Validating Agent View Point

TO: Agency Force

FROM: A Validating Agent

When I originally came to KY Farm Bureau three and a half years ago, I had worked for a few insurance companies previously, and was very disappointed in how they treated their customers, employees and agents. To me, KY Farm Bureau represented a company with morals that would stand by their product and offer an atmosphere that was based on family values, respect, and doing the right thing for their agents, employees and customers. Their program, which offered a supplemental pay for new agents, seemed very much like a great opportunity to start a job as an agent, but still provide for my family. Even though I knew I was taking a significant pay decrease by taking the KFB agent job, I felt like it would eventually be an investment into my career to work for a much better company with much better opportunities.

I was told to expect to validate in four years making at least $100,000—all I had to do was try to hit the tier bonuses—which I did for 2 years. I didn’t miss a Tier 3. I quickly realized that Tier bonuses, while nice to receive, have nothing really to do with my book of business and how much I will be making in commissions when validation is over. Obviously, what matters is the amount of premium I am writing, as well as how well that business is staying on the books and staying profitable. We have figured out that a new agent has to write about $15,000-20,000 in premium EVERY month during validation in order not to see a pay decrease from the falling supplement each year. Assuming you don’t lose too much of that business after you write it, you are looking at somewhere around $65,000 for your after-validation income. Quite a bit shy of $100,000, and most people will not even make that much.

With massive rate increases, the ability to write large amounts of business is a thing of the past. A new agent, without a current book of business to work off of, is unlikely to write $20,000 every month (particularly considering winter months). In addition to it being significantly harder to achieve the premium we need, it becomes almost impossible to write the 98 policies a quarter to hit Tier 3 bonus. Also, because we are writing fewer P&C business, we are subsequently writing less life business because we have fewer people to talk to. It becomes a slippery slope. I left a job making over $110,000, and will likely make somewhere around $50-60K this year (last year of validation). This is about $25K less than my first year with KFB. When you are progressively making LESS each year, there is something wrong with the program.

The primary issues that we are all facing are the massive rate increases. I, personally, understand the reasoning behind it. The company has to be profitable in order to stay in business and we also have to make sure that we are writing good business. I get it.

Here is what I don’t understand: If the validation requirement numbers were set based on historic sales numbers that were obtainable in prior years, why wouldn’t they be adjusted to today’s sales environment? Every person in this company understands that we are not able to write anywhere close to the amount of business as prior years—nor does the company want to. Validating agents know that we have to hit high premium numbers in order to actually make money… so why do we have the added stress of hitting arbitrary policy count numbers in order to keep our jobs, particularly when those policy count numbers no longer align with company goals? We have to make sure that 1/3 of our policies are property, even though the company would rather not write property business. There are a number of Validating Agents that are going to be happy to add renters and umbrella policies to every auto they write—it makes sure that they validate for that month and keep the job that provides for their family.

Validation contract changes have been made all the time. Originally, Validating Agents were able to earn validation passes based on hitting tier bonuses and winning contests like Spring Challenge and Sportsman’s. It was a great incentive, but the company decided to take the passes away. So why can’t the company make a change to the program that would not only show their interest in seeing us succeed, but better meet the company goals of profitability?

I speak for most of the Validating Agents when I say that we are very disappointed in KY Farm Bureau. We were sold on a program and opportunity that no longer exists, and feel like we were set up for failure. Personally, I feel like the goal of just becoming successful and profitable is enough to keep me driven. Constantly worrying, at this point, if I am going to lose my job because I only wrote 19 policies this month instead of 21 (no matter how high quality those 19 policies were) or because I might only have 13 customer reviews completed instead of 15, is an added stress that keeps me from focusing on the activities and actions that will work better for my long-term career success and company profitability. Morale is low among Validating Agents.

Chances are, if you are validating, that I am preaching to the choir. How often have we heard we just need to knock on more doors? That all the problems the company is having right now is our fault for writing ‘bad business?’ That everyone had to go through validation and we shouldn’t expect special treatment? My answer is that we all work hard—we wouldn’t have made it as many years as we have if we didn’t know what we were doing. We wouldn’t have been chosen after going through the rigorous hiring process. Many of us didn’t receive much training on inspections and how to write profitable business, likely because a number of the experienced agents and agency managers were already writing business that contributed to the company becoming non-profitable.

We are not expecting special treatment; we are asking that the validation program be altered in a fair way that is going to meet the goals of both the company and the agents. That being said, we are not likely to see any change in the validation contract in the near future, and I believe that is something we have begun to come to terms with. While we have lost some Validating Agents recently, I think that most of us will validate and become career agents or agency managers. The majority of us are now just trying to get through and survive. A big change from how optimistic and exited we once were to become an agent within the Farm Bureau family.

Disclaimer: “The KFBIAA has allowed this post to be anonymous because of the agent’s status as a validating agent. An anonymous author posting will be the exception not the rule.”

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