Jul 082013

When to Retain Your Insurance Expert Witness

When is the Best Time to Retain Your “Expert”?

A critical decision when Insurance Agency Valuation and Insurance Company issues are involved.

Experienced Insurance Expert - excerpt from text. Moat Associates.A recent internet discussion among international attorneys, accountants and experts contributed a number of answers to this question. As one might expect, the predominant answer was, “As Soon As Possible.” Continue Reading →

Dec 152011

When Hiring an Insurance Valuation Expert

What lawyers should want when hiring an insurance valuation expert or arbitrator

Too often when interviewing a prospective “expert” lawyers are led astray by the insurance executive who “has worked in the insurance business for over 25 years” or by the CPA who “has testified on many valuations.” BE AWARE – neither may be up to the task. As an attorney going to trial on an insurance valuation matter you want to know your prospective expert’s response to at least the following questions.

  • How many times have you testified on an insurance (agency or company) valuation?
  • Of those times, what percentage was for the plaintiff and what percentage was for the defendant?
  • Have you ever been excluded by a court? If so, why?
  • Have you ever been appointed by the court as an independent expert?
  • What percent of your income is based on expert testimony on insurance valuation issues?

Adapted from “Factors to Consider When Hiring an Expert,” an article by Donald May (Marks Paneth & Shron LLP):

Nov 222011

How to Value Your Insurance Agency Business

Using DCM’s  Free Website Business Valuation Estimator

Moat Associates has created a business valuation tool  that can be used to estimate the value an independent insurance agency, whether large or small.

  • Do you need a valuation estimate for legal or perpetuation planning?
  • Are you curious about the value of your insurance agency in today’s market?
  • Are you wondering about how to possibly value and price your insurance agency for sale?
  • Or are you thinking about buying another agency and want to get an idea of its value before planning an offer?

Continue Reading →

Oct 162011

Business Loans for the Independent Insurance Agent – Part 2

This is the second part of a two part series. Don’t miss part 1:Business Loans for the Independent Insurance Agent

Spotting Trouble on the Horizon

When Lending Implement a Regular, Knowledgeable Follow Up

Inherent in the establishment of appropriate covenants and conditions should be acceptance of regular financial and operational reviews. These might be as frequent as quarterly in marginal loan situations or when trouble has been spotted. Such reviews should include not just the agency’s financial results but at least annually the owner’s personal financials whether or not personal assets have been pledged against the loan. Continue Reading →

Oct 112011

Business Loans for the Independent Insurance Agent – Part 1

An Introduction to Business Lending Opportunities and Observations on Workout Strategies (if needed)

The independent insurance agency business has been, is, and should continue to be, an excellent source of loans for commercial banks, insurance companies and other lending institutions. Blessed by an increasing base of prospects, an economy that demands insurance, social and economic inflation that increases premiums the insurance industry has seen a half a century of uninterrupted growth in premiums.

Compensated by commissions based on these premiums the independent agent has enjoyed a unique opportunity for growth in both his/her agency’s income and its value. While the last twenty years have seen marked shrinkage in the number of independent insurance agencies, the primary cause has been a continuing pattern of mergers resulting in fewer but, overall, larger average sized agencies. Among insurance companies and industry experts this trend is expected to continue. It is this merger activity and the resulting larger agency that provides lenders with the opportunity to build a portfolio of highly profitable, mid-size ($500,000 to multi-million dollar) loans and insurance companies with the opportunity to access sources of larger premium sales. Continue Reading →

Sep 062011

Is Arbitration A Trap For The Unwary Insurance Agency?

A Reprint from MEALEY’S LITIGATION REPORT: Insurance Vol. 21, #13 February 6, 2007


By Peter H. Bickford

[Editor’s Note: Peter H. Bickford is an independent counselor and arbitrator to the insurance and reinsurance markets, with particular focus on dispute resolution, solvency, regulatory, agency and operational issues. In addition to being a practicing attorney for over 30 years, he has been an officer of both a life insurance company and of a broker oriented property/casualty insurance and reinsurance facility with line responsibility for contract and claims operations. He is an ARIASUS. certified arbitrator and umpire.

Copyright 2007 by the author. Response articles to this commentary are welcome.]

Arbitration has been a recognized standard for resolving disputes in the insurance industry for centuries, evolving from the need for global commerce to be able to rely on standard business practices and the prompt resolution of disputes.1 Over the past several decades, arbitration has become the preferred means of resolving disputes between insurers and their reinsurers. In this period the number of full-time reinsurance arbitrators, along with the number of law firms, consultants, and other experts specializing in this field, has skyrocketed.2 The arbitration boom has also begun to take hold in other areas as well, such as between insurers and commercial insureds and between insurance companies and their agents, with many insurers now including an arbitration clause in their standard producer or agency agreements. However, this expansion of the arbitration process beyond the reinsurance arena has its critics, and creates special problems for agencies that need to be considered. In his excellent article on the commercial history of arbitration and insurance,3 Continue Reading →

Apr 212011

Insurance Agency Perpetuation Planning

Defining Perpetuation and Business Succession – Best Practices for Insurance Agencies

STOP, just for a moment, and answer a serious question: 

If you had been hit by a bus last night, what would have happened to the business of your insurance agency?

  • If you aren’t sure, you need to do some Perpetuation Planning
  • If you imagined uncertainty, even chaos, for your family and your employees, you need to do some Business Succession Planning.
  • If you realized that there would be an immediate and possibly substantial loss in the insurance agency’s value, you need to do some planning.
  • If you have planned for such a contingency (or you just don’t care) you need to read no further.

Insurance Agency Perpetuation Plans

Advisors, consultants and your peers call your response to this question “Perpetuation Planning.”   In its simplicity, this is misleading.  What you need to plan is how and for whom to preserve your insurance agency’s value when a “triggering event” happens.  And one will happen to you. Continue Reading →

Oct 112010

Insights on Insurance Agency Valuation

Business Valuation Methods; Insights on Insurance Agency Valuation

The business valuation of an insurance agency or insurance brokerage requires an in-depth knowledge of the internal workings of an agency and a wide-ranging understanding of the insurance agency environment. Most insurance agency valuation reports are vulnerable because the “expert,” lacking close experience with the insurance agency business, has relied extensively on general information and standard text book valuation methodologies.

Issues Affecting a Defensible Insurance Agency Valuation Continue Reading →

Aug 112010

Independent Insurance Agency Valuation

Do You Really Have An Insurance Valuation Expert?

Planning Your Cross-Examination of an Expert on Insurance Agency Valuation

Whether one is presenting or cross-examining an expert’s valuation report there are several issues that are important to success.  Typically, these fall into the following categories.

  1. The expert’s knowledge of the insurance industry and specific type of business in which the subject company is engaged.
  2. The valuation process.
  3. The breadth and quality of information relied upon.
  4. The choice and weighting of valuation methodologies.
  5. The opinion – reasoned, credible and legal.
  6. The “readability” of the report. Continue Reading →