There are many reasons why an agency owner sells their agency, including retirement, financial gain and the three Ds—divorce, disability and death. However, there is an undocumented but growing reason why agency owners are deciding to sell: stress and burnout.

In many industries, including insurance, the coronavirus pandemic gave people an opportunity to reflect on and reset their life goals, plans and expectations. Coming out of the pandemic, some agency owners realized that they do not have to continue owning an agency just because the previous generation did.

On top of the pandemic, agency owners had the double whammy of dealing with the hardest market the industry has experienced in 40 years. This led to significant rate increases, markets shutting down, restrictive underwriting practices, and many agents questioning carrier loyalty, partnerships and practices.

A significant amount—90%—of agency owners under the age of 55 who sell their agency cite stress and burnout as one of the determinative factors for selling, according to IA Valuations' data. They love insurance and taking care of their clients, but do not enjoy managing people and operating a business. These owners view offloading all the administrative and financial challenges of owning and operating a business as the only option to restore balance in their lives.

While selling your agency may feel like the only option, there are many solutions to consider if stress and burnout are the primary drivers for a change in ownership. Here are five options:

1) Hiring an operations manager. Most agency owners cite the operations and management part of the business as the leading cause of stress and burnout. For agency owners who have a strong sales focus, an operations leader is the perfect partner to regain balance. It's like Batman and Robin—two partners supporting and bringing out the best of each other.

2) Develop a strategic plan. Most agencies operate year to year without a strategic plan for growth. This can feel overwhelming and uninspiring, especially when all your carrier partners are demanding growth to retain the relationship. Taking time to develop a plan will put you in a better position to understand what you need to do to grow the agency and restore balance in your life.

3) Consider bringing on a partner. If you are a single agency owner, consider bringing on a partner to share in some of the leadership and management duties of the agency. A partner could also help shoulder some of the financial risk of agency ownership and give you a teammate to help grow the business.

4) Merge with another agency. This option should be explored before selling. There are many agencies with strong operational leaders who love the operations and management of an agency the same way that you love selling insurance and taking care of your clients. Finding the right partner to merge with could be the solution for providing you with relief from the duties and tasks causing you stress and burnout. Find the right cultural fit for your agency and clients, relinquish the parts of the job that cause undue stress and retain ownership in a larger entity.

5) Develop a strong peer network. The independent agent community is one of the most giving, sincere and supportive structures in business. At IA Valuations, the number of times we have heard an independent agent say, “There is enough business for all of us," is remarkable. To combat burnout and stress, seek out the company of non-competitor peers dealing with the exact same issues you have in your agency.

Jeff Smith, J.D., CIC, CAE, is CEO of IA Valuations and the Ohio Insurance Agents. 

The information provided in these documents is general in nature and shall not be construed as personal legal, tax or financial advice for your situation. Please contact@iavaluations.com to discuss your personal situation.

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