Running Clock Rant: Scratch Agent “Wiped Out”

In my day to day activities I have the opportunity to meet with agents from all companies. On Wednesday I met a former Allstate agent. This person started a scratch agency and survived for 5 yrs. The area managers encouraged this person to ‘invest more’ in your business. This was during the 2002-2007 period and  real estate was increasing in value. So, believing their repulsive story…the agent refinanced twice. NOT ENOUGH PRODUCTION was the call…and eventually took TPP–but not before, the agent lost the house and car. Naive–you bet. Business person–questionable….a failure?…not in anyone’s eyes except Allstate’s. I spent time with the agent assuring that he/she was not a failure but rather was lured into a situation that was a ‘no–win’ situation. Now, more agents are buying into the 8/8 contract because “We can make up to 14% more”…..and perhaps they will. However, insurance cos are NOT static and there is the ‘insurance cycle’. Finally, as the company allows large agencies to buy smaller agencies–my question: “Who will ultimately purchase these large agencies?’” The company will do it, and it will be valued at a 8% commission level. When this happens, those ‘fat cat’ agents will scream — “That’s not fair!” Naive perhaps, business people–questionable–drinkers of ‘kool aid’–unfortunately.