From: XXXX XXXX

Sent: Friday, February 26, 1999 5:12 PM

To: ralph@usicnet.com

Subject: Farmers Direct

So sorry to hear of your experience. I am a Farmers Agent here in

Northern Virginia and I would like to shed some light on your experience

and what has transpired since then.

In June 1993, Farmers Insurance Group of Companies (FIG) expanded into

VA. VA became the 29th state in which FIG does business. FIG had

expanded a few years earlier into TN and AL. In these 29 states, FIG is

available only through our Agency Force. We are all exclusive agents of

FIG, yet we are all independent contractors.

Expanding into these states was a very costly endeavor for FIG and they

experienced some tremendous losses, to the degree that they vowed to

expand differently in the future. Thus, Farmers Direct (FD) was born.

The thought behind FD was to expand into a state initially without the

Agency Force, which would help reduce the initial cost. FD would offer

competitive rates to preferred drivers only (people with blemished

records need not apply). Once a certain amount of policies were in

force, they would then send in the Agency Force and begin to offer other

lines such as home and life.

So, they moved into MD and PA in, I think, late 1997/early 1998 as a

pilot program. Since my Agency is close to the MD border, I was able to

monitor what was going on a little bit. I would sporadically field calls

from people wanting a quote or wanting to make arrangements for payment.

It was frustrating to have to explain to them that I did not represent

FD and that there was nothing I could do for them.

>From reviewing your experience, it would appear most of your problems

can be correlated with the fact that FD was new and you were dealing

with inexperienced staff (they were probably all in training at that

time). However, your biggest problem came probably unbeknownst to you

when FIG merged with Zurich Ins. in early 1998. While the merger was not

complete until later in 1998, the plug was almost immediately pulled on

FD (the merger allowed FIG to offer its products through the existing

Zurich Agency Force, so FD was no longer needed). It would appear at

this point you were simply getting lip service from staff members

regarding correcting your original effective dates. In all probability,

they did not have the means to fix it. Obviously, they did not have the

courage, or perhaps, the authority to tell you that FD no longer

existed. I don't know for sure, but from what I can gather, FIG simply

gave the existing policies to a competitor, which would explain why you

could not get the changes made and why they apparently lost your

complaint record. The Company that inherited these policies probably

realized that any policyholders with problems would eventually leave in

anger while the ones that were running smoothly could be cultivated into

good accounts.

So, my opinion is you were a victim not so much of FIG/FD, but of "Big

Business in Corporate America". You have already gotten good advice from

my brethren to stay with your current agent, where you will be known by

name, not your account #. I simply hope that other people who read this

site will understand that, while FD was handled poorly, it should not

reflect poorly on the Agency Force. We had nothing to do with it and we

are very glad it is gone. These days, the only thing that separates one

insurance company from another is it's customer service.

My advice to those reading this: STOP "SHOPPING FOR THE BEST PRICE". If

you bought a policy from B because they are cheaper than A, then I can

promise you that B will eventually have a rate increase. In the

meantime, it is quite possible that A will have a rate reduction. Almost

all companies have a tiering system based on ages and driving records.

Most policies that I review reveal that the rates are high because the

policyholder is in the wrong tier, not because that companies' rates are

higher. This is the fault of the agent. So, instead of shopping

companies, SHOP FOR AN AGENT. Find the one who will look out for your

best interests regarding tiers and, most importantly, your coverage.

Find one who can offer all lines of coverage so you only have to deal

with one. After all, as Americans we typically like to deal with 1

doctor, 1 lawyer, 1 stock-broker, etc.

If you place most of your policies with one agent, I guarantee you will

be treated as a client, not as an account#. However, if you venture into

these 800#'s, providers via internet, etc., then you will be treated

like a #.

Good luck to you, Ralph, and anyone else reading this.

XXXX XXXX, Agent

Herndon, VA