Why Does a BOB Have Value?

[Gulfman]

You would have to intentionally piss people off to make a book of business disappear in a few months.

Not really...just another vendor who advertizes like crazy. The client finds out you are charging them $100 yr more than "Lemonade" (the latest and greatest online insurance agency), and you are written off. (i know you don't do PC Stephen...just saying).

The value in a book of business is the revenue stream as well as the opportunities for account rounding and referrals.

For instance, if you take two P&C books of roughly the same premium and commission with similar types of clients. One is all packaged up, everyone has bundled home and auto, has an umbrella and all the toys written through the agency. While the other is mainly monoline or just home and auto. I would argue the second book is actually more valuable to a buyer. Not only do you get the existing revenue stream, you have plenty of opportunity to account round and increase premium and commission. That does not even consider referrals.

The same concept could be extended to any line of business where there are similar crossing selling opportunities. A DI book, health book, investment book, and even a life book.

Finally, assuming you are buying a book with a good loss ratio, it could significantly enhance your profit sharing bonuses from carriers.

I don't think most realized just how endangered that model is. While no one is expecting an established agent to work like a 1st year agent desperate to survive and grow, the days of the 10:00 to 10:05 work days are numbered.

Those are some great points...thanks Vol!

WHAT DID YOU MEAN BY the 5 min. days are over? (i know you were joking but what were you saying "between the lines?"


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[JamesP]

Me too, more like 8am to 10pm!