Key Questions to Ask Before Buying an Insurance Agency

Scale your Agency, expand the type of business you write, or step into ownership for the first time. But before making a major investment, it’s critical to slow down and ask the right questions. Buying an insurance agency isn’t just about acquiring policies—it’s about ensuring that the opportunity fits your long-term goals and capabilities.

Whether you’re a new agency owner or an established producer considering expansion, here are the foundational questions that should guide your decision-making process.

Can You Handle It—Really?

Before reviewing numbers or carrier contracts, start with a gut check. Do you have the time, resources, and energy to take on this new responsibility? Buying an agency adds layers of complexity, from staffing to compliance to operations. Without a clear plan for how you’ll manage the transition, the acquisition could become a strain on your team and finances.

Does It Align With Your Business Goals?

Not every agency is the right fit. Consider whether the agency you’re looking to buy aligns with your current offerings and long-term strategy. For example, if you specialize in personal lines but the prospective agency focuses on commercial accounts, there may be a steep learning curve and operational shifts ahead. Buying for the sake of growth can backfire if the book of business doesn’t support your direction.

Are You Overlooking Hidden Risks?

A large revenue number or premium volume can be tempting, but don’t let the top-line figures distract you from the bigger picture. Ask whether the agency has:

  • A solid three-year revenue trend (growing, flat, or declining)
  • A carrier appointment structure you can maintain
  • Accounts heavily tied to relationships with the seller or staff
  • Agreements with clusters, networks, or aggregators that could change post-sale

Understanding the full operational picture—including carrier expectations, compensation structures, and client retention—can help prevent unexpected surprises.

Who’s Actually Running the Show?

Staffing is one of the most overlooked parts of the buying process. Get clarity on:

  • Employee roles and compensation
  • W2 vs. 1099 employment status
  • Non-compete agreements
  • Client relationships tied to individual producers

If key employees leave after the sale, the value of the book may diminish quickly. Make sure contracts and employee incentives support continuity.

What Are the Operating Costs?

Alongside revenue, evaluate the agency’s expenses. Ask for a breakdown of monthly overhead costs, including rent, tech systems, and vendor contracts. Lease obligations and long-term technology agreements can follow you post-acquisition, so you’ll want a full picture before making a deal.

Have You Done the Due Diligence?

Once initial conversations are promising, initiate a proper due diligence process. Sign a non-disclosure agreement (NDA), review detailed financials, and request documentation related to:

  • Carrier production requirements
  • Client concentration (especially large or related accounts)
  • Lease and vendor agreements
  • Book breakdown (personal vs. commercial, benefits, life)

Approach the process like a strategic dating phase—this is your chance to assess compatibility before you commit.

Buying an Insurance Agency: Final Thoughts

Buying an insurance agency can be a smart way to grow, but only if the opportunity truly fits your goals, capabilities, and resources. By asking the right questions and digging beyond the surface, you’ll be better positioned to make a confident decision. If you’re considering buying an insurance agency, remember: it’s not just about what you gain—it’s about what you’re ready to manage.

Watch and read more content here: Media Center | SIA of NC

SIA of NC is a Master Agency of SIAA logo. Learn more about the SIAA Model: SIAA Model | Insurance Agency Network & Alliance | SIAA

Posted in