In What Cases Are Insurance Agencies Sold?
When an insurance agency is sold, sometimes it’s the physical building and the book-of-business that are sold and sometimes it’s just the book-of-business or data that is sold. You’ll find that the latter is true more often now with today’s “virtual agencies,” with more agents working from home and on the go than in a physical office building that’s rented out or owned.
You’ve likely read a lot about many insurance agents nearing retirement: 1 in 4 are expected to retire by 2018, with the average age of an insurance agent being 59 right now. So, these agency owners and agents are beginning to plan for what’s next. They’re likely either planning to sell their book-of-business or pass along to a family member, colleague or acquaintance.
Other reasons insurance agencies are sold, besides retirement (17%), are:
- Burnout (30%)
- Moving (8%)
- Health issues (3%)
- Divorce (7%)
- Losing money (10%)
- Other opportunities (25%)
Do You Have a Plan?
As you can see from the graph above, you can’t always plan for when you’re going to sell your agency. Life happens, and it might come up abruptly. Do you have a plan in place for if that were the case?
There are many questions you should ask yourself to determine how prepared you are. Have you considered how you would advertise your book-of-business for sale? Or, who in your family would you pass along the book to? Do you have a will that includes where all of this data will go in the unfortunate event of your death? Having all of this planned out will relieve stress on you or family members in the event that you need to sell or pass on your book.
One of the most important factors to consider when selling or passing on your book-of-business is to understand it’s value. There is a lot that goes into placing a value on a book-of-business, but it all starts with the condition or form the data is in. This means how “clean” and thorough is the data, where it is stored, and how quickly it can be picked up and used for selling and servicing.
To better understand these factors and more that go into your book’s value, check out our blog: 5 Signs Your Book-of-Business is Valuable.
Consider an Agency Management System
Like we said, the value your book-of-business holds relies on where it is stored. This is because our world is moving quickly towards technology, and buyers will have less and less interest in a book that is solely paper files or unorganized Excel files. Not to mention the disaster recovery concerns with hosting your book in paper or Excel files.
To learn more about the limitations of Excel for managing your book, check out our blog: 7 Reasons You Shouldn't Use Excel to Manage Your Book-of-Business.
There is a lot to consider when it comes to understanding the value of your data, even if you aren’t selling or passing on anytime soon. Increasing the value of your book will allow you to improve client retention and continually grow your agency. Learn more about increasing the value of your data in our eBook, A Valuable Book-of-Business: Preparing for sale, transfer, or growth in your agency.
[Free eBook] A Valuable Book-of-Business: Preparing for sale, transfer, or growth in your agency
In this eBook, we'll discuss the factors of a valuable book, how to make your data more valuable, and how to maintain it going forward.