The last item we discussed on valuing an independent insurance agency was retention. Now we will take a look at carrier appointments.
5. CARRIER APPOINTMENTS
One of the first things a potential buyer looks at when evaluating an agency is their appointed carriers. The buyers are looking for carriers they currently do not do business with or ones that have a specialty niche. Having these contracts can create a larger valuation for an agency especially if it is with a carrier that may give out a limited number of contracts and that require high premium levels to stay appointed with them.
Agencies whose books are mostly with standard carriers are usually more attractive than excess and surplus lines or non-standard business. This is due to the standard carriers being approved by the state. However, in many high risk areas such as the Gulf Coast it can be difficult to write business with standard carriers. Therefore, you will often times see the majority of agencies in these areas writing a large part of their books with excess and surplus or non-admitted carriers. Agencies that have been granted special permissions by admitted carriers to write business in these areas can expect a higher valuation for their agency.
5. CARRIER APPOINTMENTS
One of the first things a potential buyer looks at when evaluating an agency is their appointed carriers. The buyers are looking for carriers they currently do not do business with or ones that have a specialty niche. Having these contracts can create a larger valuation for an agency especially if it is with a carrier that may give out a limited number of contracts and that require high premium levels to stay appointed with them.
Agencies whose books are mostly with standard carriers are usually more attractive than excess and surplus lines or non-standard business. This is due to the standard carriers being approved by the state. However, in many high risk areas such as the Gulf Coast it can be difficult to write business with standard carriers. Therefore, you will often times see the majority of agencies in these areas writing a large part of their books with excess and surplus or non-admitted carriers. Agencies that have been granted special permissions by admitted carriers to write business in these areas can expect a higher valuation for their agency.