So it is apparent to most everyone that Mergers and Acquisitions are on the rise in the insurance world. Soon enough they will have a MASSIVE impact on my piece of it; the independent broker channel. I’m sure in some pockets it has already started. Fact is the industry and the American public will be better off with less independent agencies. Many existing brokers have not ” kept up with the times..” so to speak which reduces the overall customer experience, gives the insurance companies to much power(which most are not using wisely) , reduces the ease to entry into the business and creates where we are today; Non insurance people entering to take over.
So I have been semi-actively looking for agents to buy/merge/acquihire for over four years now. I limit this to a certain geography and admittedly have been growing to quickly to keep up with a very consistent search. But, I still have seen lots, researched lots and came up with several criteria I find “interesting” to look at.
In many cases, I am sure most dive right into the “numbers” What is your gross commission? What is your loss ratio? What are your expenses? blah, blah, blah. All well and good I suppose, but as they say; if you do what you’ve always done you’ll get what you’ve always gotten…or something like that. So here are some others, in no particular order since nobody buys the cow when you can get the milk for free;
- What is your total “household” or client count? What has it looked like for the last three years? **Must factor in agency age, owner age, employee tenure and likely adjust the three year look back
- What is your PIF(policy in force) count? Same as above, This is as important as policies per household/client.
- How many of your accounts have both commercial and personal insurance with you? How many could have that with you?
- How many have life insurance with you or an affiliate?
- If dealing with health insurance; how many of those clients have other (commercial) policies with you?
- Agency owner; I was talking with an executive of a large company and we had a conversation about what is really important; the owners age or the owners time in the business? What is behind this? Well we all have a life cycle and so does a business. Plateauing your business, sometimes called maintenance of a book or farming a book instead of actively growing it. Time in business could be a better indicator
- How did you get into the business? Did you stumble in and buy another agency? Buying another agency may have set up your expectations for now. ** Pay attention to Zenefits but not to much. Must factor in how inexpensively you can acquire customers; less than $20
- How big is the space you rent or do you own? Big difference.
- What kind of furniture do you have?
- Do you have a large printer and a copier? All in one?
- How about a wall full of file cabinets?
- Where do you, the owner, sit?
- Do you rely on your company partners for wall decorations or have your own style?
- Is your location one that accommodates “walk ins”?
- Your website; is it full of stock photos?
- Your website; when was your blog last updated, does it read like stock/canned material
- Social media presence or lack there of?
- What memberships do you pay for?
- What are you doing next?
- How often do your carrier reps visit you?
Wow, honestly I was surprised when I wrote all my ideas in one place. I suppose I look at many of these almost subconsciously at this point. Either way, welcome to your input.