SF vs Brightway vs Goosehead

[FirstTimer]

I'm in Florida looking for feedback from individuals who have started a State Farm, Brightway, or Goosehead agency here within the last few years: likes / dislikes / strengths / weakness / challenges / etc. Is it worth paying the BW / GH franchise fee and giving up 50% renewal commissions to offer more than one product and corporate customer service vs going with SF, who's willing to pay hundreds thousand dollars early on to help new agents be successful (albeit selling only their products)? This is the gist of my decision struggle. Additional thoughts / details follow for those that care to read on:

I see that SF gets hammered on here a lot, but I know multiple 3-5 year Florida agents all pocketing over 6 figures in markets with multiple SF agents around them (and none who aren't, though I know they exist). SF heavily invests in the success of new agents (both new market and existing book) over the first few years to the tune of about 300-400k via payments for internship/licensing completion along with their premium builder payments, or via starting an agent with a ~2m dollar book. I understand offering only one product, regardless of how good it is, is a huge challenge if/when SF becomes risk adverse / raises rates…and Florida has been / is is likely to be that market. However, by and large Florida SF agents have seem to consistently overcome that challenge.

I also understand that you have to pay CSRs where service is done by corporate with BW and GH. However, assuming you can build a $3-4 million book over a five-year period, a CSR cost far less than the 50% renewal splits you pay GH and BW in perpetuity… assuming one CSR for about every $3M in premium and average renewal split being approximately 6% for franchises and about 9.5% for a State Farm agent; the more growth, the greater the difference. Also, it seems the service would be key to building relationships and multiline existing customers….I.e., I'm not convinced that outsourcing of service is ideal, though I'm sure I could be.

Then there's book ownership and the ability to sell/gift. That is definitely a perk, but SF has a very lucrative vesting schedule year five on. So outside of gifting the business, I find those the two about equal.

Long story short, it seems the GH / BW advantages is access to multiple carriers and corporate CSR…and it's expensive. Is it worth it…

Unfortunately, the independent route is not feasible for me because I do not have the desired experience carriers and clusters require…at least not in P&C.

Feedback is (likely) appreciated.

 

[marindependent]

What state are you in? You mentioned Florida. If that is the case. Just stop right there and take some time to understand who and what these insurers or groups are even able to write right now.

 

[FirstTimer]

I'm in Florida. It's a tough HO market and has been for years, but there are multiple carriers still selling in it…SF being one of them but only on homes built to post-2002 code. Brightway and GH offer other carriers who are still in the market, as well: Tower Hill, Heritage, etc. Of course, every hurricane affects who remains and at what price. One of the concerns I have with the BW/GH model is their emphasis on lender/realtor/title company relationships for lead referrals. I know that works a lot of places, but I don't know that it's the best model for Florida. We're already seeing attrition due to the interest rate environment and carriers are exiting. I don't know that it's a lead generation model worth paying for. I may be wrong, though; it might continue to produce (I had a rep tell me they saw a 40% jump from '08-'09 in their company-wide HO premiums). I'm just trying to figure out if it's worth paying the substantial fees associated with the franchise model versus going with SF who invests heavily over the first handful of years to facilitate new agent success. Both models have merit and problems: multiple carriers and servicing for a huge renewal split…literally multi six digits over a decent decade of business…
or one company's product that may choose to address risk via pricing out a majority of the market. I do hold a 65; maybe I should just sell life and annuities

 

[axeman462]

I had a We Insure agency that I opened in january of 2020, and sold in december of 2021

We Insure's franchise fees were very similar to Brightway.

They were very high. I do not recommend it. unless you are a super high flying agent, that can negotiate lower fees (I was not, I was starting from scratch), I do not recommend it. The fees are killer.

It you have experience in the P&C industry already, go the scratch agency route. Slowly pick up a few carriers at a time - American Integrity, Tower Hill, etc...
And build out from there.

That all being said, I feel very bad for you being in the P&C world in Florida right now. Talk about a melt down...

just noticed that you said you don't have the experience to pick up carriers on your own yet. Seriously, wait a year, get the experience, write some business, and wait for the market to soften up. I HIGHLY doubt any carriers are even appointing new agents right now. Even via a franchise.

 

[marindependent]

Sounds like you have actually really thought this through. Good for you. Personally I would question how much longer SF has to contiue taking in policies that no one else will write.

Additionally when you are in a Hard to Write State many of the Clusters - are not going to understand the challenge frankly. They are just going to want production no matter what.

 

[MVI]

I'm in Florida looking for feedback from individuals who have started a State Farm, Brightway, or Goosehead agency here within the last few years: likes / dislikes / strengths / weakness / challenges / etc. Is it worth paying the BW / GH franchise fee and giving up 50% renewal commissions to offer more than one product and corporate customer service vs going with SF, who's willing to pay hundreds thousand dollars early on to help new agents be successful (albeit selling only their products)? This is the gist of my decision struggle. Additional thoughts / details follow for those that care to read on:

I see that SF gets hammered on here a lot, but I know multiple 3-5 year Florida agents all pocketing over 6 figures in markets with multiple SF agents around them (and none who aren't, though I know they exist). SF heavily invests in the success of new agents (both new market and existing book) over the first few years to the tune of about 300-400k via payments for internship/licensing completion along with their premium builder payments, or via starting an agent with a ~2m dollar book. I understand offering only one product, regardless of how good it is, is a huge challenge if/when SF becomes risk adverse / raises rates…and Florida has been / is is likely to be that market. However, by and large Florida SF agents have seem to consistently overcome that challenge.

