Allstate vs State Farm - Which is the better company?

by Guest » Thu Dec 13, 2007 05:03 am

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

Total Comments: 91

Posted: Sun Oct 03, 2010 04:11 pm Post Subject:

Let me start by stating I'm a SF Agent. I opened a "New Market" agency (starting with 0 policies) with the expectation of being able to grow my business over time. My intent is for this post to be more informative than emotional. Always be weary of what you read and use your judgement. This is the internet and although someone says something like "I think this company is great! But I don't work for them" they probably work for them, or a family member does and vise versa.

Any previous posters that have commented on picking one company over the other based on rates or claims service in terms of becoming an agent is misinformed, this may be what you the consumer is looking for in a company you want to insure with but not what a potential business person should be concentrating on. Rates are not a tool of measure as they will inevitably change in both good and bad directions (and for those of you who said your rates with such and such company have never changed I want to move to your town), it's the nature of the business as this industry is cyclical. Claims department procedures can change at any time. All it takes is a new VP to be appointed with a brilliant idea and off they go making changes, however you should examine the companies financial ability to pay out claims.

You need to approach this as an independent business owner with limited say if you're comparing State Farm and Allstate, or even for opening an Independent Agency. Sit down and do your research, call up local agents and ask if they're willing to meet with you off the record to discuss the opportunity. I do urge you to seek new contract agents and NOT older established agents as it's a completely different ballpark or league for that matter.

SF's expectation is for you to produce high P&C Insurance numbers monthly by default (out of the gate) and feel your concentration should be on their Financial Services and Banking Products (which make you very little compensation on the front end). If you are considering becoming an agent you should prepare for becoming a jack of many trades and if you're not planning on focusing on those lines personally, or hiring staff to, then you'll be in big trouble.

The new market TICA contract (which is the contract you will be on for upwards of 5 years if you aren't assigned a book of business, which is few and far between) is designed like a cattle prod and like all the new SF contracts (temporary and permanent) it only pays out real money on a backend bonus and you can only hope to build your residual income to a level to support your expenses. If you're not producing Mutual Funds, Life Insurance Premium and Banking Products through State Farm Bank (loans, credit cards, CD's, etc) then you're A) Going to go broke and B) live in constant fear that you'll have your contract terminated (when you're a TICA). I'm currently north of $200K invested (after only a couple of years) and there is still no light at the end of my tunnel but constant pressure to produce in these other lines.

With SF you don't own your book of clients, you must focus on financial and banking products (this also includes IRA's, College Savings Plans, etc), and by default have a system for producing larger than market average (depending on your area) monthly P&C premium and policy numbers (*NOTE: a previous poster posted the amount of money you can expect from the company as a TICA agent monthly if certain numbers are hit, this amount varies based on market area and so does the signing bonus. Also, if you don't hit the thresholds you get $0 dollars. So if your current area isn't competitive it can be difficult to hit those thresholds resulting in 0 additional $'s from the company). With that said, you get a lot of product support and training.

They do like to pull the "You're an Independent Contractor" card when it suits them but then the "You're not producing here and there so we're thinking of terminating you" card when you're not hitting the numbers to earn them their corporate bonuses and trips. *Note Each market area manager, also known as an AFE (Agency Field Executive) makes on average about $150K with an additional (large) bonus based on the production of the agents. All of the prodding ends however if you're able to achieve your "Permanent Contract" but despite a comment made earlier about SF agents having a low fail rate... here is some updated stats. SF agents USED to have a fail rate of about 3% nationally, this has jumped to to over 40% with the companies new focus, contract and business model. Either they're terminated, or run out of capital.

I'm not entirely familiar with the Allstate model but you do own your own book, and they still have an actual focus on P&C insurance (if you don't know what P&C means you probably shouldn't be considering this path yet, learn to walk before you run). Having known this in advance I probably would have selected Allstate as I got into this business to be an Insurance Agent, and not a banker.

Independents have their pluses and minuses too. You can have 8 or 10 or 30 companies to quote from which is great. However, now you're talking about learning the little details of each of the companies policies, and often they don't have amazing support in terms of product training. You are considered much more independent but you need to become "appointed" by companies in order to have them as an option in your agency. Lets say you want to offer company "X's" products in your office, you need to go through a process in order to be approved and these companies have production expectations and some might even come to inspect your actual physical office before making a final decision whether or not to appoint you.

