But careful preparation can only serve as a mild painkiller for the greater concern that insurance agencies are highly dependent on their ability to do business with insurance companies. Agency appointments can often be revoked with relative ease, even if appointments have been duly assigned to the buyer. Therefore, even if a buyer has acquired only the assets of an agency and abandoned all liabilities, an insurance agency may require that the purchaser “act properly” by the insurance company or be confronted in another way with the revocation of his order and the interruption of business flows. Insurance agencies and deal values are close to an all-time high and all expectations are that the deal flow in 2019 will be equal to or greater than last year`s figures. And while the reported figures tend to be larger agency transactions, there are many agencies involving small local businesses that are not included in industry reports. Once the buyer has purchased the company book, he will want to protect himself from competition, solicitation and disclosure by the seller that could erode or destroy the assets that have just been acquired. While the standard for an agency is to maintain the right to its accounts receivable and at the expiry of deadlines, the results can strongly affect a potential buyer when an agency agreement grants account property rights to other companies. Even if the sales agency`s contractors are bound by unsolicited and non-competitive provisions under the sales contract, insurance customers are not widgets, but people who can choose who they want to work with. Insurance companies and their representatives will not be bound by non-competition bans. Therefore, if the Agency is not allowed to access the bank account, the wear and tear may fly over other agents or directly to insurance companies. Therefore, in order to adequately protect the Agency`s bloods, sweats, tears and tears, it is customary for producer agreements to contain provisions relating to the “ownership of Expirations or Renewal policy” that give the Agency the right to renew its client accounts at the end of the policy, unless the Agency is late in accordance with the current agency agreement.
In addition, an insurance agency cannot comply with the Law on Companies of a given state if it has not properly acquired its foreign qualification for activity with the competent Secretary of State or an equivalent state authority.