Business Advice

Succession and Agency Planning

Episode Summary

This podcast provides an in-depth look at structuring insurance agencies for effective succession planning. It covers the importance of having a plan in place for unexpected events like death, retirement, or major lifestyle changes. Smoothly transitioning responsibilities and ownership is critical.

Key considerations when developing a succession plan are whether you intend to eventually exit the business, grow through acquiring others, merge with another firm, or just prepare for the unexpected. Thinking through long-term goals helps shape the plan.

A major decision is whether to operate as an individual agent or establish a formal agency. Agencies can outlive agents, simplifying transitions. With an individual agent, their book must be sold or transferred when exiting.

Steps to set up an agency include:

1. Choosing a business name and filing paperwork to establish the legal entity. Popular structures are LLCs, C-Corps, and S-Corps based on ease of setup and ability to add partners.

2. Obtaining an EIN (employer tax ID number) from the IRS after formally creating the entity.

3. Applying for a state insurance license under the agency name and paying any fees.

4. Contracting the agency with carriers either through insurance portals or by directly contacting them.

5. Developing succession plans and submitting paperwork to carriers in advance.

LLCs are common agency structures because they cost little to start, allow designating ownership percentages, and permit adding partners easily.

C-Corps involve ownership through shares of stock. S-Corps are a special election for LLCs or C-Corps where profits/losses flow through owners.

Even when operating under an agency, individual agents still need their contracting and certifications with carriers. The principal-agent must get certified for any policies they plan to write.

When contacted, the agency gets a writing number but agents should still use their number. The agency number is a placeholder for commissions and ownership.

Taking steps today to properly structure your agency will enable smooth transitions in the future. Having a succession plan helps prepare for both expected events like retirement and unexpected events like death or disability. Structuring as an agency simplifies transferring your book of business when the time comes to exit.


(0:00:05) - The Broker Link helps insurance agents sell more, earn more, and stay independent
(0:00:42) - A succession plan is put in place to prepare for an unexpected event
(0:02:20) - Putting together a succession plan for life events can be incredibly important
(0:07:05) - Steps necessary to establish and move yourself underneath an insurance agency
(0:11:53) - How do you go about applying for an insurance license
(0:20:00) - What happens after you contract the agency? What is next now that you've
(0:22:45) - Nick: We just want to get you thinking about what the future may hold

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