Home › Additional Tips to Consider When Buying an Insurance Agency 

Have you ever thought about buying an insurance agency? Maybe you’ve seen an opportunity to purchase an agency that’s for sale, or you’ve been approached to buy an existing agency. Maybe you’re a business owner who’s been looking at insurance agencies for sale in New York City, NY, but you’re not quite sure where to begin. Either way, you’re on the right page. 

When searching for an insurance agency to purchase, it’s important to understand the different factors that influence the success or failure of an insurance agency.  

business leaders discussing about insurance agencies for sale in New York City, NY

What to Consider When Purchasing an Insurance Agency

Compensation, Commissions, and Profit-Share Arrangements

Depending on the agency’s size, these can be a very important consideration to a prospective buyer, as you will want to make sure you get what you are paying for. Some insurance agencies offer compensation to agents, while others offer compensation and a profit-share agreement. If you are purchasing an agency that offers compensation, it’s important to understand it.  

You may be interested in compensation equal to or greater than what you are currently earning. If the compensation you are offered is not as high as you’re earning now, you may want to consider purchasing an insurance agency that offers a profit-share agreement. Profit-share agreements typically entail an agent earning a percentage of the commission paid out (and can range from as little as 3% to 8% depending on the market you’re in).  

Profit-share agreements can also be a great way for an insurance agency to attract new agents or promote younger agents. With profit-share agreements, the insurance agency typically retains the right to set the compensation paid out to the agents. 

Premium Trust Accounts, Fiduciary Obligations, and Successor Liability

Depending on the type of insurance agency you are considering purchasing, you may want to consider whether or not the agency will have a trust account or fiduciary obligations. These are two different regulations that govern how insurance agencies must account for a premium.  

A trust account requires that a certain percentage of premiums be held in trust. A fiduciary obligation requires that the agency act as a fiduciary for its agents. There are costs associated with holding premiums for a trust account or a fiduciary obligation, but the benefits can be significant.  

agency heads looking for insurance agencies for sale in New York City, NY   

Are You Looking for Insurance Agencies for Sale in New York City, NY?

When purchasing an insurance agency, it’s important to understand the different facets of business that affect the success or failure of an insurance agency. With the assistance of a professional, you will be able to determine whether your agency is a good fit for you.  

We are happy to help you answer any questions or concerns you have during the buying process. Call us at Energia Consulting Partners, LLC today to discuss everything you need to know.