowed to manipulate the system and they would start their agencies on the wrong foot. Many of these agents are very large auto producers with large agencies. 

The district managers that reported this issue felt it was highly unethical behavior and stated that the district managers that were looking the other way while this was going on was doing a huge disservice to their agents by teaching them not to follow the rules and take short cuts.  The company people who reported this issue were concerned that this behavior was undermining Farmers core principles and profitability and was just plain wrong.  

I would like to say that there are many, many issues and concerns that are reported to UFAA every day, but I felt this particular issue was a priority to bring to the attention of FGI management.  After all if agents are told not to cancel and rewrite or convert Legacy auto policies and it is being abused, shouldn't FGI make sure this unethical behavior is addressed?  

Tom Schrader
President
United Farmers Agents Association