Who Makes the Rules? The Great State Farm Shakeup

For decades, State Farm represented stability. Then one of the industry's largest carriers announced sweeping changes to contracts, benefits, compensation, and retirement programs.

We explore the State Farm shakeup and  what it means for the independent insurance channel. We discuss ownership, choice, customer loyalty, talent shifts, and why the ability to adapt may be the most valuable asset an agency owner has.

This conversation is bigger than one company. It's about control, resilience, and what happens when the landscape changes beneath your feet. 

Because in insurance, the most important question may not be who writes the policy. It's who makes the rules.

Learn more at IntegraPartnerNetwork.com.

Transcript

SPEAKER_02 0:00

This is IA Forward, your playbook for success as an independent insurance agent. Now, here to help you knock it out of the ballpark are your hosts, Jane Tatum, Mike Basil, and Tanya Leed.

SPEAKER_00 0:13

Welcome to the IA Forward Podcast. We have a special tribute today before we begin. For decades, Huntington, Texas proudly operated with a single red light. It faithfully served through hunting seasons, adventures at the lake, and countless trips to and from the Integra office. For generations, it faithfully stood and watched over the little town, asking only that drivers pause briefly before continuing on their way. It never sought recognition, it never complained. It simply did its job. Then Integra kept growing and more people started coming to town. And on June 9th, its tenure, as Huntington's only red light, came to an end. This original light is survived by its new counterpart and a community adjusting to this level of extraordinary metropolitan development. Shane and his family don't want to take all the credit, but they're not ruling out that the second light is due to their growth. The citizens of Huntington, Texas request privacy as the town adjusts to this unprecedented level of infrastructure.

SPEAKER_03 1:40

Oh my goodness.

SPEAKER_01 1:49

It's North Houston. It's North Houston. We're a Houston suburb. I mean, it's all downhill from here. All downhill from here. Second red light. That's the end of it. We're no longer a one red light small town. We're no longer there.

SPEAKER_00 2:19

And I really closer to a Chick-fil-A.

SPEAKER_01 2:22

We are so close to a Chick-fil-A. And um, I really did not know what was going on. And while the the the solemnness uh but I really appreciate you guys uh going to the extreme silliness of having a funeral for our one red light town. It's fantastic.

SPEAKER_03 2:48

It must be such a reassuring feeling getting on these calls and seeing like the getup I have on and knowing that things are going to immediately go sideways.

SPEAKER_01 3:00

Yeah, I didn't know where we were going, but I knew you had a get up on because never seen you in a black tie. Uh solemnness. I I now I'm figuring out that this is not just a normal uh uh dress or blouse. I can't see, you know, I assume dress. Uh Tanya has on uh black. Uh obviously y'all are prepared for the wedding. I did not know, but I'm in the wedding. I mean, not wedding, sorry. The funeral I've got wedding on the brain right now with daughters getting married. So I I was not I was not prepared for the funeral, but uh yeah, I do I do love this. This is good. This is good.

SPEAKER_00 3:43

So uh speaking of funerals, our topic today.

SPEAKER_01 3:48

Yeah. Yeah. State farm. So we're doing the uh the thing that everybody else is doing in the news, and I feel like it's just too big to ignore, right? Uh state farms changes, uh, compensation changes, benefits changes. Uh, you probably have a little more detail on it than me, Tanya, but just lots of really large corporate adjustments that are going to filter down to their roughly 19,000 state farm agents across the country. Um, so there's there's a lot of stuff going on here. Uh, I felt like we needed to really talk through it and get it out there for our listeners.

SPEAKER_00 4:34

I do want to talk through some specifics, but I think the first thing we really need to discuss is what a huge change at State Farm means for us in the independent in search channel.

