Allstate vs State Farm - Which is the better company?

Submitted by Anonymous (not verified) on Thu, 12/13/2007 - 05:03
State Farm is known to employ more than 60 million individuals dedicated to provide serving millions and providing them with insurance solutions. All state has more than 70 000 professionals offering insurance solutions to millions of individuals.

The consumer's point of view

Consumers are divided in their opinion of the two companies. Some think that State Farm is the better provider while others think Allstate is. There are individuals in our community who believe that since both State Farm and Allstate are big names in the insurance industry, it is hard to compare them both.

State Farm and Allstate seems to have a tough competition between them where they have almost equal votes in their favor. Both State Farm and Allstate share the same amount of criticism too from agents as well as consumers. Individuals have accused one of the 2 companies of denying claims for absurd reasons and the other of not paying claims again for absurd reasons.

The community has a State Farm agent putting his vote in favor of both the companies. The agent says that State Farm gives more importance to professionalism and a sense of healthy competition.

Complaints against State Farm

  • This company is accused of not being clear in their contract with the agents.
  • They have the reputation of overcharging consumers.

The fact of the matter is that, all insurance companies seem to have unhappy customers or employees. Each company has different policies and hence they may or may not suit a customer or an individual looking for employment with that organization.

Related Readings:

I am interested in opening my own auto insurance agency. Can you advise which one is better between Allstate and State Farm? thanks

Posted: 13 Dec 2007 10:38 Post Subject: Jus a little thing

Hi, State Farm is not bad for you if you're not a body shop. You should know that state farm claim car repairs offer lesser amount as compared to AllState. But then again All state is costlier in terms of Auto insurance premiums. Hope thats clear enough! Bobby_Rudy

Posted: 13 Dec 2007 10:54 Post Subject: I'll vote for State Farm

hi all!
I think people are generally happy with State Farm. Now, that I have my insurance with them for years - I see that they were never apprehensive towards paying for my broken sewer. Moreover the premiums remain flat. Isn't that a good deal?
Regards,
Pollarjerky

Posted: 13 Dec 2007 11:03 Post Subject:

Honey, Allstate and State Farm, are the two biggies in the US insurance industry. Therefore, it's very hard to compare between them. The above two posters have commented in favor of State Farm but I'm darn sure that you will come across many who are happy with Allstate. State Farm or Allstate doesn't affect much an agent as long as he is OK with understanding the needs of his clients.

Hope you will choose the right path for you.

Posted: 13 Dec 2007 11:11 Post Subject: State Farm vs All state

Well my friend,

In that case I'm sure you'd love to count upon the feedback of an agent as well. Am I right ? I've worked with both of these companies ( n my experiences with State farm was not good even though their programes & rates were seemingly better for the prospects) but I won't share with you anything about my present company as I wanna remain neutral within this conversation. But yeah, there is something that you ought to know - customers would count a lot on their local agents.

See, now that I'm an agent, I do share both my cell phone no. as well as my residential no. with my customers. & I also walk that extra mile to accept payments from my customers even though it is the first day of the week. I remain focussed lest their policies may get canceled.

I don't thing it is a mistake for anyone to switch in to a new carrier every year ( keeping in mind the rates & disc). But yes, when I have a fairly strong bonding developed between me & my customers then I believe, it matters to them the most. All that they want is to discuss freely about the rates & the benefits that come up time to time!
Thus I'd firmly believe that its somewhat difficult to conclude at this note as the rates may vary owing to the varying effect of the policies upon different things.
Thanks,
Won'tTellYouMore00

Posted: 14 Dec 2007 05:55 Post Subject: becoming state farm agent

Have you considered Farmers?
I could write volumes on why I don't like Allstate and know people who could do the same with State Farm. One denies claims for ridiculous reasons and the other seems to have a history of not paying claims for any reason.
I'm afraid that the only person who controls the way you do business is you. Ethical, honest, trustworthy, consumer-conscious agents are not as common as you might think.

When your policy holder gets "jerked around" over a claim, you'll need to take a stand for your client. Even if it involves administrative action, sometimes someone has to challenge the system. Your clients depend on you.

