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