Many State Farm agents said they feel angry and betrayed by the Bloomington-based company.
Agents in two Western states, two Southern states and two on the East Coast reached out to WGLT after learning about changes State Farm will make to their contracts effective in 2028.
State Farm is eliminating a deferred compensation program that for many functioned as a retirement plan, ended health insurance for the independent contractors, and reduced the base compensation for agents. The agents who reached out included a retiree, mid-career agents, a longtime agent and a relatively new agent. They uniformly said they feared company retribution if their names were made public.
'A false promise'
The agents told WGLT they signed a contract years ago with the company’s assurances in mind — promised that the company valued the agent relationship.
“That trust relationship has been broken by them, because the contract very explicitly says these payments will be made for 20 years, as long as the agreement is in place. They figured out the only way they can get out of paying us this money is to just cancel that agreement,” said a mid-career agent.
The end of a deferred compensation program called AIPP loomed large in many agent comments. They called it a “grimy” and “dirty” decision to end it.
“They took away something that was a major, major selling point in this quote-unquote lifetime contract … When you’re getting recruited as a State Farm agent they are selling you a false promise. The promise that they were selling us about investments, and all the wonderful things that you get with AIPP, was a total false bill of goods,” said an agent.
Longer term agents already have most AIPP payments in their pockets. But one mid-career agent said the end of AIPP will cost him $1 million over a decade that he had planned to invest to help fund retirement.
“We were promised this AIPP investment payment. It was a major component to our quote-unquote lifetime contract that would allow us to retire because we did not have ownership in our agencies, right?” said the agent.
In a statement, the company said Tuesday the changes are driven by evolving customer expectations and keep the focus on customer needs.
"Agreements with State Farm agents include a compensation structure designed to incentivize serving the expanding needs of today’s customers. One consistent compensation structure across agents provides clarity and gives State Farm flexibility to adapt as customer needs evolve — while supporting the entrepreneurial opportunity," said the company.
Their own insurance
"We're the biggest insurance company in the world, yet you're not offering health insurance to your loyal agency base?"Longtime State Farm agent
Some agents said they understand changing the commission structure. They’re capitalists too. They don’t like it, but they can live with it.
But the retirement program and the end of health insurance offerings are huge. Some have pressing medical needs and face open market prices for health coverage that are double what State Farm offered them in what was already what they called a “high deductible” offering.
“Pulling healthcare out from under our feet is a bit hypocritical to me,” said one longtime agent. “We're the biggest insurance company in the world, yet you're not offering health insurance to your loyal agency base?”
That agent said there will be a huge impact on the care of a family member if they do not recover before the insurance runs out. They said they will have to rethink retirement plans, and it might affect their employees.
The agents told WGLT they feel resentment for State Farm executives who they feel look down on them distantly from the heights.
“Furthermore, the hypocrisy is all of the executives of State Farm are State Farm employees who will still get health insurance benefits,” said a longtime agent.
A mid-career agent said the change is a bitter irony for agents who sell life policies.
“One of the biggest objections we ever hear when we try and sell life insurance is, 'I have it at work'. We always tell people you can't rely on what you have at work, that can change at any time. Now as life insurance agents, we have firsthand experience,” said one agent.
Any agent who was sick and had life insurance at work now will find it difficult to replace at an affordable cost, two agents said.
The company has also ended options for vision and dental coverage said the agents.
Annual compensation
The impact of the change in commission structure varies. State Farm provided a calculator to allow agents to figure out where they would land under the new structure.
One agent said that with the same performance they have now they would lose 30% of their income. Another older agent said 40%. A younger agent said about 10-15%. A mid-career agent said it might be possible to come back to an equivalent income by maxing out every element of the new structure, though that’s unclear because the company has not yet released the criteria to qualify for each performance step.
“If I hit the same numbers into on that new contract as I did in 2025, my agency would bring in $97,000 less. And I already have issues making payroll, so that's significant in itself. If it was just that, there might be things that we could do to work around it, but the biggest one was AIPP.”
“A lot of us agents are wondering, what are we going to do when we are looking to retire?” said one agent.
Buyout
For agents who won’t take the new contract, there may be some payments available. The company last week resisted the term “buyout,” saying agents could apply for a benefit. Agents scoffed.
“It's worse than just a buyout. They created a Hunger Games buyout,” said an experienced agent.
The company on Tuesday reiterated its position that it is not a buyout.
“It's worse than just a buyout. They created a Hunger Games buyout.”State Farm agent
"State Farm is offering an opportunity to all agents. Each individual can choose whether to sign the updated agreement. Those who decide not to move forward can apply for a transition benefit that may be available," said State Farm.