SPEAKER_01 4:51

Yeah, you know, several of the captive agent or organizations, uh carriers, and for for anyone who doesn't know, uh captive and exclusive are synonymous with each other. Uh, captive's more of the slang term. You're captive, right? You're you can only sell for that one company. Uh over the last probably decade, we've seen exclusive come up as people didn't like that term, uh, like they were captive. They didn't like it. So uh they started kind of changing that and a little bit of a brand change to exclusive agent. We have the big three, uh, State Farm, Allstate Farmers are the big three. You also have some other ones like countrywide financial, um, American family, uh, to name a couple of others around the country. And so, you know, for us in the IA channel, uh it's a couple of different ways we can go with this discussion. One, uh, you know, what actually might happen should some of these, probably a fair amount of these agents decide to either retire depending on their age, depending on their where they're at uh in life, or uh jump ship over into the independent agency channel. And I think those are the two likely areas. Uh, you know, we've seen this with uh Allstate and farmers in the past, where the intention, I think, my my thoughts, my personal opinion, is that they're trying to uh accelerate the uh the retirement of many who are maybe retired in place. They're maybe not growing, they're not uh they're not at the same place they were maybe 20 years ago. Uh they've got a lot of new agents that have come on board over the last decade, and they want the larger state farm agencies, in my opinion, to absorb the smaller, maybe non-growing state farm agencies. I mean, 19,000 is quite the quite the distribution uh model in terms of points of distribution. And so if they can, in their minds, corporately retain the majority of their premium volume and they can shrink, you know, by 20, 20 to 30 percent, then they they win, right? That's sort of the the element. What I don't love is that they're also kind of doing this. A lot of companies, big corporations, big Fortune 500 organizations are doing uh layoffs in the name of AI. And I don't love that. Like, I really think that is an excuse in most cases. I don't really think it's wow, we have AI, you know. In the last year, we've been able to, you know, reduce our workforce. We no longer need 2,000 people, right? Like, I'm not saying that's not possible. I'm just saying I think it's more of an excuse. And I think that's also at play with this as well.

SPEAKER_03 8:14

I think one thing maybe that would be worth mentioning for anyone who's listening to this, who's maybe part of one of those that you mentioned and is saying to themselves, well, wait a minute, I do have access to some other carriers. That must not be me. We there are programs within those groups that allow you to have some access to some other carriers, but the compensation that you're receiving if you write anything through those is, I mean, let's just be honest, it's poor. Right.

SPEAKER_01 8:46

Yeah, I there was uh an exclusive agent for a different carrier uh that I uh I'm aware of a conversation that happened in the last few weeks. It's like, you know, well, I don't really think I need to, you know, go independent because I mean we have the same access that you guys do now. And uh that was one of the carriers, one of the exclusive carrier companies, uh, exclusive agent. And that carrier had negotiated, uh, basically created their own independent agency within the organization itself, uh, almost like a wholesaler environment, and is offering access to independent agent companies to their exclusive agents. Well, on the surface, you know, it it's it feels like, oh, well, that's good. The problem is, is when you dig into that, uh, it's extremely different in terms of compensation. And what they're doing is they're trying to stop the exodus, right? They're they're when when they're going that way, and I'm you know, really slapped the wrist a little bit of the of the independent agency carriers, you know, kind of shame on you uh for going down this path. And uh I tell them that openly, I tell them that in one-on-one conversations. Uh, shame on your national account groups for going down that path and deciding to do business with uh a captive organization's agents. You know, you're just dressing it up like it's it's false, right? It's just it's a fake environment in terms of what your success is gonna look like. What's disappointing to me on that is that uh, you know, we were told as a network uh 20 years ago, you can't do business with an exclusive agent organization as an alternative market because you're gonna get adversely selected against. And we don't want to be adversely selected against. And yet now those same carriers are going into those organizations and doing that. And so I think in the name of just distribution, we kind of lose our way a little bit here and there. Um, but it's not the same thing, Mike, to your point. It's not the same thing. They're going to push their primary market, right? They're going to produ push themselves first and these other markets as an alternative, which is not going to end well for the independent agency carriers that are doing business there.

SPEAKER_00 11:28

This is a little off the topic, but oh, we don't do that here.

SPEAKER_01 11:33

We know that. We need to stay focused on the topic.

SPEAKER_00 11:36

Yes, uh-huh, uh-huh, squirrel. But being in Florida, and this was an experience that that we had a few years ago. When you're an exclusive agent and your your company decides they're not going to write homeowners in a specific state, then I understand offering those, you know, offering those independent carriers to your exclusive agent because there's no other way that uh your agents can make a living, right? And for instance, Allstate wasn't doing home in Florida when we bought our house, right? And I don't know if they are if they are now, but um, the Allstate agent here in Pensacola was offering the same carriers that the independent agents in in Pensacola were simply because so many people weren't writing home in Florida at the time. So I understand it from that perspective, but like Mike said, the the compensation isn't isn't nearly the same. But back to today's topic.

SPEAKER_01 12:47

Well, I want to I want to touch on that real quick. Okay. And and just to because I did think Florida, yeah. I'll be we'll we'll be back to you in 10 minutes when I finish my monologue, second monologue. Um, so Florida is a unique animal in that, and I think the difference I want to point out is those are not necessarily the same independent agency companies I'm talking about. Like there are a lot of independent agency companies who are really not exclusive to the independent agency channel that offer a monoline home uh offering, or a monoline home, or a monoline dwelling fire. And in the Florida space, that happens along along the coast in Texas, Louisiana, uh, all throughout the Gulf Coast, that happens. Where they're monoline property, personal lines property carriers. And yes, they have uh they have different channels, right? They they work with uh the farmers channel, the state farm channel, the all-state channel, they work with the independent agency channel, and they're all kind of doing business within those environments. What I'm specifically talking about, that uh in these cases where we've moved out of this is just a property problem, is where some of these exclusive agent companies have started getting agreements through their internal wholesaler to offer auto and home right next to their own auto and home, right? So a little bit different at a reduced commission that's gonna lead to uh uh that's gonna lead to um a problem, right? It's gonna lead to issues with losses because where are you gonna go with your best clients? Well, you're gonna go to your home base, right? And then you're gonna put everybody else. So the monoline home issue and the Florida or coastal issue is a little different. And yes, I agree with you. Uh, I think that's just opportunity for those monoline carriers to have a great distribution network that's gonna feed them.