Posted: 22 Dec 2007 04:39 Post Subject: I am an Agent

Being a state farm agent , I find it a great way to go... competitive to get in. Allstate you buy your book of business... State Farm you earn it thru professionalism and competition. They are both good companies. Go interview both companies.

Posted: 22 Dec 2007 09:36 Post Subject:

Hey Keruxjts, why don't you become a community member by signing up. I am sure being a state farm agent you would be of help for all of us here.

Am I right, guys? :D

Thanks,
Andy

Posted: 17 Jan 2008 03:46 Post Subject: Farmers? Bad Choice

I entered the Farmers system last year and became increasingly disllusioned as each day passed. This company talks a good game, but when you start looking under their knickers you'd better have eye protection!

Am also talking with State Farm and Allstate. All insurance companies have unhappy customers, but who tries to do something about it?

Posted: 23 Jan 2008 06:51 Post Subject: Becoming State Farm agent: check the terms of new contract

Unfortunately, being a state farm agent I can not recommend starting the new contract the way its structured today. Be an Independent Agent and actually own what you produce. If I was starting over that's what I would do being a state farm agent.

Posted: 13 Feb 2008 10:05 Post Subject:

So can you highlight some of the things that are not favorable to new State Farm agents. All I've heard from every other State Farm agents and employees is how bad the new contract is for the new agents. I think it's called AA97? State Farm wouldn't disclose any of it to me. I think their response was, "Don't worry about that right now". If State Farm can't disclose their contract before I commit to them, I'm scared to think what else I have to worry about once I do commit to them. Allstate wasn't scare to disclose their contract and agreement to me. Makes you wonder...

Posted: 13 Feb 2008 10:38 Post Subject:

"Don't worry about that right now". If State Farm can't disclose their contract before I commit to them, I'm scared to think what else I have to worry about once I do commit to them.

I would beware of ANY business that practiced this type of logic...seems unethical to me....and seriously I wouldn't commit to a cup of coffee without knowing what was expected in return...and certainly NOTHING contractual! :shock:

Posted: 18 Feb 2008 04:10 Post Subject:

So can you highlight some of the things that are not favorable to new State Farm agents. All I've heard from every other State Farm agents and employees is how bad the new contract is for the new agents. I think it's called AA97? State Farm wouldn't disclose any of it to me. I think their response was, "Don't worry about that right now". If State Farm can't disclose their contract before I commit to them, I'm scared to think what else I have to worry about once I do commit to them. Allstate wasn't scare to disclose their contract and agreement to me. Makes you wonder...



Anytime somebody gives you an opinion ask the following.

1) What makes you say that?
2) How would you do things differently?

then say...
3) How do you mean?

Expand, isolate and then reinforce every question.

Take everything with a grain of salt and remember that you are the one whose word is on the line. I'd check into both companies, look at the policies of both companies, compensation, training, mentoring, growth, etc. etc. and then make your decision after examining ALL the facts.

If a company will not give you a contract to read over (at your leisure) you need to get out of dodge immediately.

Insurance is a tough business and some agents have no problem taking advantage of the ignorance of newbies.

Posted: 20 Feb 2008 04:48 Post Subject:

My family has always went with State Farm, until they realized State Farm had been overcharging them. They ended up receiving refunds totalling almost $2,000. The made a transition to a much smaller insurance firm since. I would probably go with State Farm over Allstate though. Something about insurance companies with huge advertising campaigns urk me.

Posted: 11 Mar 2008 04:51 Post Subject: State Farm/Allstate

Having looked into being a state farm agent and working with Allstate for 7 years, I went independent.

With Allstate, you own your book and thus become an allstate independent agent to some extent. They will buy your book should you decide to sell, at their price. Or, you can sell it to someone, provided Allstate approves of them. You can build a nest egg with them, if you can sell policies with them. That's becoming harder and harder for many agents the way their rates are sky-rocketing as they make a push to scale back their exposure.

State Farm owns your customers. When you retire, you're left with nothing. You have to pay for running your agency the whole time, meeting all of their requirements. But in the end, it's not yours. Might as well work for someone else and save the office expenses. They also dictate when and where locations can be placed.

