insurance agency owner

Employee to Insurance Agency Owner: Prepare for a Perpetuation

As an employee in line to buy the agency, you should be involved with all aspects of running the business. Positioning yourself to be the next insurance agency owner takes a deliberate plan of action, and it is imperative that you prepare yourself. Ownership is more than just selling insurance. Get yourself involved in all facets of the business.

Address your weaknesses. You may be a great producer and embrace technology, but you’re not a fan of accounting. Too bad. As the owner of the agency, you must address the areas that are not a natural skillset.

Be honest with yourself, identify the areas where you lack knowledge or experience and take action to improve.

Here’s what you should know to become the next insurance agency owner:

Basic Agency Operations

The quality and sustainability of the agency book is the lifeblood of your future.  No excuses here – you need to be immersed in agency production and carrier performance.

  • Production: What is the source of new business? Are producer agreements in place? Are there marketing activities, community involvement, and deliberate referral source efforts?
  • Carriers: Who are the key carriers? Is the book managed with a handful of carriers or fragmented? Do you know the carrier reps? It is critical to understand which carriers are true partners and which are better suited for another market.
  • Underwriting: How is the agency book performing? You should know the approximate loss ratios of the key carriers and have a strong understanding of line of business analysis and account concentration.
  • Contingency: What has been the historic contingency income? What are the factors behind the contingency, and does the agency monitor the results?
  • Renewal Retention: What is the renewal retention of the agency? What is your proactive process? Are you making pre-renewal calls to the clients?


Business Operations

This can be a steep learning curve for new insurance agency owners, but don’t dismiss this element of the job. Be patient, you can handle it all; however, it will take some time and effort.

  • Financial Operations: Is the agency profitable? Are expenses in line with best practices? How is the accounting of the agency performed? Who does the tax returns? If you don’t know the accountant, meet him/her and get an understanding of the financial results, processes, functions and taxes. You should thoroughly understand the payroll, banking and cash procedures.
  • Contracts, Legal and Corporate Documents: Is there an attorney for the agency? Where are legal documents stored? HINT: If your documents are still on paper, scan everything now. Name and store the PDFs in an organized manner.
  • Technology: What agency management system is being used? Is it ideal in terms of functionality and cost? Is your technology up to date? Who is the IT service provider? Better to find out before you really need the help!
  • Office Facility: Will you purchase the building? Or do you know the terms of the lease and the landlord?


If you are in line to buy the agency, it is up to you to be prepared. We work with first time agency buyersevery day. Act now to position yourself to be a successful insurance agency owner.


Kelly Drouillard is the general manager of insurance lending at Live Oak Bank. Reach her at Kelly.Drouillard@LiveOakBank or 913-980-7773.