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Starting or purchasing an independent insurance agency
Posted on 2/27/16 at 5:54 pm
Posted on 2/27/16 at 5:54 pm
If your already an insurance agent in Louisiana does anyone have any insight on what it would cost? And what license you would have to get with the state to start your own agency? Was also looking at trying to find a small one to purchase if it was to hard to start from scratch. Thanks
This post was edited on 2/27/16 at 5:55 pm
3
Posted on 2/27/16 at 11:01 pm to SaintNation
Starting your own these days is tough as you don't have access to a whole lot of markets. You looking P&C or Heatlh and life
Posted on 2/28/16 at 5:41 am to SaintNation
I just did this in AL this month.
Started from scratch.
Join an alliance or cluster. ($3000 first three years)
Get an ein.
E&O ins. ($1300/yr)
Website hosting ($69/month)
PL rater ($75/month)
Startup cost is around $5000.
You have to obtain an insurance license with the state, both personal and business.
It's pretty simple to be honest.
No idea what one costs to purchase one.
Started from scratch.
Join an alliance or cluster. ($3000 first three years)
Get an ein.
E&O ins. ($1300/yr)
Website hosting ($69/month)
PL rater ($75/month)
Startup cost is around $5000.
You have to obtain an insurance license with the state, both personal and business.
It's pretty simple to be honest.
No idea what one costs to purchase one.
Posted on 2/28/16 at 9:28 am to CherryGarciaMan
Looking to go P&C but I also have my L&H license. By biggest thing is in LA I can not find any info on if I need to obtain the business insurance license or how to do so. I have looked everywhere.
Posted on 2/28/16 at 9:47 am to SaintNation
My agency is P&C, but I'm expanding to financial services as well.
I just searched and couldn't find anything about a business license in LA, but in AL I had to get one.
Call the dept of insurance monday and they could advise you.
225-342-0860
I just searched and couldn't find anything about a business license in LA, but in AL I had to get one.
Call the dept of insurance monday and they could advise you.
225-342-0860
Posted on 2/28/16 at 10:15 am to SaintNation
You can expect a payout to the old owner of 2-3 times trailing revenue.
Posted on 2/29/16 at 9:06 am to Mr.Perfect
Yeah buying one at two times trailing is kind of the norm for a smaller agency
Posted on 2/29/16 at 9:32 am to MsState of mind
Lots of things go into this. If it's a personal lines book with a bunch of auto, homeowners and flood, I would say the need to keep the old producer around is less important.
If it's a commercial book, the might want two years of transition from the old agent to yourself.
If it's a commercial book, the might want two years of transition from the old agent to yourself.
Posted on 2/29/16 at 9:48 am to Mr.Perfect
If it is largely personal lines, and especially mortgage billed homeowner's and NFIP, I would say the multiples being suggested here are low.
I'd discount large commercial, pay only as it renewed, and I have never acquired based on trailing, nor would I ever.
I'm in a different geographic location however. But having said this, I read Marsh Berry's agency valuation stuff monthly, and I see more basis on revenue per CSR etc., composition of book of business, retention etc. than I do on different valuations in different geographical regions.
I'd also add you should buy the renewals, not the agency. Or if you do make a stock transaction or agency purchase, you should check your tail coverage as you're picking up every error and omission from the seller.
I'd discount large commercial, pay only as it renewed, and I have never acquired based on trailing, nor would I ever.
I'm in a different geographic location however. But having said this, I read Marsh Berry's agency valuation stuff monthly, and I see more basis on revenue per CSR etc., composition of book of business, retention etc. than I do on different valuations in different geographical regions.
I'd also add you should buy the renewals, not the agency. Or if you do make a stock transaction or agency purchase, you should check your tail coverage as you're picking up every error and omission from the seller.
Posted on 2/29/16 at 9:49 am to Mr.Perfect
Duplicate
This post was edited on 2/29/16 at 9:50 am
Posted on 2/29/16 at 8:56 pm to Iowa Golfer
Thank everyone of you for the advice. One more question. Since technically by law(at least I thought) you own your book of business as an agent. I realize if you change agencies you would have to AOR/BOR all of your policies. This is my question:
If you have a verbal agreement with your current agency that they pay you a percentage of your book new and renewel then when you start to AOR/BOR the policies over can they stop paying you your commission that you agreed to with that agency. So if I pulled say 60% of my book over to the new agency, then do they legally have to keep paying me on the 40% that is still with them or can they refuse to pay?
Thank you all again
If you have a verbal agreement with your current agency that they pay you a percentage of your book new and renewel then when you start to AOR/BOR the policies over can they stop paying you your commission that you agreed to with that agency. So if I pulled say 60% of my book over to the new agency, then do they legally have to keep paying me on the 40% that is still with them or can they refuse to pay?
Thank you all again
Posted on 2/29/16 at 11:16 pm to SaintNation
How long have you been in the biz?
They definitely wouldn't pay you for the book that is still with them. It's their book.
How hard is it to get the contracts you need with the carriers?
They definitely wouldn't pay you for the book that is still with them. It's their book.
How hard is it to get the contracts you need with the carriers?
Posted on 2/29/16 at 11:54 pm to SaintNation
You need to move all business at once in the situation you describe. Once you start the move, you're not going to be around the former agency much longer, nor should you be if you're moving on.
If you're moving everything, you shouldn't have any trouble getting a contract with the current carriers as long as you switch en masse. The carrier wants to keep the business too.
If you're moving everything, you shouldn't have any trouble getting a contract with the current carriers as long as you switch en masse. The carrier wants to keep the business too.
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