I chose none of the above. It's all on me, with no financial assistance, but I enjoy being able to quote 12 auto and home companies for each prospective client, increasing my ability to truly shop coverage and cost for each person I speak to. I enjoy helping the customer, not the corporation.

Posted: 12 Mar 2008 05:32 Post Subject:

Hey Guest, you are sounding to have a great experience in the field of selling insurances. Why don't you join us? I'm sure this community can gain a lot from your expertise.

Waiting to seen you in this community.

Posted: 15 Mar 2008 06:04 Post Subject:

I'm here now.

I've found these forums are a great way for us to share knowledge and customers to benefit by obtaining the unbiased answers they need.

Posted: 04 Jul 2008 11:35 Post Subject:

With the fierce competition in the market, it all will depend upon your performance. In addition, you're required to meet their sales obligations in each period, otherwise they may choose not to allow you to use their names.

However, I'd suggest that you do your own research regarding the competitiveness of the products offered by the companies and also contact some of the local agents for insights.

Posted: 04 Jul 2008 11:54 Post Subject:

Well, there are other aspects to look into....

  • what product you intend to sell?and what the company offers in that line?
  • whether the company's products are competitive enough, as compare to its competitors?
  • what is the socio-economic condition of the market in the locality? is the market capable enough to pay the premium?
  • what is overall market scenario? whether there is enough demand in the market or not?
  • How much the other agents are making?
  • demand in the market, like- if you find that there is a huge demand for small business insurance in the locality, but no agent is offering the right kind of product, you may consider channelizing your business to that line.


Regards,
Dan

Posted: 04 Jul 2008 12:07 Post Subject:

I'm looking into entering the insurance agent profession. However, I don't have any experience in this field, neither do I have the license. Well. I'm planning to get the license soon. But I've another issue, I've a pretty bad credit and wud like to know if it'll affect my prospect in becoming the agent?

Any advise will help...Thanx

Posted: 04 Jul 2008 01:44 Post Subject:

I've a pretty bad credit and wud like to know if it'll affect my prospect in becoming the agent?

Absolutely, especially with the larger carriers I would think....

Posted: 05 Jul 2008 10:23 Post Subject:

Hi Arnold, your bad credit may or may not affect your prospect of becoming an agent. Though there is no direct correlation between efficiency and credit score, but employers are gradually putting emphasis on credit report as the criteria for employment. The general concept is that if you're bad in managing your finance, you're ought to be bad in managing your business. However, some employers won't mind recruiting you if you can prove your worth.

Posted: 05 Jul 2008 10:36 Post Subject:

Credit score won't affect your job prospect. As far I know both State farm and AllState don't look into the credit score of the candidate while recruiting.

however, an independent agent should be good in managing finance. I've seen agents ending up in debts for bad financial management.

Posted: 08 Jul 2008 08:26 Post Subject:

Hi all !!

It seems to be an interesting discussion to drop in :D State Farm certainly offers good opportunities for aspiring agents. However, when the name of State Farm ensures minimum business, it is often difficult to meet the break-even point. Its not only because of the competition from the other companies agents, but also because of the competition amongst the State Farm agencies. Moreover, the turnover of the State Farm agents, for the initial years, remains pretty low.

However the success of all the State Farm agents can be attributed to the fact that State Farm follows the strictest policy of recruiting agents. They take the pain to train you for around ten months before you're all set to operate your own business. And, during this period you'll be paid by State Farm.

Hence, if you've decided to join State Farm, ensure that you also possess the hardest set of mind with the zeal to excel.

Hope I was of some help.

Regards,
Juanita

Posted: 08 Jul 2008 09:13 Post Subject:

Let me throw some light upon the recruitment process of StateFarm. Juanita has mentioned its right that StateFarm train their agents for the necessary skills.

The recruitment process involves evaluation of sales aptitudes, background checks, face to face interviews and personality test. It may even take 2 years from ‘acceptance' to become fully operative StateFarm agent with own office. State Farm mainly look for the following characteristic in the candidate….


