What You Should Learn Before Selling an Insurance Company

It goes without saying that our economy is thriving and poised for further expansion. with the creation of new jobs every day and a consistent decline in unemployment. In comparison to the previous six years, Americans now have more disposable money. More Americans are investing in their assets and well-being and buying insurance as a result of these considerations, as well as options and affordability. This year is a very good time to think about selling your insurance brokerage company due to the predicted increase in sales brought on by increased discretionary income as well as growth trends for the next five years.

The insurance brokerage market is one of the most lucrative ones to work in. Profit margins hover around 10.5% on average, and well-managed businesses can pay their employees an average of $140,000! Currently, there are hundreds of carriers to work with and around 373,000 insurance brokerage companies in the United States. The insurance brokerage sector is expected to rise by 6%, and revenues increased by 3.4%, establishing a pattern of expansion. Although it may seem contradictory, the best moment to sell a business is when both the economy and your company are flourishing. The formulas below are a guide to help owners understand what is significant when pricing estimates in the insurance industry are made. Remember that these are only suggestions, and the real value of your company can only be determined by a qualified business broker.

• Inventory included, 125–150% of Annual Sales
• 150-200 percent of commission income
• Annual Revenues at 2x
• 4-5x EBIT, 4-6x EBITDA, and 3-5x SDE

We can assist you in taking actions to raise the value of your insurance agency right away so that when you are ready to sell, you are more likely to obtain a higher price now that you are aware of some of the criteria that are taken into account when determining a buying price.

Customer Diversity

No matter what industry their company is in, we always advise business owners to diversify their clientele. We have encountered numerous business owners that rely on one or two sizable clients for more than half of their revenue. This presents a significant risk to a buyer, thus in order to boost your company’s worth and draw in more buyers, we encourage business owners to target smaller accounts in order to reduce the importance of large clients.

Due to the range of policies available, insurance companies have numerous possibilities for client diversification. Health, medical, life, accident, and a number of other annuities and asset protection plans are all types of insurance policies that can be purchased. The types of consumers you service will depend on the insurance you now offer. A wide range of people are affected by health and medical policies; both individuals and huge corporations require both short- and long-term strategies. Small business owners wishing to secure their company’s equipment can use commercial and personal property and casualty insurance, as can individuals looking to insure expensive items like boats or cars. If your company only offers one or two types of insurance, you might want to think about broadening your selection to promote expansion and client acquisition.

Consumer Assistance

Customer service is key, I’ve learnt from my own experience working in the insurance industry (and speaking with providers about my own coverage). How often have you lost patience while chatting with an insurance company or service provider? Most people would probably respond “too many,” which is why it’s so important to concentrate on giving your customers the best support available. This may be a useful endeavor to implement, especially on larger accounts, if your sales representatives are not already checking in with clients. Consider switching account managers or taking over if you notice that a significant client is not receiving the proper care. Clients in the insurance sector have enormous purchasing power and limitless possibilities for service providers; if a significant client chooses to do business with someone else, you may lose out on retention bonuses.

While we’re talking about cultivating client connections, it’s a good idea to make sure that your team and the client, and not the company owner, are the ones who do it. When the time comes for you to sell the company, potential buyers will think it is too risky because all client relationships go through the owner. A buyer can tell that a transition will be seamless and there is no chance of losing the customer due to the owner’s leaving by looking at relationships between long-tenured personnel and clients.

Volume of sales

Continue to sell! Insurance industry business valuations mainly rely on sales and earnings, thus if your books go down, so will your company’s overall value. Selling can be demanding, therefore we advise business owners to build a team of knowledgeable sales representatives and a long-term strategy to maintain consistent sales and revenue streams. One approach to motivate your sales team and promote healthy competition among them is to implement incentive programs. They are able to concentrate more time and energy on the prospect by mapping out target accounts and assigning particular salespeople, or small teams, to these accounts. Maintaining a sales and marketing strategy will boost your company’s value and convince potential buyers that there are always deals in the works.

Planned Groups

While having individual insurance policies is crucial, group insurance policies are what keep the insurance business afloat. Group plans, or policies used by major enterprises for their employees, are the main source of income for insurance companies, but they can be challenging to get. Going after small businesses before pursuing corporations may be advantageous for smaller businesses looking to break into the group plan segmentation. Small businesses can be a solid source of income that is simpler to operate and frequently require plans for employees as well. Owners can advance and concentrate on larger enterprises once they have experience with smaller companies. Industry trends indicate that include extra services in your proposal will help you win business if your company is having problems securing group insurance. Consider adding dental and vision coverage to your company’s health care offer to a small to mid-size business, for instance, to make the deal more enticing.

Agents Designated as Insurance

A strong tool that can significantly boost the value of your insurance agency is having qualified agents on your team. Insurance designations are essentially documents that identify the agent as a specialist in a certain area of insurance. Having a group of licensed agents who specialize in various areas will help distinguish your company as an industry leader if it offers a variety of services and insurance plans. Consider a high school and the teachers employed therein to help you better see the significance of having certified agents on your team. There are teachers of science, math, and english, but none of them are experts in all three. In order to provide the finest outcomes, each teacher specializes in their field of instruction; insurance brokers are similar to these teachers. Visit this website to learn more about the many designations an insurance agent may earn.

We hope these five suggestions have assisted you in identifying ways to raise the value of your insurance company if you are considering selling it. When you decide you’re ready to sell, it’s crucial to receive the best sales price and recuperate the years and sweat equity you invested in growing your company. At the moment, the Southeast economy is booming, and investors are looking for purchase. The first step in selling a business is determining its value, which we can do for you with a free. Taking these actions now will help you boost the sales price for when the moment is appropriate for you, even if you are 6–12 months or longer away from selling.