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The Gift of Insurance Agency Perpetuation

Chances are you have at least once received a gift and your first thought was: “Thanks?”. That question mark means you either don’t know what you’ll do with the gift or you didn’t want it in the first place. Both are not great reactions. Unfortunately, this is how some people feel when it comes to insurance agency perpetuation.

Something as large and meaningful as your independent insurance agency shouldn’t be received with hesitation! Whether you’re turning over ownership to a blood relative or a member of your larger agency family, it’s important to have both the giver and receiver on the same page. To avoid an uncertain or unwelcomed transition, both need to be prepared for perpetuation.

The SIS Agency Perpetuation survey showed 60% of respondents chose a family member as a successor. See the full results here.

Tips for the Giver: Wrapping Up Your Agency

  • Start planning now: There is no “too early” in planning your agency perpetuation. Some suggest starting as early as your mid-30s. No matter what age you are, it’s a good idea to put thought into how your agency will transition now.
  • Get a plan in writing: Focus first on defining milestones and a final end date. You should also consider incentives for employees to stay past the transition, client care plan, successor mentorship, and your ultimate goals for perpetuation.
  • Keep your plan fresh: Perpetuation is a big deal, and can’t be completed in one shot. Review your succession plan annually and update as needed. Include your successor in these reviews if you can.
  • Track and integrate agency progress: Part of your annual review of your plan should include analyzing agency data. Keep track of how you’re doing through reports generated by your agency management system.

Not sure what you should be tracking? Check out our post on data tracking and reporting

  • Get your accountant involved: There are multiple tax implications involved in agency perpetuation. Depending on how and to whom you pass on your agency, you may have to pay more taxes or get a break. Get your accountant involved right away to ensure you’re ready.

Tips for the Receiver: Respecting Past Practices and Making the Agency Your Own

  • Be a part of the plan: Be part of perpetuation planning as early as possible. Let the owner take the lead, but don’t be shy about inserting your ideas. It’s important to be upfront about expectations.
  • Decide on owner involvement: One big item to plan ahead is how much the giver will be involved after the transition. Be clear about what you want, yet keep an open ear to what the giver intends. It’s best to negotiate these items, along with anything involving cost and compensation, with a third-party, preferably a lawyer.
  • Practice patience: Be patient and practice compassion as you take ownership. The independent insurance business is relational, meaning there are a lot of emotional attachments to the agency itself. There can be some strong feelings that come with change.

Get even more perpetuation planning tips from our list of agency perpetuation resources

  • Embrace innovation…slowly: Transition is the perfect time to try something new. But, don’t change everything at once. Come up with one or two areas to start with right away. Move to others as time goes on, giving staff and customers time to adjust.
  • Consult with staff: To help ease transition, consult with members of your agency before implementing anything new. Ask for input on how to implement the changes you have in mind and be clear about why you feel they’re important. Ask for their opinions on what other improvements can be made. Focus on building trust and gaining employee buy-in: you’ll need both before making any new moves.

Leveraging Your Consistent Resource: Your Agency Management System

One thing that will be there on both sides of your transition is your agency management system. This is a great tool for setting up your agency to transition. And, it will create a sense of stability for your staff as ownership is transferred.

At SIS, we’ve helped multiple agencies work through a variety of transitions. Whether it’s moving from a legacy system to our all-in-one, web-based Partner XE management system, transitioning staff roles within the system, or providing all-staff training for a fresh start, we’re here to help.

To find out more about SIS, the services we provide, and our leading agency management system, Partner XE, visit us at sisware.com.

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Author: Sarah Deak

Sarah Deak has been contributing to the SIS team since 2013, covering topics like agency perpetuation, workflow improvements, data security, and marketing. She has a background in small business, working with organizations to improve their online presence and client engagement. Sarah also writes for the SIS newsletters and website, and counts herself lucky to hear from our many passionate, hard-working clients for our client stories. Her favorite part about working for SIS are the dedicated, service-minded people.

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