  • Ability to operate a business
  • Ability to sell insurance and financial products of the company
  • Desire to excel and self motivation
  • Dedication towards work and desire to be compensated best.
  • Strong written and communication skills


After approval you'll receive training from the in-house trainers of StateFarm.

Wishing you all the best!!
Darla

Posted: 28 Aug 2008 11:02 Post Subject:

Its not the AA97 that is the bad contract its the TICA or AA04 contract that current agents are on that is causing them problems. They came up with the new contract in 2004 and almost every agent on it is still struggling. They have been many agents that have left State Farm due to it. I know agents that filed bankruptcy and have been divorced over it. They had meeting just this week with more lies and deceit from the company. You can't make any real money on this contract at best its a 50K a year job in your 5th year even if you are above average. There are rumors of a change to all getting the AA97 a good contract its not what the oldest agents have but still a good overall deal. Right now I would avoid State Farm like the plague unless you have $100,000 you want to invest with no guaranteed return.

Posted: 22 Sep 2008 09:31 Post Subject:

I looked at both and choosing Allstate was an easy decision. As "Guest" stated above, with State Farm, you do not own your business. With Allstate, I own my book of business and when I retire, I can sell it and 100% of the proceeds are mine.

One side note, I would never sell back to Allstate. They will pay approximately 1.5 times the value of the book. Selling on the free market will bring me anywhere from 3 to 4.5 time the value.

Posted: 19 Jan 2009 08:05 Post Subject: Allstate vs State Farm

Reading all of this information is very helpful because I am also considering both companies. I have a relative who is with State Farm and has done very well but he is pushing me towards Allstate. To say the least I a confused. I am making the jump from a career in claims to the agency side and want to choose the right company.

My biggest concern with State Farm is they don't have any expected agency opening in my area this year. With Allstate, they do have a local openning but I don't know much about the company (pay structure, products ect). If anyone has any advise in that relm I would love to hear it.

Thanks

Posted: 20 Jan 2009 01:42 Post Subject: Statefarm VS. Allstate

Matt,
I looked into both companies and It came down to my long term goal of owning the book. I think the Allstate model is good but both contracts require invested time and money. I think the requirement for both is around 30 k in liquid capital to open an agency and that is no where near enough. 50-100k is much safer and also a working spouse so you can invest in staff. With Allstate you need to write 50k a month in P&C which is approx 100 policys a month so by year 3 when the enhanced comp goes away you will have renewals around 160k that is with 90% retention. If you look at top producers there is about 4-5 agents in my region across 3 states writing this amount of business. So plan well dont just look at a 44% commission for the first year...it goes away what ever you write monthly plan on 10% renewals after three years. My advice is if you dont at the minimum have 50k and a working spouse avoid Allstate, go to Statefarm it seems that you can make a living with seeded accounts. Which may not be what you want to make but with Allstate your income can come when you build the book.

Posted: 21 Jan 2009 09:12 Post Subject:

I would suggest developing an independent agency rather than a captive agency like you mentioned. If and/or when the day comes that you leave the industry, captive agencies will not allow you to take your block of business. If they buy the block of business back from you, they will set the price. If you are independent, you take the business with you and you own it. Good luck.

Posted: 12 Feb 2009 02:40 Post Subject: Looking at changing industries

Am a pharmaceutical rep with 12+ years experience. Looking at becoming an agent. Is the job mentally stimulating/challenging? Financially worth it? Better to work for an agency or do your own thing?
Lots of questions I know but just trying to make the right decision. Would love to speak to above poster.

Posted: 12 Feb 2009 08:12 Post Subject:

Since you were a medical representative for years you may look into the area of health and life insurance. The agent is required to carry license of operation in almost every state. So, that the place to start. Obtain the licensing requirements from the DOI and prepare yourself for the test.

The career of an insurance agent is definitely challenging and financially worthy, but it'd also depend upon the skills of the agent. You surely will get more suggestions from other members, so, pls, hang tight. :D

Posted: 16 Mar 2009 04:11 Post Subject:

Yes. I know a lot of pharmaceutical reps and nearly 100% say that it was “fun” or “glamorous” in the beginning but after that wears off it is like running a bread route. No offense to bread route drivers… If you find the right home so to speak, you will be very challenged. Good luck.