The pool of funds for what's called the Short-Term Exit Program [STEP] is limited, agents said, as is the number of payments that will be offered, according to the agents. They said it’s first-come first-served. If there are more subscribers than slots, the company will make decisions based on length of service.
The company has not released target numbers yet for the new contracts, and the STEP application window closes at the end of September. The agents said State Farm told them it will notify those who get STEP in November. That’s after agents must make a decision whether to sign a new deal. They said the company told them they can change their minds and accept the new contract, but some agents questioned whether the company really means that and would find a way to ditch agents who wavered and then tried to come back into the fold.
If you do get STEP, an agent must stay through the fourth quarter of 2027. For one agent, the worst part is the amount. The range is $50,000 - $300,000, the agent said. On the low end that’s 10% of the market value of that agent’s book. At the high end it’s just half the market value.
“It is an insult,” said the agent. “I would never take 50-grand and then have to sit here 'till the fourth quarter of 2027 continuing to sell their products when I could move on myself, and that’s what they anticipate. They want someone to be like me, to be pissed off and just leave, get nothing, and go into the independent business myself,” said one agent.
What now
One agent said they had never aspired to have a huge office. They described their client list as moderate, and the goal has been to take care of customers. They said they make a good living but are not rich.
“Under this new way they want to do things, agents like me are going to leave, and then the company is going to take that, take my book, and they're going to assign it to the agents who stay.”
Agents get paid less on clients they are assigned than the ones they develop on their own. That will also save the company money, agents pointed out.
Agents said the cumulative impact of the changes is significant, and the company’s “false promises” have put them in a bind.
"We're all questioning why would someone become a State Farm agent now when there's other options out there."State Farm agent
“You look at making less money, and then on top of that, you’re not even getting retirement benefits, so you got less money to work with. Now you got to have more expenses to be paid for on the health insurance side, and you have to find room to put commission checks to retirement,” said the agent.
“We're all questioning why would someone become a State Farm agent now when there's other options out there,” said another agent.
Protest
One agent said there is a group of agents styled “Save the Farm” that plans to attend the Annual Meeting of the Members of State Farm Mutual Automobile Insurance Company in Bloomington at 10 a.m. June 8 at Corporate Headquarters to urge repudiation of the changes. That meeting includes a report on how the company performed in the last year, according to a State Farm statement.
Because State Farm is a mutual company and not a stock company, any person with a mutual policy in effect can attend that meeting. State Farm also offers non-mutual policies, but people with that kind of coverage are not eligible to attend. Any mutual policy holder that does not attend is automatically considered to have assigned its proxy vote to the board.
The agent said the group was forestalled from asking clients with mutual policies to assign their proxy votes to the agent group instead. Such assigned proxies must be submitted 20 days in advance of the meeting. The company did not tell agents about the changes in contracts and benefits until that deadline had passed.
Structure of the business
State Farm has said it is making changes to improve service to more customers, part of its digital-plus-people strategy. All agents acknowledged the insurance industry is changing to a lot of tech-based programs to access people who will have money to spend on insurance in the future.
“But guess who has money right now? Baby boomers and Gen X. And guess what, they don't want to talk to a computer. They want to talk to a person,” said an agent.
The agents said the company has licensed an AI product for all agent offices. It has also increased a limit on the number of offices an agent can have from three to six.
"The State Farm agent opportunity is focused on serving more customers, improving customer experience, and delivering competitive prices," said the company.
“There'll be larger books but let me do the basic math for you on this. Let's say that I inherit an assignment that's a million dollars for the company, because we're only getting paid a certain percentage on that assignment. …You almost have to hire another person to service it, so it's about a wash, unless you get a huge assignment,” said a longtime agent.
State Farm said its agents remain central to how the company serves customers.
"Many customers want a personal relationship with an agent, while expecting faster, simpler service and more competitive prices. These updates are designed to help agents and State Farm work even more effectively to improve the customer experience and lower prices," said a spokesperson.
If the goal is sales-sales-sales, agents said they won't have time to serve clients directly.
A couple of agents highlighted the point that geography matters. If you are in an area with a decent population base, you can probably get more clients. If you are in a rural area where there aren't too many people, you'll have to try something different. A longtime agent in a small town said they may have to do digital marketing statewide to continue to succeed under the new terms. That agent wouldn’t like it but will do that.
What that and another agent both said is that the shift in the way they will have to do business will undercut the whole good neighbor vibe State Farm has relied on for decades because increasingly customers will not be neighbors.
“If you're very tech savvy, State Farm has made it available to you to get multi-state license, and if you want to go after a lot of online customers, you could probably still maintain a presence in a small town, but you’re marketing and selling to people who don't live there,” said an agent.
