What should I check about an insurance brokerage’s book of business before buying?

First, find out what you are actually getting. Ask whether the book is the client files, the carrier agreements, or both, and whether carriers and clients must agree to any transfer. A book that cannot move is just a list of names. Your lawyer should read the agreements with each carrier.

Next, look at the mix and the movement. Ask for the policies by type and carrier, and how many renew each period. Check how many clients buy more than one product, since those tend to stay. Ask for a record of lost clients and the reason each left.

Look at who really holds the relationships. If one producer brings in much of the business, find out whether that person will stay and whether any restriction on competing is in place. Finally, ask how client information is stored and protected, and whether there has been any security incident. A breach you inherit can damage trust. Ask the seller for their privacy practices in writing, and have your accountant look at commission income. Ask about the staff who service the accounts as well. Customer service staff know the clients and the carriers, and their departure can hurt as much as a producer’s. Find out who is likely to stay, and what the seller has done to keep them.

Key takeaways

• Confirm in writing whether carriers and clients must agree to the transfer.
• Ask which producers hold the key relationships.
• Review privacy practices and any past incidents.