Agreement To Purchase Insurance Agency
December 2nd, 2020
December 2nd, 2020
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. What about staff or independent agency contractors? They must also have individual licences from insurance producers; they cannot simply “borrow” the licenses of their staff or managers. In addition, each agency must have a single “designated responsible producer” who is personally responsible for the Agency`s actions and who has the same licenses and insurance lines held by the Agency. Therefore, in order to adequately protect the Agency`s bloods, sweats, tears and tears, it is customary for producer agreements to contain provisions relating to the “ownership of Expirations or Renewal policy” that give the Agency the right to renew its client accounts at the end of the policy, unless the Agency is late in accordance with the current agency agreement. In addition, the Agency must keep the right “lines” under its agency license. For example, many states allow an insurance agent to place insurance coverage such as life, health or title, without even obtaining authorization for such lines for its licenses. Therefore, a potential buyer should confirm that their destination has all the necessary licenses, depending on where they sell their business. And these licenses should not have expired and contain all the correct insurance lines, both to continue their current activity and to write the insurance lines that the buyer ultimately wants for the agency.
Fortunately, even if a buyer wishes to transform the target company after the purchase of a limited liability company into a limited liability company, this can be achieved in accordance with existing corporate conversion laws, without the need to re-apply for agency licences. Insurance agencies face a dual competition problem. They must be able to maintain and maintain competitive relationships with other agencies, but they must also fight the potential for loss of customers directly to the insurance companies and/or wholesale agencies with which they deal.