Posted: 19 Mar 2009 12:46 Post Subject: allstate or state farm

Go independent!
With Allstate you better have 50k to spend getting started and be able to go 12 weeks without pay. You work for them and they can buy your book for 1.5 times the renewals and force you into bankruptcy. On the other hand if all goes well and you build or pay off a 2m book then you will be sitting pretty. Just hire some producers to maintain your growth.
State Farm is a whole different animal. You invest 20k and borrow 25k from them. Doesnt matter how much pnc or life you sell if you dont sell enough banking products then they non renew your contract and you are out the money.
Independent contracts are not perfect but they are better than the above mentioned ridiculousness. Also when you acheive your 2m book you will be drawing 15% renewals instead of 10% with allstate and even less with sf. 5% of 2m is 100k per year!

Posted: 30 Apr 2009 01:45 Post Subject: state farm

i am going to assume that you will need up front money to start with state farm??? Because if so, i am out.

Do they pay you for the "internship" period also?


reading some of these responses scarfes me

Posted: 30 Apr 2009 10:02 Post Subject:

i am going to assume that you will need up front money to start with state farm??? Because if so, i am out.



What do you mean by that? If you want to start as an independent agent you'd certainly need to make some initial investment and its true with all insurance agencies. State Farm is no exception.

An independent agent would be responsible for searching for his own business. And that would require investment.

Posted: 04 Jun 2009 02:13 Post Subject:

i am going to assume that you will need up front money to start with state farm??? Because if so, i am out.


What do you mean by that? If you want to start as an independent agent you'd certainly need to make some initial investment and its true with all insurance agencies. State Farm is no exception.



Not what the question asked. The poster was wondering if the captive carriers require you to have a certain amount of money in the bank (liquid capital) before the captive will consider giving you an agency contract, and the answer is yes.

The big 3 all have capital requirements of anywhere between $25 - 50k before they'll give you a contract. They realize that you have to have money to live on when you first get started in this business, and this is their way of making sure that you will be able to take care of your finances while building your business.

InsTeacher 8)

Posted: 10 Jun 2009 01:03 Post Subject:

I'm currently in training with SF, and they pay me what I was earning before in my previous job during the 9 month training "internship". When the training is over they give me a $18k signing bonus immediatley then $12k more after 12 months. They will also extend me a $30k line of credit, and subsidize a seperate low interest loan for furniture & office equipment. I am opening a new market office so I will not be getting a book, so they will pay me $11k a month to help me get started for the first 2 years. Then it tapers down to $8-5k/month years 3-5.

The new contract doesn't give as much commission up front as the previous contracts, but as you can see they give you a lot of resources to get you started. Also if perform exceptionally well you can more than double your commission when you get the yearly bonus. This contract is a performance based contract designed to get the agents to perform at a high level from the start.

Posted: 10 Jun 2009 08:59 Post Subject:

Anon, it's great to know that you are receiving supports from your recruiters. However, I'm curious to know whether you have to return any of these favors in the near future to State Farm.

Posted: 12 Jun 2009 01:03 Post Subject:

No, but the initial contract is for 12 months. If you don't perform according to expectations, they could choose not to convert it to a permanent contract. You will not have to pay back any money they gave you, but you are responsible for any loans you took.

Posted: 12 Jun 2009 05:30 Post Subject:

Hi anon,

If you don't perform according to expectations, they could choose not to convert it to a permanent contract.


Have they explained to you regarding the expected targets?

This contract is a performance based contract designed to get the agents to perform at a high level from the start.


Would you avail this loan for all 5 years? Or is it that you'd consider it upon your success rate? I'm asking this since you'd need to have enough resources to repay your loans if you're unable to meet the targets..am I right!

Steven

Posted: 12 Jun 2009 06:22 Post Subject:

Hi Anon,

Thanks for the reply, buddy :D

If you don't perform according to expectations, they could choose not to convert it to a permanent contract.



