Buying A State Farm Book Of Business
Purchase another agency or book of business: If you want to purchase an existing insurance agency, or simply purchase the clients of another agency owner who is moving or retiring, a 7(a) loan could be a great way to do so.
buying a state farm book of business
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A private school in Washington state received a donation of several books from the insurance company State Farm that were targeted at kindergartners and discussed transgenderism despite the company's claim that they did not encourage such donations to schools.
So, today we're going to help you figure out what your book of business is worth. I'm going to share a bit about some books we have bought, the variables that go into a book's valuation, and what you can do to increase the value of your book.
A book of business in the senior insurance world is going to be valued based on your annual gross commission. So, when someone says "My book was valued at 1.5x," they mean that their book is valued at 1.5x their annualized gross commission.
Be careful of offers like that. People that don't want to service the clients will offer a really low valuation. One gal I was chatting with recently had a mostly Medicare Advantage book of business. One organization offered her 90% commission in the first year, 10% in the second year, and nothing after that. That was it. That's a really low valuation.
The cost of a book of business is usually 1.5-2.5x the annualized gross commission. For example, a hypothetical book of all Medicare Supplement business that produces $100,000 in income per year would cost between $150,000-$250,000.
When we look at the income, we want to know how much the book of business produced for you over the last year, but also how it's been doing over the last several years.
The Medicare Supplement book of business has recurring income, while the annuity book of business doesn't. Does the annuity business still have value? Absolutely! But does it have as much value as a Medicare Supplement business? No, it doesn't.
The final way to do this is as-earned. This relieves a lot of the risk for the buyer, because if the book doesn't make any money, the buyer doesn't pay. But if that business grows and it sticks, it earns more.
That first book we purchased has grown. It's been way better than what we thought. Our staff has done a ton of cross-selling, which has added a ton of value. We've written a lot of big annuity business out of there which has been a huge gift.
The first book of business we bought happened in the middle to end of 2017. We got a really tough call from an agent of ours who found out he had terminal cancer. He was given 24 months to live and asked us if we'd consider buying his book.
Having a CRM is also a big one. One of the first things we did when we bought that first book of business was to input all those paper files into a CRM. When that work is already done, it saves the person buying your book a lot of time and manpower.