SPEAKER_00 15:09

I would believe that this would create a capacity issue. I mean, it seems to me there's only so much risk. There's only there's only so much money available. And if our carrier, if our independent carrier partners are letting exclusive agents use that risk, what does that do for us as independent agents?

SPEAKER_01 15:34

Sure. I think that's what happened over the last three to four years, between probably late 22 through uh 2025, is there were some capacity issues for the IA channel with the traditional dependable IA channel companies. And uh in their defense, the exclusive channel agents got cut off first for the most part, uh, but it did create some uh issues for some of those carriers who had allowed their capacity to be absorbed and had to shut down some of their independence, a lot of their independent agencies as well. And so, yeah, I think capacity does become part of the concern in the macro uh view of things. And it's one of the things that's always um, as an independent agency champion, as someone who's diehard independent agency, I'm always gonna point that out, right? That's always something that's gonna come to the forefront. Uh, and that's going to be interesting if we see a significant influx of uh state farm agents or state farm producers and agents into the IE channel as a result of state farms actions.

SPEAKER_00 16:57

I kind of want to do some kind of undercover spy thing and go to work uh as a producer or an admin at uh one of our state arm agencies here to really get an inside view of this, like as some kind of undercover agent thing. But yeah, I know Shane's not gonna let me do that.

SPEAKER_01 17:22

I'm ready. Yeah, we're good. I'm ready.

SPEAKER_00 17:24

You see that actually when Mike had his tie on, my first thought was Shane's gonna think he had a job interview today.

SPEAKER_01 17:31

Yeah, he's like Mr. He almost has kind of the you know gadget man look, right? With that, with that that shirt and tie on, like he's ready to pull out, you know, Mr. Spy, gadget guy. I don't know.

SPEAKER_00 17:45

There's just a pretty good My husband told me he he's like Wednesday Adams. He's like all you had to do is uh braid your hair. I'm like, thanks, honey. I'll take it. I'll take it.

SPEAKER_01 17:56

That's good.

SPEAKER_00 17:57

But but some specifics on this state farm announcement, right? I mean, we're talking about shifting compensation. We're talking about eliminating company provided health insurance for agents and spouses. We're talking about eliminating their annual investment payment program. They're transitioning everybody to a single contract structure, which Shane will tell you that's what you should do anyway. Absolutely. You know, everybody should have the same contract, but reducing retiree benefits for a not only for former agents, but for their surviving spouses, like that's huge to me, right? And so the whole thing they're calling it is this uh state farm next gen neighbor kind of thing. And uh, yeah, mixed gen good neighbor. That's the that's what they're calling it. Um, moving to a human digital model. Yeah, but it it somewhat reminds me growing up in West Monroe, Louisiana, state farm was a huge, huge employer for us in the area. And with really no notice, I think they were the second largest employer in in Washtaw Parish where I grew up. And with absolutely like zero notice, they just shut down. And so it put thousands and thousands of people in this small small town in North Louisiana, like out of jobs with really very, very little notice. And looking at the way this rolled out, it it kind of triggered those memories of of that happening to the the town that that I'm from. And these great resets that they have, and when they change these rules like this, this whole idea of you know, a state farm is there just doesn't feel like state farms there anymore.

SPEAKER_03 20:14

Yeah, I before we get into the actual specifics, I just wanted to say one thing real quick. You know, this is an industry insurance based on risk mitigation, right? Like that's what we're always doing, risk mitigation. So, and of course, we're like we're biased, we know that, but within that risk mitigation, which feels better to go and work for a place like State Farm, and you have one group to work through, and any changes they make, you're you're gonna eat those whether you like them or not, and it's one set of rules and it's these rates, and that's what you've got. Or do you want to be on this other side where if one carrier, you know, if sunny side up carrier decides they want to change everything, blow everything up, all right? You just stop using that one, you use scrambled eggs carrier instead, or whatever else. Yeah, it's just it it seems counterintuitive to me, but again, I'm biased.

