- 1,581
Hey Everybody,
I know the valuation of P&C books and have the financing lined up.
I know the valuation of P&C books and have the financing lined up.
Last edited:
Personal Lines Block Transfer
- Thread starter insurance1822
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- personal lines
Huh?
Are you trying to roll the carrier on approximately 1000 policies? Wow, that's going to be a lot of work!
I assume you'll have every policy holder accept this change, go through and re-underwrite each piece of business and then get the policy holder to accept the new rates and terms. If you do this, you won't get blacklisted anywhere, except maybe with the clients.
What am I missing here? Why do you want to transfer the entire block which will probably cause a 25% - 30% roll off in the book? Why buy a book to do this?
What are you going to do when the new carrier rejects some business due to unacceptability?
Are you saying you have a carrier that really pays that much more in commission than every other personal lines carrier out there? You would have to ask yourself 2 questions: Why? and How? Seriously, if commissions are out of line, there is something else going on.
Dan
Are you trying to roll the carrier on approximately 1000 policies? Wow, that's going to be a lot of work!
I assume you'll have every policy holder accept this change, go through and re-underwrite each piece of business and then get the policy holder to accept the new rates and terms. If you do this, you won't get blacklisted anywhere, except maybe with the clients.
What am I missing here? Why do you want to transfer the entire block which will probably cause a 25% - 30% roll off in the book? Why buy a book to do this?
What are you going to do when the new carrier rejects some business due to unacceptability?
Are you saying you have a carrier that really pays that much more in commission than every other personal lines carrier out there? You would have to ask yourself 2 questions: Why? and How? Seriously, if commissions are out of line, there is something else going on.
Dan
Your question isn't very clear, however, for most of the time, anytime you block transfer a book of business from carrier A to carrier B without a very good justification, you can most likely kiss carrier A goodbye.
I assume he wants to do this because he is not appointed with carrier A and doesn't want to be appointed with carrier A.
It's not clear what the motivation is for this. It appears to be someone who thinks buying a book of business is a simple road to riches.
Dan
It's not clear what the motivation is for this. It appears to be someone who thinks buying a book of business is a simple road to riches.
Dan
- 1,076
Book rolls are common but rarely easy. Does the carrier you are rolling the business to have better rate and broader underwriting guidelines? Is it a name as well known and is the AM Best rating better or at least equal. Are they going to take the whole book or will
they re-underwrite and cherry pick it? Does the new carrier have consistently good rates (consistency is most important thing in personal lines pricing) or do they change their filed rates frequently? Can you afford to burn the carrier you are rolling the business from?
If an agency has $1M+ with a certain carrier... they must be fairly competitive in your area. Make sure you are rolling the business for the right reasons (consolidating carriers, better forms, pricing and/or claims service, easier to deal with, etc) and not just to get 22-25% for the first year. There is usually a reason why some carriers offer very sweet deals for book rolls... It is because they are having issues growing organically due to the fact that their rates, product or service do not measure up. Do your homework... You have a lot more to lose than the carrier dangling a few extra points of commission for a single year. How long is the buyout on the book of business as compared to the increased commission? If you buy a book of business and then try to make a bunch of changes(agency name, location, personel, book rolls, etc) you will have some major retention issues.
they re-underwrite and cherry pick it? Does the new carrier have consistently good rates (consistency is most important thing in personal lines pricing) or do they change their filed rates frequently? Can you afford to burn the carrier you are rolling the business from?
If an agency has $1M+ with a certain carrier... they must be fairly competitive in your area. Make sure you are rolling the business for the right reasons (consolidating carriers, better forms, pricing and/or claims service, easier to deal with, etc) and not just to get 22-25% for the first year. There is usually a reason why some carriers offer very sweet deals for book rolls... It is because they are having issues growing organically due to the fact that their rates, product or service do not measure up. Do your homework... You have a lot more to lose than the carrier dangling a few extra points of commission for a single year. How long is the buyout on the book of business as compared to the increased commission? If you buy a book of business and then try to make a bunch of changes(agency name, location, personel, book rolls, etc) you will have some major retention issues.
- 1,076
Large, profitable books of quality personal lines business often sell for 2-3X revenue or 8X EBITA. A $3M premium book will generate about $600k in total revenue (commish + contingency) so you are looking at a purchase price between $1.2m and 1.8M.
45% is a very, very good deal... the best I have ever heard of by 15%. That makes me wonder why the carrier needs to be so
aggressive.
45% is a very, very good deal... the best I have ever heard of by 15%. That makes me wonder why the carrier needs to be so
aggressive.
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