Verify renewal quality, carrier appointments, and producer retention before you close on any independent life or health insurance book of business.
Find Insurance Agency (Life & Health) Acquisition TargetsAcquiring a life and health insurance agency means buying recurring commission streams, carrier relationships, and client trust. Disciplined due diligence protects against post-close attrition, undisclosed E&O exposure, and carrier appointment gaps that can erode revenue quickly.
Validate that reported commissions are recurring, diversified, and supported by documented policy-level data before accepting any valuation.
Request a full export from the agency's CRM showing policy count, premium, commission rate, renewal date, and lapse history by carrier and product line.
Calculate 12- and 24-month persistency rates. Target agencies with renewal rates above 85–90% indicating a loyal, low-attrition client base.
Identify top 20 accounts by commission revenue. Flag any single client exceeding 10–15% of total revenue as a material concentration risk.
Confirm that carrier appointments can be maintained or transferred and that no regulatory or E&O issues will survive into your ownership.
Obtain written confirmation from each carrier on appointment continuity post-acquisition. Verify contingent bonus eligibility and preferred commission tier status.
Pull five years of E&O claims history and confirm current coverage is active. Undisclosed claims or lapses are deal-breakers requiring escrow protection.
Confirm all state licenses are current for the agency and producers. Review DOI complaint history and any prior regulatory actions or fines.
Assess producer dependency risk and operational systems to ensure revenue continuity after ownership transfer.
Identify which licensed producers own client relationships. Negotiate retention agreements or non-solicitation clauses before closing to reduce attrition risk.
Evaluate how many client relationships are held exclusively by the seller. Negotiate a transition period of 12–24 months with earnout tied to client retention.
Verify the agency uses a documented CRM system with complete policy, renewal, and client data accessible without the owner's direct involvement.
Verify the Insurance Agency (Life & Health) acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Insurance Agency (Life & Health) meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Insurance Agency (Life & Health) must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
Most life and health agencies trade at 2.5x–4.5x recurring annual commissions. Higher multiples reflect strong persistency rates, diversified carrier relationships, and a team-based book not dependent on the selling owner.
Yes. Life and health insurance agencies are SBA 7(a) eligible. Lenders typically require 10–20% seller financing as a standby note and want to see at least three years of documented commission income and clean financials.
Appointments don't transfer automatically. Each carrier must approve the new owner. Engage carriers early in due diligence to confirm continuity and protect preferred commission tiers before closing.
Earnouts typically span 12–24 months and tie a portion of the purchase price to client retention milestones. They protect buyers against attrition and incentivize sellers to actively support a smooth client transition.
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