I also understand that you have to pay CSRs where service is done by corporate with BW and GH. However, assuming you can build a $3-4 million book over a five-year period, a CSR cost far less than the 50% renewal splits you pay GH and BW in perpetuity… assuming one CSR for about every $3M in premium and average renewal split being approximately 6% for franchises and about 9.5% for a State Farm agent; the more growth, the greater the difference. Also, it seems the service would be key to building relationships and multiline existing customers….I.e., I'm not convinced that outsourcing of service is ideal, though I'm sure I could be.

Then there's book ownership and the ability to sell/gift. That is definitely a perk, but SF has a very lucrative vesting schedule year five on. So outside of gifting the business, I find those the two about equal.

Long story short, it seems the GH / BW advantages is access to multiple carriers and corporate CSR…and it's expensive. Is it worth it…

Unfortunately, the independent route is not feasible for me because I do not have the desired experience carriers and clusters require…at least not in P&C.

Feedback is (likely) appreciated.

What's your overall goal? Do you want to build a $3-4mm book? If so, that's very different than a $1mm book.

One you can do 100% by yourself, the other you cannot.

So ultimately it depends on what you want.

I started at State Farm and am now 100% independent.

I think it was the better choice. But I also still respect State Farm.

For me, a book of business that doesn't require a huge staff of CSRs is preferable. For you, maybe it's not.

Start backwards. What do you want? What's your ideal daily life?

Want to wake up and make 100,000 per year without much hassle?

Want to wake up and make 200,000 per year and have three staff members?

What's it worth to you?

 

[Longtimelurker]

I looked at all three of those as a start up agency this year(Virginia). State Farm was a no as I taked to several agents that said the start up kickers weren't attainable half the time. Plus I wanted to own my book. Too many rules with State Farm IMO. Pros are you're with the biggest firm and have a gazillion dollars of free advertising. Cons are they will pull out of a market and then you are stuck. Have a friend that's an agent in New Orleans and after Katrina they literally couldn't write a HO policy for about three years. He took a hit as he couldn't sell HO during that time.

Goosehead was good but I didn't like the $50k start up fee out of fh gate. That's a big nut to overcome. They were also very pushy salespeople. To the point of it really becoming a turn off. They literally had a rebuttal within three seconds of every negative I pointed out. Started doing the math on the 50% renewals and it was just going to take too long to scale with that kind of hit.

ultimately I went with horizon agency out of Colorado. Very very small start up fee, you own the book and they're just honest and straightforward people. They post on here as well so they'll likely see this and chime in. What I liked best is it's literally a 4 page contract. Simple and easy and you can bail at any time if it doesn't work out.

good luck. Outside if being in Florida, I could have written your post myself almost to a t!

 

[FirstTimer]

Appreciate all the input. I'm in a situation where I have the capital to sustain through slim years (military pension and wife that works). I know in the best of situations it will be tight for at least a couple of years, but I do want to realize some success and enjoyment in the industry. Outside of a chance to make a good living (assuming I can persevere), I feel insurance genuinely helps people achieve financial security… despite many viewing it as a necessary evil.

It might make sense for me to go produce for another agency for a while…maybe get some additional clarity. I'll think hard on that. Does anyone happen to know of any "good and fair" MGA/cluster/aggregators operating in Florida? Firefly looks exceptional, but they do not. I've seen a lot of pros and cons with SIAA and Smart Choice… Hesitant to pursue anything with either given some of the negatives around binding, commission payments and exit fees.

 

[FirstTimer]

I looked at all three of those as a start up agency this year(Virginia). State Farm was a no as I taked to several agents that said the start up kickers weren't attainable half the time. Plus I wanted to own my book. Too many rules with State Farm IMO. Pros are you're with the biggest firm and have a gazillion dollars of free advertising. Cons are they will pull out of a market and then you are stuck. Have a friend that's an agent in New Orleans and after Katrina they literally couldn't write a HO policy for about three years. He took a hit as he couldn't sell HO during that time.

Goosehead was good but I didn't like the $50k start up fee out of fh gate. That's a big nut to overcome. They were also very pushy salespeople. To the point of it really becoming a turn off. They literally had a rebuttal within three seconds of every negative I pointed out. Started doing the math on the 50% renewals and it was just going to take too long to scale with that kind of hit.

ultimately I went with horizon agency out of Colorado. Very very small start up fee, you own the book and they're just honest and straightforward people. They post on here as well so they'll likely see this and chime in. What I liked best is it's literally a 4 page contract. Simple and easy and you can bail at any time if it doesn't work out.

good luck. Outside if being in Florida, I could have written your post myself almost to a t!

I'll check out Horizon; I found their website and will call to see if they do business in Florida. Did you have any immediate access to tier 1 carriers and what's their commission / renewal splits?

Appreciate the info!

 

[FirstTimer]

What's your overall goal? Do you want to build a $3-4mm book? If so, that's very different than a $1mm book.

I definitely envision a larger book with a sales and CS staff. Ultimately, after about 10 years or so, I'd like to be in a situation where I could have an office manager running most of the day to day and enjoy myself a little bit. Gotta love renewals…as long as you're not giving half away.