SPEAKER_01 21:19

Well, I I think it's a great point above all of that. And you know, for years and years it was well, the brand, right? The brand brings me clients. I hang my shingle out. If I can get approved, if I can get approved, if I can get into um becoming a state farm agent, then uh I'm gonna do well because the brand is so strong across all markets. Like you have to give them, you know, hats off to them for building their brand well through the years. And they have become so large that. That as an organization, what we saw through the hard market is they can grow their surplus while having disastrous underwriting results. Like that means you that is so large in terms of capital and the ability to uh to be strengthened through even difficult markets. And so we have to recognize that. Like we, you know, we obviously I'm a I do not love bad information getting put out there. And so I want to recognize that. Like that is a reality. However, to Mike's point, when you look at the go forward, like when you look at where the market has been going for probably a decade, maybe 15 years, really, really going. Uh, the choice model, the customer wanting choice, agents wanting choice, what you see is you've seen this huge exodus. And that's from the exclusive channel across the board, right? And what we all know, anyone in the agency network space, anybody uh in the carrier space within the IE channel understands is that most of that exodus has excluded State Farm at this point so far, right? And there's been a 18, 17 to 18 point market share gain in the last 25 years, almost all directly related to the exodus from the exclusive channel to the IE channel, uh, through either natural attrition, uh, people retiring, and maybe their kids deciding to go IA instead of take over mom or dad's you know exclusive agency. And so we see that that's transpired. We've experienced that, we've talked to prospects around that, and this is like the final ball to drop, is kind of the way I see that, right? Um, and they're they're this isn't new, it's just the first time that State Farm has done it. And you know, they did have a contract change a few years ago. Uh, I think it's been a little while now, maybe 10, 15. It wasn't quite as drastic. This is kind of like kaboom, kind of drastic in my view. Um, I want to I want to add one thing though before we go too far down the rabbit hole. The whole benefits, like mainly around health care, uh, that I'm gonna defend them a little bit there. Um, you it's very difficult to be independent contractor based and provide some type of health care in the world of uh the the uh ACA environment, the the Obamacare environment. Uh there's been so much regulatory change around that segment that that has backed them into a corner here. Like they don't really have a choice. They have to go one way or the other, and they've opted, you know, to comply with that. And so they get a little pass on that part. Now, the commission change um to variable or more incentive-based compensation just to earn a base, that is the part that's gonna rub a lot of agents the wrong way.

SPEAKER_00 25:38

I want to know how much of this reaction is really financial and how much of this is emotional, right? And I'm asking this question to the guy who is even killed and doesn't believe that you should get emotional about business, right? I mean, it's it's all about looking at it very logically and there's no emotion behind it. But, you know, agents who have built their retirement plans around the AIPP, you know, those agents that are near retirement. And and when you are near retirement, the impact of losing your health benefits, the the feelings that the the rules have changed in the fourth quarter of the game, um it almost seems like I don't really even know if this is really about even cost-cutting or AI, but more about the idea of changing what State Farm wants their future agents to look like.

SPEAKER_01 26:45

I I think it's definitely intended to be about the go forward. Um, I'll be shocked if there's not tweaks and adjustments to this for uh retirement age. Um I've heard things around buyouts uh for agents that don't want to sign the new contract. I don't know the details of that. And again, all of the information for our listeners, just so you're aware, is publicly available information that we're talking about. Like we have no knowledge of under, you know, under the radar or internal conversations. We're not state farm people. Uh I do not know state farm people outside of acquaintances. So um I'm saying this with that that understanding that um that it's just my opinion that they're gonna look at this and if they tried to make this huge broad suite for the go forward of agents, uh the newer agents, the the less established agencies, the less established books, there, and the new agents that are gonna be coming in over the next decade. As we all know, there's a huge um number of agents that are going to retire over the next decade uh across the spectrum within the insurance space. State farms no different than that, right? And so yes, I think the intent is to align with their their future. I think there's some things that got caught up in uh in this, maybe, maybe they back off of, maybe they come back around and tweak. Um, I don't know, right? I'm I'm just it is a huge organization. It is uh, I think a Fortune 100, maybe even a Fortune 50 organization. I I would have to I know uh we know Fortune 500, but I'm thinking Fortune 100 at this point. And so uh this is one of the largest organizations in the world. Uh they're they're navigating a very, very difficult situation, in my view, where um, you know, they've got to do something. They can't just keep the status quo. Uh, they're going to have to do something. And uh organizations all across the country have to do or are doing things like this. And uh I try to sit in that CEO chair, and that's really where my even kill is coming in, and go, man, you know, do we are we sure we want to do this to our, you know, 40-year veteran or 35-year veteran? And I I know what I'm choosing if we can afford it. I'm saying no, we're not gonna do that to them. Um, I don't know how that happens in a much larger organization. I'm the CEO of a small business. Uh even though we're we've grown and we're with, you know, we're we're we're enough, right? I mean, yeah, we got two red lights now. That's right. You know, so um, you know, it's a big deal, uh, you know, but I I know that tens of thousands of employees, 19,000 agents, uh, that's a lot. And that's a that takes pretty complicated, you know. Hopefully they can they can understand this, figure this out. I I I would be emotional, even the even kill guy that I am. It would be very difficult not to have an emotional reaction if you're at that stage and you've built you've built your life, your career, your retirement plan around um you know, dependability for for for the organization that you've entrusted to this. And I really think that's the the conversation today to younger agents in the spectrum is that is the biggest difference in the independent agency space and and the exclusive agency space. You're not dependent on a single carrier. Yes, we're all contractors at the end of the day, but you have choice. I mean, you want sunny side up or scrambled eggs, like you can choose. Mike got a great analogy earlier. Um, you know, if you don't, I mean, if you want to eat breakfast for dinner, you can do it, right? I mean, I love that by the way. It's my favorite, is breakfast for dinner. I mean, you you have the marketplace to keep things in balance. And if they all decide to get together and go down a path that's somewhat colluding, then they're breaking the law, right? And so that generally would never happen in the independent agency space because someone's gonna swoop in and say, ooh, opportunity, right? I mean, we see it. We see it with Geico's entry into the independent agency space. We see it with progressives all in several years ago, almost 10 years ago now, saying, hey, we're gonna be an auto home standard preferred lines carrier in the independent agency space. They were not that, you know, in 2010 or 2005 or before. Um market conditions and the reaction to market conditions in the independent agency space allows for the marketplace to take care of what's happening to state farm agents right now.