Something else that is noteworthy is that State Farm is a "Mutual Company" and Allstate is a "Stock Company". There are Pros and Cons to each but I would familiarize yourself with what that means exactly when making your decision.

And I say "when making YOUR decision" loosely. It is very difficult to be "selected" for an agency opportunity with State Farm. They DO run your credit as you must achieve your Securities licenses and there are credit guidelines for that, they also use it to determine if you're responsible financially. Insurance companies run credit when you buy car insurance from them, do you think they're not going to run it when selecting who's going to represent them? You must also be able to create a business plan, pass a personality profile and then sit through a panel interview. The interview panel is usually made up of 2 AFE's, a DAFE, an agent from the area and the recruiter. The panel can vary depending on availability and area. Then, if you're able to become an "approved candidate" you're now in the "agency pool" and must wait for agency opportunities to open up. Once an agency opportunity opens up you'll have to form a business plan based on that specific area and sit through another panel interview up against other candidates all vying for the same location. The strongest candidate gets selected, that being said there are underlying factors here including your relationship with the area AFE, nepotism, etc. State Farm is notorious for selecting children of existing agents.

A resource for unfiltered information about the SF opportunity can be found at the "National Association of State Farm Agents" site. State Farm does NOT endorse this association which is why I'm not a member yet. Being a TICA if SF was to find out that I joined this association it could impact their decision to renew my contract as this association always fights for the rights of the agent. I will join once I'm independent but currently use them as a resource for information.

One last piece of advice I can give is to Google info about agents suing the company they're with... you'd be surprised at what you find.

In the end they're all corporations looking out for their best interest, it really depends on which clam chowder you like best Manhattan or New England....or maybe even Chicken Noodle???

Posted: Mon Oct 04, 2010 11:58 am Post Subject:

Interesting post. Might be said to be a "captive independent". Best of all success to you!

Posted: Mon Oct 04, 2010 06:08 pm Post Subject: STATE FARM

as a auto glass shop here in texas.state farm likes to use internet companysa that use illegal aliens as there insstallers.insted of locale shops.and if they do there investigation they could find out this.

Posted: Mon Oct 04, 2010 07:14 pm Post Subject:

as a auto glass shop here in texas.state farm likes to use internet companysa that use illegal aliens as there insstallers.insted of locale shops.and if they do there investigation they could find out this

So, you've reported these companies to the INS as you know this for a fact?

When you shop at the store do you make sure the lettuce you bought was not picked by illegals? Why not? This is what you expect SF to do.

Posted: Tue Oct 05, 2010 12:19 am Post Subject:

INS will not do nothing here in texas.even after everything RICK PERRY has said is all words and no actions

Posted: Tue Oct 05, 2010 02:41 pm Post Subject: Are State Farm Employees afraid to talk?

State Farm Employees: Whistleblowers receive from 15% to 30% (PAID TO YOU) of the amount recovered by government.

Posted: Sun Nov 14, 2010 02:29 am Post Subject: State Farm VS Allstate

I sell Life and Health Lines, as an Independent Agent through a brokerage. Just from my years in the business, I've heard a lot of negative feedback about both. I have heard about how much faster and more efficient the claims process was with progressive and Farmers...

Posted: Sat Feb 26, 2011 06:47 pm Post Subject:

It is great to read the different comments when comparing State Farm and Allstate, but I wonder if someone could share about Allstate new agents contract. Just like we read about the State Farm TICA.

Posted: Fri Mar 04, 2011 01:08 am Post Subject: pitbull-rental insurance

Hi, my house is rent,owner said his insurancenot cover
Pitbull pet dog,but. Small two dogs is ok because pitbull would be
Happpen problem like destor something likechewing, bites etc.
Pitbull is adopt itshas trained already and very sweet good to kids.
How I can own pay rental cover it than owner or do I can payment to owner cover for pet destory? Pls emai me more informpls thkd

Posted: Mon May 30, 2011 05:44 am Post Subject: Allstate VS State Farm

I used to work for ALLSTATE, and I know the "SCAMS" they run, I would suggest going with State Farm if those are your only two choices, honestly growing up I had State Farm and was very happy, I now have Nationwide. If I were going to open an agency, it would be with NATIONWIDE!!! GOOD LUCK!!! ALLSTATE IS A SCAM, and trust me you will lose money in the end, and your "book of business"!!!

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