Any potential purchaser of an insurance agency likely suspects that the Agency must have certain licenses, both residents and non-residents. But which licenses should be kept exactly and who should hold them? Typically, an agency must license an insurance agency, broker or production company when that agency sells, solicits and/or negotiates insurance (some states do not have licensing requirements for businesses). This requirement also applies when the Agency is active in wholesale trade in a Member State, with regard to the investment of insurance between a consumer`s insurance broker and an insurance company. The purchase and sale of insurance agencies, brokers and producers presents unique risks and challenges that do not necessarily apply to other sectors, or even to other types of insurance businesses. While insurance agencies are not subject to the same standards as those that apply to the acquisition of control of insurance companies, there are nevertheless many important challenges to take into account in terms of due diligence and even regulation when considering purchasing an insurance agency. This article will include some of the many tricks that should be taken into account when registering an acquisition of an insurance agency. We hope this article will help any potential buyer or seller of an insurance agency understand what is related to the acquisition of an insurance agency. While acquiring agencies is no different or necessarily more difficult than buying another type of business, agency purchases represent a number of unique challenges and problems that need to be considered. This article took into account only a few considerations that the parties should take into account in the diligence and design of an insurance agency agreement when implementing an insurance agency agreement.

Depending on the size and complexity of the acquired business book and the relative knowledge of the buyer and seller, the buyer can only require the seller`s cooperation after the sale or need more support. The agreement should require the cooperation of the seller and determine the scope and duration of the cooperation. The buyer and seller may also agree to a advisory agreement specifying certain obligations and allowances. Insurance agencies survive and prosper from their commissions. As insurance players become more sophisticated, the trend is to move away from traditional “flat” commissions, based solely on a percentage of the premium generated, and rather on “contingent commissions” based on other measures. This may include the volume of transactions placed with an insurer, the results of insurance security and the “loss ratio” or the performance of the risks taken. While appropriately worded submissions, guarantees and compensation rights may help to limit this exposure, a thorough understanding of an agency`s performance and potential recovery obligations can also have an impact on the Agency`s assessment. While the standard for an agency is to maintain the right to its accounts receivable and at the expiry of deadlines, the results can strongly affect a potential buyer when an agency agreement grants account property rights to other companies. Even if the sales agency`s contractors are bound by unsolicited and non-competitive provisions under the sales contract, insurance customers are not widgets, but people who can choose who they want to work with. Insurance companies and their representatives will not be bound by non-competition bans. Therefore, if the Agency is not allowed to access the bank account, the wear and tear may fly over other agents or directly to insurance companies.