SPEAKER_03 32:20

So for state farm, life and health is part of the deal, right? Oh, yeah. So sticking with the analogy that chicken or the egg, for state farm agents, what comes first? Life and health or PC?

SPEAKER_00 32:40

P C.

SPEAKER_01 32:42

I think it's PC, but it is the exclusive agent problem. They make so much money off of their life insurance operations. I'll I'll exclude health for a second, just say life. Um they make so much money, they're so profitable off their life insurance operations. And this is not specific to State Farm, this is all exclusive organizations out there, that it funds their ability on their investment side to kind of do some things on their property and casualty rate making and filings and be competitive in the market. Sometimes they will lose money on an underwriting basis on their property and casualty because they're making so much money on life plus investments. And that obviously is why you see those organizations say, hey, if you don't sell this many life insurance policies by this date, uh your contract's gonna be terminated. You're never gonna feel that. You're never gonna feel that in the independent agency space.

SPEAKER_03 33:48

So that's a lot of pressure, and that's pressure that someone may not want. That may not be something they would care to sell. But what about that person who's on the fence? Like, okay, I don't like what just happened here. I'm thinking about leaving. Life and health is something I or life, let's just say, is something I have traditionally done well at. Do I still want to? Is that something they should want to do when they go independent? Is it something they should stay away from? What is the thought on that?

SPEAKER_01 34:20

I I have always believed that when someone goes from the exclusive channel to the IA channel, they should continue doing what they're doing because that's what made them successful, right? So if they are life insurance, right, they they write life insurance and write enough life insurance. Um, I think it's a great sticky product for growing your policy per client. And I think you should continue to sell life insurance. I think what happens is um they get beat over the head with it and they kind of get throw the baby out with the bathwater kind of thing, and they're like, I don't want to sell any more life insurance. I think that's a wrong move for an agent who's moving into the independent agency space because if they've always sold life insurance, they should continue to sell it because it's what they know and what they do. Um, it's not going to be one of these things that you have to uh or or else, but you should want to because it's good for your clients. Everybody needs a life insurance policy. Um, and it's good for the stickiness within your book of being able to say auto, home, um, maybe a boat or an RV umbrella policy, if they're in that range, life insurance policy. Like there are lots of statistics over and over and over again that talk about when you have an auto home and you add a life policy, how sticky, like upwards of 96 to 97% retention of that client once you go there.

SPEAKER_00 36:16

I think there are some specific behaviors that State Farm is trying to create with this. And they're they're somewhat interesting to me from from the independent agent perspective. And State Farm has always been great at retention. Retention has been their jewel in the crown, right? And people move state farm agents when they move around the country. You know, you you a majority of their business comes from, you know, I'm moving to this area, I'm moving from this state farm agent to this state farm agent. It's not like it's a remarket process of I'm moving to I'm moving to Louisiana from Texas, so I need new insurance, right? It's I am moving from Louisiana to Texas, so I need a new state farm agent. And what this new next gen state farm neighbor program is is focusing and rewarding growth and new business, customer acquisition, expansion, no problem with that. But there's a lot less emphasis on maintaining the book, on maintaining customers. And we've seen agencies not be profitable because of that. If you shift all of your energy to just getting new clients with no real focus on retention, then you're just creating churn. And I don't see where that's profitable for the agent themselves.

