How to Maximize Your Return on Investment After Buying an Insurance Business

LSM Insurance and the book valuation experts at Jacox-Hilton Corporation have taken you through the purchase of a book of business, but the question becomes, “What do you do with the book once you have it?”

We asked Cameron Jacox and James Hilton, managing partners of Jacox-Hilton, to answer this question.

“As soon as the transaction is completed, the advisor who bought the book is now in the negative,” says Hilton. “They’re expecting their return on investment to come from the residual income and the new business. They’re essentially buying a future revenue stream when they put down an up front investment. At this point, it’s about whatever they can do to try and maximize that return on investment and get more money out of it.”

Now is the time to not only take advantage of some of the opportunities indicated by the make-up of the book and start acting on them but also to start monetizing what is in front of you. This means running the business properly, utilizing technology such as a good CRM system, and Jacox-Hilton’s advisorAssist in-force mining platform.

“This is where doing a book-wide analysis of each and every individual opportunity and then setting up a distribution strategy, either by going and meeting with every individual client yourself or having another advisor do it with you, with the idea of maximizing the client’s value, making new sales, and bringing in new commissions from the existing client book.”

According to Jacox, though, “We found that 20 to 30 per cent of the policyholders are in a situation where there is a much better alternative policy available for them, but they’re just not aware of it.” Advisors generally haven’t used a systematic approach to client servicing, so when new products come out, market prices change, or clients’ needs change, no alterations are made.

“As a result, you can decrease their costs per thousand dollars of insurance or perhaps enhance their coverage, maybe making it more on the permanent side, so they don’t have to face large renewal premiums,” Jacox continues.

“There’s a plethora of ways an advisor can meet with a client and in these meetings, the policyholder is always better off going with the recommendations of their advisor. These situations always have a very high closing rate and it’s a very, very strong organic growth opportunity for maximizing your return on investment.”