Okay, I think that makes sense.

What's the target they have set for you anyway? Since you are starting from scratch, are you experiencing any problem in getting business?

Apart from the assistance from State Farm what are your out-of-pocket expenses in running the agency?

Posted: 14 Jun 2009 04:37 Post Subject:

Steven,

The production targets vary based on market & the business plan that I presented to them. They are not unreasonable, but requires you to start producing immediately(meaning "get yourself out there now, no slow ramp up or apprenticeship").

However, the production targets are secondary. The primary focus for SF is that you are running the business in a well organized and ethical manner, that shows potential for sustained growth. There have been a number of agents that produced adequate numbers, but they didn't have their contract converted to permanant because they producing those numbers in a way that SF did not approve of. However unfortunate this may have seemed to these agents, SF has a brand & image they need to protect.

The loans are the agent's responsibility, regardless of success or failure. The agent is not required to take the loans, it is up to them. The loans are usually used for office equipment & furniture. If the agent has the means to aquire them without these loans, they can do so. Most agents taking over an existing book, usually negotiates a pretty good deal with the outgoing agent. New market agents tend to make use of the loans more often. The $30k line of credit can be used for anything, but it is up to the agent to manage it wisely.

Posted: 14 Jun 2009 04:48 Post Subject:

Hi Simon,

I have not yet completed my training, so have not begun producing. In my response to Steve above, I have addressed the targets.

As far as out of pocket expenses, I know agents that had no or very minimal out of pocket, and I know agents that put alot of money into the office and marketing. It is really up to the agent, and what he/she wants their business to look like. The most significant out-of-pocket expense is usually the lack of pay until the business becomes profitable. Most agents rely on their spouse for household income until the agency stabilizes.

Posted: 14 Jun 2009 06:33 Post Subject:

Insurance, like any other business can be a challenge to evaluate startup costs. In fact, it's sort of a catch-22 situation. You can try and pull off a shoestring startup in which you barely spend any money on marketing and office equipment, or you can borrow the money and put more money into marketing.

What can be difficult to evaluate is whether you will reach profitability quicker by sinking in the extra money, or if you will become profitable by operating on an extremely low budget. I would caution that if you are going to have clients coming into your office, you want to make sure it has a professional image. The last thing a client wants to see is office furniture that came from their neighbor's yard sale!

I agree that it is very easy to run numbers and project sales figures and say this is how many blah blah blah...but these figures are easier said than done. If you place the focus on doing the right thing for each and every customer, then you will reach success! Good luck!

Posted: 15 Jun 2009 08:47 Post Subject:

The $30k line of credit can be used for anything, but it is up to the agent to manage it wisely.


Do you know any module which shows how such line of credit could be managed effectively?

Posted: 17 Jun 2009 02:45 Post Subject:

Steven,
I'm not sure what you mean by "module", but essentially it is like a HELOC or credit card that you take cash advances from. But the rate is definately more favorable. So you can borrow from it, and pay it back as you need. Idealy you may use it to pay expenses that you don't have the cash to cover(paychecks, rent, utilities...). Then you would pay it off when you get your commission check. So you would have the line open if you ever need the access to cash.

Posted: 17 Jun 2009 09:41 Post Subject:

Anon,

As far as out of pocket expenses, I know agents that had no or very minimal out of pocket, and I know agents that put alot of money into the office and marketing.



Okay, I’m kind of curious to find out if the agents who take care in spending on marketing would attain more success than ones who wouldn’t.

Posted: 17 Aug 2009 12:56 Post Subject: allstate and state farm

Allstate and state farm are both big companies. It is very hard to compare them and choose the one best. But i think state farm is good for me.

Posted: 18 Aug 2009 10:21 Post Subject:

But i think state farm is good for me.


Now, would you tell us your reasons for picking State Farm?

A carrier with a smooth settlement process would always be my first choice. I'd always try to go through a carrier's settlement history before enrolling with them.

Posted: 19 Sep 2009 01:27 Post Subject: Answer

I think they both have good insurance rates, but Statefarm will pay quicker for an accident/bodily injury. :twisted:

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