State Farm's AI Plan for Sales Agents Sparks Uproar. 'A Real Slap in the Face.' [View all]

State Farm rolled out the red carpet for its army of sales agents at a Las Vegas convention last month. Thousands who flew into Sin City on the insurer’s dime were treated to a Pink concert, a Jimmy Fallon-led singalong and selfies with the “Jake from State Farm” actor.

Then Jon Farney, State Farm’s chief executive, took to the Allegiant Stadium stage and dropped a bombshell.

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A big driver of that change: AI. The rapidly evolving technology is shaking up the industry’s decades-old sales model, paving the way for faster, cheaper, more targeted transactions. Apps and bots are reinventing how people want to buy products like insurance.

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State Farm in a statement said it is “updating how we support and work with our independent contractor agents so State Farm can meet more customer needs, drive competitive prices, and strengthen the agency model for the future.” The proposed new contract unveiled by Farney is designed to lower costs by cutting benefits and encouraging agents to consolidate into bigger offices.

It ends a valuable deferred compensation program, axes health benefits and changes commissions on several types of policy, according to agents and company documents reviewed by the Journal. Agents who don’t meet certain new sales targets for two years in a row will be paid lower commissions, the documents state.

The impact on agents, who work as independent contractors selling State Farm products only, depends on their mix of business and time with the company. But their gross annual income could fall up to 40%, forcing some to let staff go, refinance their homes or quit their office leases, according to agents who spoke to the Journal.

They are also being asked to incorporate AI into their sales process. The company last month announced an AI and digital initiative—“Next Gen Good Neighbor”—designed to marry tech with human interactions. Personal relationships will “remain the foundation” of the company, according to its website.

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