SPEAKER_01 38:02

The exclusive system in and of itself is heavy, heavy sales focused with with little retention, little um service-minded stuff poured in, right? Uh, and and we've always said, you know, if we could get the independent agency to act a little more like the captive in terms of sales mindset, uh, then wow, what would that look like, right? Because we know we're gonna be service-minded. We know we're going to be uh retention focused. That is um if that is shifting, right? And and if that is something that they're going to push, then uh what they're banking on is that they're gonna have enough pricing consistency. Uh they're gonna have uh enough brand loyalty within the consumer side of things that they're, you know, I don't want to say arrogant about it, but like borderline, like that's like a little bit of arrogance about it, going, hey, our brand is so strong. Why are we putting so much emphasis on keeping these customers? These customers aren't going anywhere, right? That's the way I interpret it. Um but we see in the in the insurance space, personal insurance space, how competitive it has become. I do know to your point that a lot of state farm agents around the country, I know in talking to some in our area uh way back, that something like 90% of their new customers into their agency were transfers from what we would call agent of records, their version of agent of record, um, transfers in from other areas, right? I thought that was fascinating. And that tells you the size and scope of State Farm, right? Like that's kind of the back to the brand, back to um just you know the size of that they have become over the last five or six decades. Uh, they've just become such a behemoth on that. And so for that agent to say, yeah, no, I just most of my new opportunities come off of you know transfers. And I'm like, that's crazy. Like we probably like the opposite of that. Like, probably five percent at best of our new business opportunities are agent of record, right? Now, you know, um Charles Speck would say, well, you're doing it wrong because he's an agent of record guy, right? But I'm just saying, like that's just not natural for us in in personalized, in the personal lines space. Um, Charles is a commercialized guy, so it's a little more natural there. But, you know, to think that it's completely inverted, well, then you can kind of understand the corporate decision to say, hey, we got to put more emphasis on new business because as we're seeing the competitive landscape change, we've got to do something different here. Well, think about the monstrous mountain climbing adventure that state farm trainers are about to embark on, where they're trying to retrain the mindset of 19,000 agents. So if they can and their staff and their staff, and so if they can if they can push some of those out, then maybe that helps. I don't know. I'm just thinking out loud there.

SPEAKER_00 42:04

Shane, I have a question for you. And when I when I ask you this question, I want you to remove your Antebra Partner Network hat and put on your I own an insurance agency hat. Okay. What would happen to us if tomorrow we woke up and our largest source of revenue changed by 30%?

SPEAKER_01 42:35

Um we would be in some difficult decisions. Um we we would have difficult decisions to make. And um now, if as an independent agency, if if you're allowing me to keep my independent agency hat on and not put my exclusive agency hat on, what I would tell you is is that the likelihood or the chances that that would happen from a carrier directive is extremely small because we would end up in a potential bridge burned partnership, both coming from the carrier. So if a carrier came in and said, you know, unfortunately, we're reducing your uh your your compensation by 30%. Um, well, I can promise you we're probably rolling that book, right? Because what you're telling us, and what I mean rolling that book for those that don't understand that, we're probably taking that book of business with that carrier, and we're going over to carriers, you know, A, B, and C, and we're saying, hey, uh, we got an opportunity. We we're interested in partnering stronger with you, moving a book of business. What can we do here? Not only would those carriers take that book, they would probably pay us for the pain of moving that. Book, right? And so um we just wouldn't see that happen. Now to Tanya's question, if it was just no choice, this is what was happening to us, 30% of our income is getting, you know, uh reduced, uh, there would be some very difficult decisions in in what we would have to do from a personnel standpoint. Um we would we would do everything we could to keep our people, but we would be forced to look at really hard things. And I love that question back at the carrier executive. Hey, what would you do if your salary was reduced by 20 or 30 percent starting in a year and a half? And I do not know very many corporate executives who would say, I would just learn how to do my job better and uh more efficiently, and I would just have to thin up my personal budget and let's go team. They would be putting resumes out, they would be calling headhunters, and they would be looking at their next gig, right? And so that's truth. And so I think that's the thing, as I am fiercely defensive of agents, right, in general, because I think agents are the most important part. Obviously, the distribution, right, is is the agency uh environment. And I would even say, even at the exclusive side, right? Um, I'm not sure a board of directors or a group of investors would love me uh because I would be so pro-agent that I would look at them at the board meeting and say, hey, we're not doing anything. We're not doing anything to our agents, we're not doing anything to hurt our agents. Um, that that would probably not get me my CEO bonus or my stock options that year, but that would be the way that I would view it. And my contention is the company that takes care of their agents that really caters to their agency force, they're gonna win. And so when I see things like this, I'm just looking at it going, man, they're they're shooting themselves in the foot. And we've seen it with other carriers, right? We've seen it with other exclusive carriers, and some of those carriers have still not served, they they're they're not they've still not overcome shooting themselves in the foot a decade ago.

