The Standards & Guidelines for Appraising Insurance Agencies/Brokers

The American Association of Insurance Management Consultants ( is proud to announce the publication of “The Standards & Guidelines for Appraising Insurance Agencies / Brokerages”. This publication, three years in the development, responds to the crying need for a standard of valuation for the retail and wholesale agency and brokerage community in the United States and Canada. Al Diamond, President of Agency Consulting Group, Inc. chaired the Valuation Committee of AAIMCO, comprised of the most experienced agency valuers in the industry.

For generations insurance businesses have been generally valued by the WAG (Widely Accepted Guess) system, somewhere between a buyer’s and seller’s hope and expectation of value with no better basis than having heard that a multiple range of some measurement (commission, revenue, earnings, EBITDA) has been a historical measurement of value for insurance businesses.

Of course the experienced appraisers of insurance agencies and the most intelligent buyers follow a different and more reliable course in establishing a value, estimating the future earnings potential of the agency being valued under the circumstances of the valuation. Then, for the convenience and comfort of the agents being valued, they converted the projected earnings potential into whichever multiple was acceptable to the agent. The value, nonetheless, was the real value of the projected earnings of the agency in question under the specific condition of the valuation.

The consultants of the American Association of Insurance Management Consultants (AAIMCO), some of the most experienced appraisers, experts and consultants working in our industry defined the Standards of Valuation, combining all of their experience and expertise, in order to provide guidance for agents, for courts and for future valuers regarding the proper methods for ascertaining agency value.

There is no ‘magic number’, no quick multiple that can take into account all the vagaries and differences among the tens of thousands of agencies in the U.S. and brokerages in Canada. But each one of them, analyzed properly can be assigned a value based on their reason for valuation. By perusing and using the Standards of Valuation, anyone may understand why the same agency may have different values under different circumstances to the same appraiser and, certainly, different values to different individuals based on the circumstances of each buyer or appraiser.

We hope that all agencies avail themselves of a copy of the Standards of Valuation and that they (or any appraisers they choose to use) subscribe to the Standards common to all insurance retail and wholesale agencies and brokerages operating in North America. For that reason, there is NO cost associated with viewing or downloading the Standards of Valuation. They will be available to all Insurance Associations and to all courts in need of such a document, to all agents and brokers and to the legal profession for their common use. Please click here to be taken to Agency Consulting Group, Inc.’s website and on the left side of the website click on the tab Industry Standards for Agency Valuation where you can be viewed and downloaded the Standards.

Of course we recommend that every agency should know their value every year (for estate planning purposes, if for no other reason). But any agency with more than one owner needs a basis of value in the event of the triggering of a Buy/Sell Agreement. Agencies with Succession Plans need a basis of value for newly arising owners and as a basis for the retirement of older owners. And, of course, agencies acquiring, merging or considering a sale should have a valid valuation for those purposes.

Agency Consulting Group, Inc. offers valuations in three ways:

The Traditional Valuation (click name for more information) is a non-invasive review of all details of an agency’s operation. A questionnaire is sent to the agent requesting the valuation for completion and attachment of historical financial information, growth data and book of business data (that can be generated from most Agency Automation Systems or from the agency’s historical records. Agency Consulting Group, Inc.’s analysts contact the agent with the inevitable questions to ‘fill in the blanks’. We then input all of the data into our Valuation Program, designed and improved by Agency Consulting Group, Inc. over the past 30 years. Al Diamond, personally reviews and casts the values for every agency based on the specific conditions of the agency in question.

Some agents are fully conversant with accounting, financial reporting and valuation methodology. Agency Consulting Group, Inc. makes a low-cost version of our valuation program available to agents and they can input their own data and create the projections that allow them to cast their own valuation. Should an agent purchase the Agency Valuer (click name for more information) and decide later to use Agency Consulting Group, Inc.’s Traditional or Special Valuation, the entire cost of the program will be applied to the selected valuation.

Agency Consulting Group, Inc. also has a Special Valuation for more information call 800-779-2430 to speak to Al about this option program in which a senior consultant visits the agency, collects all necessary information and data, and interviews the owners in order to derive all o f the information necessary to cast a valuation for the more complex valuation circumstances.

Since many agencies choose to re-value their agencies annually, Agency Consulting Group, Inc. has a special program for annual valuations at a much lower cost than a Standard Valuation because the agency’s data is already in Agency Consulting Group, Inc.’s files and only a one-year update is needed annually.

Please click here to access the Standards of Agency Valuation (see the Standards of Valuation section of our website) and to see how Agency Consulting Group, Inc.’s Valuation Service can meet your needs. Call us (800-779-2430) with any questions or to arrange a valuation for your agency or for any agency you would like to purchase.