Ask Your Peers  How to compete against State Farm, Farmers and Allstate 

I am in an area that is dominated by these companies. Any suggestions on how best to compete against them? I have a relationship with an MGA that allows me to write Safeco and Allied but I still seem to fall short price wise. Any suggestions would be appreciated.

Thanks,
Edward

Edward
where are you located ? in California Farmers Homeowner rates are about the same
as Allied and Safeco
On Business insurance, you should be very competitive in Restaurants and Apartment and HOA Buildings

Thanks

Ed, your question is one that independent agents have been asking for years so don't feel like the Lone Ranger!

The answer is to first become totally familiar with the State Farm policy form. I believe you'll find that in many coverage areas it clearly does not measure up to either the Safeco or Allied policies.

The next step is to use that knowledge to explain to your clients and prospects the truly important differences in coverage between your policy and the State Farm product. It's about educating them with specific examples of why and how your policy is better, and that price is one of the least important considerations when it comes to protecting their biggest asset!

Some people don't want to think about insurance. They feel comfy with the State Farms, Allstates, and Geicos because they spend billions on warm & fuzzy advertising. You won't convince those people you have a better product but you will win a greater share of battles when you educate the buyers. Good luck!

Move a state that has Erie and kick everybody's butt.......

Make friends with them and ask them to refer you the business they can't write (which is a LOT!). Sounds to me like you're just starting out and focusing mainly on personal lines (and price...), so if you're not competitive in "preferred" personal, do a little research on what "non-standard" markets you have, and what non-standard means. Start calling on State Farm, Farmers, and Allstate agencies, take them to lunch, be nice to their staff, and ask what you can do for them. Call your proposed relationship "book stabilization" for them: they can move any non-customer/non-standards immediately off their desk and over to you so they can continue to focus on what's profitable for them, and if it's a current customer whose needs they can't fulfill (child, relative, business, etc.), well, you GUARANTY to treat each referral with kid gloves, to make the referring agent look good, and to NEVER attempt a cross-sell into their lines (and that actually does stabilize their books in that they don't have to walk the entire account because their companies don't want just a part of it).
Anyway, that's how I got started 20 years ago. Even though I've moved on to much larger commercial accounts, I still get referral from the same agents, and ALWAYS fulfill the promise we first started out with (even when it hurts). Basically, look at it not as a wall, but a temporary niche to launch your business, then write, practice, and study like hell and move forward. There's PLENTY out there. Good luck!

Hi Rhonda,
Thanks for the reply. I am in CA, Los Angeles to be exact. I was referring more to the auto side of the game. I quoted a prospect who was with State Farm and I could not beat his price. The home was right on but could not do a bundle because of several claims within 5 years.
Thanks again.
Edward

Thanks Lawrence and Dave. Great insight.

Dave hit hit the nail on the head! Allstate writes a lot of ACV homeowners policy to stay competitive in my area for example. So if you know this, can see this on the potential clients' policy, and can explain it to them, you'll earn a lot of people's trust. While price is very important, you have to be able to compete on the the education piece of it to earn trust and referrals. And yes, become the State Farm and Allstate Agencies best friend because they can't write a lot of business. When they refer you a car insurance policy for example, NEVER touch the home policy without their permission because you'll lose them as a referral source (many times you'll be able to beat them on price if you bundle, but don't do it without you talking to them first). If for some reason you have a piece of business that you think you are quoting way too high on, refer it to them and give them a shot at it- that will earn you many more referrals in the future. Learn your market as fast and as thoroughly as you can.

Actually, I think it was Lawrence who stressed the importance of product knowledge (i.e. read and compare forms), and I couldn't agree more. But also, yes, between my "markety" answer, Lawrence's educational one, and Rafael's summation, I agree: we nailed it.
To further stress the education aspect, rejoice in the fact that you're an independent broker. There's an entire world of insurance that captive agents will never need (or bother) to learn about because their companies don't want to deal in certain marketplaces and consequently just don't offer products that serve them. Nothing wrong with that, just recognize that it IS a niche opportunity to work cooperatively with captives: they have their niche, you have yours, they can dovetail to better the situation of the insurance-buying public.
Can I suggest getting an "Accredited Adviser in Insurance" designation from the Institutes? Make reading forms and discovering under-served markets a daily practice. The long professional development task ahead of you will be as full of opportunity as it will be arduous. With a growing understanding and self-awareness of your differentiated professional identity, you won't even be able to hold yourself back from cold-calling because you will feel the general public just "deserves" you over the alternative, and your confidence will come through with every pitch and inquiry. The end result will be quite simply a lot more money and a lot more fun and personal satisfaction.
It's a brand new year. Get out there and shine!