Have you ever done a book transfer inside your insurance agency? If yes, then you will agree with the following:
Book Transfers are a pain in the butt and should be avoided at all cost !
Your company has become unstable. What do I mean by unstable? The company is unable to remain profitable and is pulling out of the market. Warning signs for this are downgrades by the rating agencies. Massive agency cancellations. Tightening of claim payouts. Dramatic increase in rates. None of these alone are red flags, but multiple ones can be indicators that something is going on. Like your car’s “check engine” light, it may be no big deal, but it couldn’t hurt to ask questions.
You have been cancelled. This is not the death knell it may seem. I have seen many companies cancel good profitable agencies. There could be something on their balance sheet that necessitates shedding premium in a market, and you just hit their metrics. Perhaps you got unlucky with storms or shock losses. Just because they are CATs doesn’t mean they don’t count, someone still had to spend real money to adjust the claim. Whatever the reason, you felt the axe blow, and have to do something.
You have too many companies. Over the years, I have seen many agencies become company collectors, believing the more markets you possess the greater your success. This may be true for commercial lines, but not in personal lines. At most, 3 to 5 companies are the most you really need. If you have more, look at where your premium stacks up and I guarantee that most of it is spread among 3 companies and never evenly distributed among 5 or more. One of the dangers of too many companies is that you dilute your ability to make profit sharing. If this is the case, then consolidating some of the smaller carriers can help earn more profit sharing.
So, have you found yourself in the scenarios above? What did you do? Comment below.
P.S. Next post: How to Survive A Book Transfer