The Complete Guide to Buying an Insurance Book of Business
What to evaluate, what to pay, and what to watch out for when buying someone else's book.
Buying a book of business is the fastest way to skip the years of cold calling and relationship building that come with starting from scratch. It's also the fastest way to waste six figures if you don't know what you're looking at.
I've seen agents buy books that evaporated within two years and agents who bought books that became the foundation of a seven-figure agency. The difference wasn't luck — it was due diligence.
Retention Is Everything
Before you look at revenue, commission splits, or carrier mix, ask one question: what's the retention rate? Ask for three years of carrier-reported data, not the seller's internal tracking. Sellers are optimistic. Carrier reports are not.
A book with 95 percent retention is a golden asset. Those clients renew year after year with minimal effort. A book with 85 percent retention is a treadmill — you'll spend your first two years replacing 15 percent of the book annually just to stay even. At that churn rate, you haven't bought a book. You've bought a pipeline that needs constant feeding.
Carrier Mix and Appetite
Verify which carriers the book is placed with and whether those carriers are still actively writing in your market. Carrier appetites change. A book that was great three years ago might be sitting on a carrier that's pulling back from your state or restricting new business in your ZIP code.
Also check commission rates. Some books come with legacy commission agreements that won't transfer to a new owner. You might be looking at $300,000 in revenue under the seller's contract and $240,000 under yours because the carrier resets the commission schedule for new agents.
Customer Concentration
Pull a list of the top 20 clients by premium. If any single client represents more than 5 percent of total revenue, that's a risk. If the top 10 clients represent more than 30 percent, that's a major risk. One defection in a concentrated book can blow up your acquisition economics.
The best books are diversified across hundreds of policies with no client dominant enough to matter individually. That's what predictable cash flow looks like.
Producer Dependency
Who has the relationships? If the seller is a solo agent who personally handles every client, you're buying their Rolodex — and Rolodexes don't transfer well. Expect 10 to 20 percent attrition in the first year from clients who followed the person, not the agency.
If the book has been serviced by a team, the transition is smoother. Clients are attached to the phone number and the service experience, not one individual's cell phone. Ask who handles renewals, who handles claims, and whether those people are staying post-acquisition.
Financing the Deal
Most agency acquisitions under $1 million are financed through a combination of seller financing and SBA 7(a) loans. Live Oak Bank specializes in insurance agency lending and understands the industry. Typical structures involve 10 to 20 percent down, seller financing for 20 to 30 percent, and SBA covering the rest.
Earnout provisions are common — the seller's final payout depends on retention hitting certain targets post-close. This is actually good for you as a buyer. It aligns incentives and protects against the book shrinking after the seller walks away.
The Due Diligence Minimum
At minimum, verify retention rates from carrier reports, loss ratios by line, carrier appetite and commission schedules, customer concentration, E&O claims history, lease terms and obligations, staff contracts and non-competes, and technology systems. If the seller pushes back on any of these, walk away. Transparency in due diligence isn't optional — it's a signal of what kind of business you're buying.
Pricing the Book
Personal lines books typically sell at 1.5 to 2.5 times annual commission. Commercial lines books command higher multiples — 2 to 3 times — because of stickier client relationships and higher revenue per account. Mixed books fall somewhere in between, with the commercial percentage pushing the multiple up.
Don't pay revenue multiples on a book with declining retention, aging carriers, or concentrated clients. Those discounts exist for a reason, and no amount of "I'll work harder" overcomes structural problems in the book you're buying.
The right book at the right price, with the right financing, can take five years off your growth timeline. The wrong one can set you back even further. The difference is in the homework.