SPEAKER_03 46:39

But uh captive carrier making these types of changes is not as bad for themselves as an independent. I mean, it is survival of the fittest on the independent side, to the point you were just making. If you make all these changes to compensation, these independent agents are just gonna remarket and go somewhere else. And then, I mean, short of you being at a point where you're gonna have to declare bankruptcy, a carrier on the independent side cannot make changes like that.

SPEAKER_01 47:13

Right. Well, what we saw in the most difficult market in generation, at least one generation, maybe two generations over the last three years, is they were really careful about messing with their compensation. Uh, they just stopped writing and went up on the price, right? They just filed for price increase, rate increases, they slowed down their new business acquisition uh to survive. Uh, but um hey, kudos to I'm gonna I'm gonna give a shout out to Germania, uh a farm mutual here in Texas. Germania was nearly there, like they nearly went bankrupt. And they um their CEO, uh, the leadership team there did maybe one of the most incredible jobs I've ever seen of saving a company. They made really difficult decisions. Um they they pulled back a little bit on their distribution, they shut down new business, they had uh rate increases out of necessity. They never touched agency compensation. Never. And they are not only did they survive, but they are now thriving. They've come back out of that. Um, they they maintain their agent loyalty. Um, I mean, it's incredible. And it's a it's a it's a state, it's a Texas-based, only do business in Texas, uh, rural carrier, property, uh, auto, property, uh, personal lines, a little bit of commercial. Um, they're they're just a really fantastic organization. And it's because I think it's because their CEO and their leadership uh is very in tune with the agency force.

SPEAKER_00 49:02

If you're a state farm agent right now, Shane, um what should agents be evaluating? What numbers should they be running? What should they avoid doing emotionally? How how how how what do they need to be doing to to move forward, making the decision to stay or come play with us over at the integra partner network?

SPEAKER_01 49:27

Yeah, I I mean, I'll I'm gonna leave my my Integra Partner Network hat off for a second. Um, and I'm gonna say this and then I'll I'll put it back on when I finish up. I I'm I'm not panicking and I'm not I'm not emotionally reacting like um the sky is not falling right now. Like that's what I'm first and foremost doing. Now, Mike and Tanya and Robbie are not gonna like me saying that, right? Um, because they want you to talk to us. They want you to talk. Um yeah, but here here's what here here's what I'm doing if I'm in your seat. I am looking at the information that I am giving. I'm not procrastinating like forever, but I'm looking at it, I'm I'm diving in, I'm understanding it first and foremost. I'm not panicking, I'm keeping my people calm. Um I am, but I am also realizing that my world is going to change. So in the book Good to Great, um uh I want you to, if you have never read that book, at least go Google Good to Great, confront the brutal facts. Uh, you'll get some excerpts on that. And I think you have to confront the brutal facts. Things are going to change. Now, in that change, do you have the energy? Do you have the um the environment, the setup, the structure to modify your internal agency organization to succeed and thrive on the changes that are going to come your way? That's that's what I'm doing if I'm in your seat. I'm not panicking, I'm looking, I'm reviewing, I'm looking internal. Am I set up for this? Do I need to be set up for this? And then at that point, I'm going to step two and I'm going, do I want, is this risk worth it? Do I want someone dictating to me my success or failure? Or do I want to bet on myself? Right? And this is where I'm putting my uh agency network, Integra Partner Network hat back on. Um, if you're successful in the exclusive agency space, I don't care what organization that is, we're talking about the state farm changes, but if it's any exclusive uh agency carrier, if you're successful there, you can be successful in the independent agency channel. Right? Uh you may be start you may be doing a restart. Uh you may be spending a lot of energy over the next three to four years uh to get you to a place, back to a place where you feel good about things. Um but the reality of it is, is that the success that you've had is because of you. It's not because of the brand. You have assumed it's because of the brand. Most exclusive agent come uh exclusive agencies uh owners are are are looking at themselves in the mirror and going, well, I'm a good salesperson, but you know, thank goodness I've got this brand. And the reality of it is that everyone that we've seen come out of that space, go into the I channel. They've been successful because of who they are, not because of this brand that they're hanging the sign out front on. That's not the reason they're successful. And so that's the second piece of this evaluation is am I ready to decide that I'm ready to just bet on myself?

