A rare and unique class of alternative financing has emerged specifically for agents, recognizing their commission stream as an asset. Selling renewal commissions for immediate capital is a debt-free alternative financing option available exclusively for insurance agents. However, choosing an institution to purchase a book of business may be difficult due to the unfamiliarity and uniqueness of the service. Once the agent knows what to look for, they can quickly evaluate the competition ending up with the most secure and reliable boutique firm that fits their needs. Below are tips to help find a trustworthy and reputable company to purchase a book of business:
Look for boutique firms that allow the agent to continue cross-selling and servicing clients. The agent does not want the firm to essentially become their competitor. The ideal situation is that after the agent sells the commissions, the purchaser receives the redirected renewals while the agent continues to manage the relationship with their clients by cross-selling other products to them.
Ensure the company is in good financial standing before doing business with them. A company with a history of at least 8-10 years or more provides the experience and ability to offer a fair market value of for sellable assets.
Avoid firms that charge fees for application or book valuation. This puts the agent at risk to pay the company money even if the offer is unfavorable and the agent decides not to sell.
Choose companies that are able to purchase multi-lines or many different products. As mentioned earlier, this allows for a variety of options in order to achieve the greatest amount of capital.
Talk to past clients. Look for someone who has used the company before or ask the company to provide a few names of clients that can be contacted.
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