In the future - to sell or to *wind down* an insurance agency?

[texasnative]

Hey guys - what's the best way to sell or to *wind down* an insurance agency? **I am NOT planning to do this right now** --- I am just integrating this into my business plan for down the road in say 10 years. Say you have someone with 3/4's of your appointments, and you sell him that book, great. But what if you have some oddball regional carriers and some of your clients recently renewed with them for another year. Are you forced to carry those clients for a whole other year? Can you talk to the carrier, and they can switch them with an AOR change easily? If you terminate your relationship with the carrier, is your client's policy "just cancelled" mid year ... that seems improper. Please give any tips / facts / hints. Thanks!!

 

[adjusterjack]

Whether you sell or "wind down" depends on your goal. If you want money for your business you are likely going to be paid the purchase price in installments over a period of time and, during that time, be obliged to work your book for the transition period.

My friend sold his agency on a 5 year plan. In the past I worked for an insurance agency that bought a few smaller agencies and required a similar agreement.

If you just want to "wind down" (no money) all you have to do is notify your clients that they need to find another agent for their renewals. Either you or the insurance companies can provide a list of agents that represent those companies. The clients aren't going to lose their insurance mid-term though the policies may have to be re-written at expiration for the renewal to be coded to the next agent.

 

[texasnative]

That is *very* helpful, thanks. So all I need to do is let the clients know...to find someone else at the end of their policy term. But what if they fail to do so? Is there any potential E&O liability on my part - aka they can say they never got notice? And what if it's an automatically renewing policy, and is paid out of escrow? Ugh. If that makes sense.

 

[adjusterjack]

So all I need to do is let the clients know...to find someone else at the end of their policy term.

Yes.

But what if they fail to do so?

That's on them.

Is there any potential E&O liability on my part - aka they can say they never got notice?

They can "say" whatever they want. Just make sure you send proper written notice with tracking and delivery confirmation and you'll be fine. Keep those records in your permanent file.

And what if it's an automatically renewing policy, and is paid out of escrow? Ugh. If that makes sense.

Yes, it makes sense. I had to do it many times over the years that I had mortgages. It was a bit of a hassle. Give them plenty of advanced notice 90 days ahead with advice to contact their mortgage companies for procedure and that the insurance company may send non-renewal notice to the lender when you close your doors. Repeat at 60 days, then at 30 days.

All you need to CYA is proper documentation.

 

[texasnative]

You are awesome sir! Thank you!!!

 

[adjusterjack]

You are awesome sir!

Not really. But you're welcome, just the same.