There are practitioners who advise their clients on building an appropriate succession plan, but who find developing one themselves to be “a very difficult problem,” says Guy Baker.

One area where agents have seen a problem in transferring their business is the fact that most insurance carriers will not change the agent of record for individual insurance lines, according to William Keen. “Those renewals are lost; theyre basically nontransferable. So, thats a difficult asset to sell.”

But some aspects of the business do lend themselves to succession planning, such as 401(k)s, pension plans, money management and health benefit programs. “Things where you set up ongoing programs that require maintenance,” Baker says.

The key to an agent succession plan, according to Baker, is “to capitalize your business to where it has value [which can] be transferred.”

Bakers solution to his business succession involves bringing in partners and building an organization around these ongoing entities.

“You can build a team and transfer that value effectively,” he says.

Baker has set up independent entities for each aspect of his business including money management, compensation consulting, 401(k) plans and group insurance. “And, theyre all with different partners,” he says.

For Keen, his succession plan is a “work in progress.” One of Keens sons may have an interest in getting into the business, and he expects to find this out over the next five to seven years. If his son decides to take this path, “then hell become an integral part of the succession plan,” he says. Otherwise, Keen needs to think about finding a successor. “The challenge would be to determine who has the honesty, the integrity, the personality, the expertise and the fit to be a good source for my clients,” he says.

In the event something suddenly were to happen to Keen today, hes established a relationship with another professional hes known throughout his career. “He knows that if something happens to me, he would be the one responsible for maintaining the business, taking it over, operating it and seeing an orderly transition,” Keen says.

Timothy OConnor built his succession plan by practicing what he preaches. Hes growing his own successor by bringing his younger brother into his business. If everything goes right for OConnor, he expects to retire by age 60, and turn the practice over to his brother.

And since OConnor has been in business for 20 years, he has a long list of referrals and clients who need servicing which he can pass off to his brother. He compares this to a mentor/prot?g? relationship. Now, theyre looking for another junior agent to serve as his brothers successor.

Robert Sunshine admits that his succession plan is somewhat unique. After leaving a successful career as a registered nurse, Sunshines spouse started working in his office. Over time, she learned the business, got licensed and got to know a lot of his clients. Now, should anything happen to him, shes ready to take over.

“Certainly most people are not that blessed to have a spouse who took the time to do that,” Sunshine said.

But he adds that producers should be able to find a younger successful professional right in their own agency. Its important to “just let clients know there is some continuity,” he says.

–Barry Higgins


Reproduced from National Underwriter Edition, February 10, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.