SPEAKER_00 53:36

One of the big overlooked opportunities that I think we have right now is that this, I see this as creating one of the biggest talent shifts that we have seen in years. We know that change creates movement, right? And I think that independent agents are going to see experienced producers entering the market looking for jobs. I think we're gonna have new hiring opportunities. I think I'm gonna we're gonna see those state farm producers looking for alternatives. And those state farm producers have seen what it looks like being with one company in one period. And get ready to engage that talent that's about to flood the market because it's gonna happen.

SPEAKER_03 54:28

Just to add one more thing to Shane's monologue, a third thing, in my opinion, is understand what you are in with your contract. Just know what your chances are in terms of you know staying in the depends on the carrier, but like can you stay in the area you're in? Do you have to move a certain amount of distance away? How long to you can market to your existing client base? Those are all things that you're gonna want to know before you step out. Just be you know, just aware, where awareness of what you have to do to get out of that. Yeah.

SPEAKER_01 55:02

I you know, comply with your contract, right? Like we would we would always say that to someone. I would say that to someone if if I had a uh an exclusive agency owner come to me and say, help me, you know, what would what should I do? How can I? The first thing I would tell them is comply with your contract. Number one, you don't need it to be in the middle of litigation, you don't need to be in the middle of doing something where your character is called into question, right? That's not who you are. And I know a lot of state farm agents. I know a lot of really good people that are state farm agents. You don't want your character called into question. Comply with your contract, right? Just go through that process. Um, that is a huge thing. I would say that to an all-state agent. I would say that to a Compareon producer, a farmer's agent. Uh, everyone needs to comply with their contract. You sign that thing, you know, comply with it, right? Now, you don't have to sign the new one. You can make that decision, right? I use that kind of like my travel ball discussion with my daughters growing up. Like, hey, season's over. You sure you want to do this again? Like it was kind of a year-to-year contract, right? And if you sign up again, well, then you got to finish the season. Well, you signed that contract. One of our core values, the first one in the list is honesty wins. You're gonna be better off by complying with that contract, right? And that's why, like, I don't see this as a like 90 to 180 day thing happening uh for even our organization or for State Farm or for other agency networks out there. I see this as a 18 to 24 month thing. Um, and I see it around uh the reality of just agents understanding where they're at and finally having the confidence to say, I'm I'm gonna I'm gonna do this myself, right? Um, and and and I say comply with the contract because you're gonna sleep better. Uh you're not gonna have the threat of litigation. And you know what? Uh it whatever company you're an exclusive agent for, they they invested a lot in you, trained you, brought you to this point, and it served you well. It wasn't necessarily a mistake, right? I don't see things like that as a mistake. I see a lot of agents that we've worked with, that we've talked to, who uh have had fantastic training, uh, who are really, really strong agents because of what the first half of their career looked like.

SPEAKER_00 57:59

Off the state farm topic, but the sign is red and white. I think that Shane finally opened his Christmas gift for me.

SPEAKER_01 58:06

I did. I did. Uh I haven't lit it up because it says it has a cord, but I don't have the cord, so I gotta look for that. It wasn't in the box. Uh so uh I don't know if you re-gifted it to me. No, I did not. And you forgot to put the cord in there? Did you do that?

SPEAKER_00 58:24

No, I did not re-gift it.

SPEAKER_01 58:30

I don't see Tanya as a re-gifter, so I I that was just obviously a joke. I doubt, I doubt she's ever re-gifted anything in her life. Uh, I've re-gifted. Uh maybe a candle.

SPEAKER_00 58:41

I don't do candles. Maybe a candle. We'll regift the candle. Yeah, like warming gift.

SPEAKER_01 58:46

I do like, I do like it. I'm I'm gonna leave it. It's gonna become my a standard part of my prop. I did I really didn't know what to do with it in the box. And I I had some time yesterday afternoon, and so I was like, I should probably open that. Like I had not even opened it. I'm sorry, Tanya. Um but I opened it up and I was like, oh, well, this is this is easy. I'll just set it on the desk. Here we go. I'm on in.

SPEAKER_00 59:13

I'm gonna leave us today with this quote from Mike Tyson. Everybody has a plan until they get punched in the mouth.

SPEAKER_01 59:20

Oh, that's good. Attitudes of choice. Make a great one.

SPEAKER_02 59:24

Bye, y'all. At the Integra Partner Network, we understand that carrier access is the key to your agency's success. That's why Integra offers direct access to top-rated personal and commercial carriers, ensuring your agency thrives in today's challenging market and with our comprehensive resources, profit sharing, and bonus opportunities, technology and peer support, all of you retinate 100% of your books with no double leads to exit. Integra is ready to empower you and your agency to find sustained growth. Find your way to integra. This is integrapartner network.com today. That's integrapartner network.com.