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Guides for independent insurance agencies

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Guide · 10 min read

Selling your insurance book of business? Get the commission records ready before the buyer asks

Short answer. A buyer of your book is paying for the commission it will keep producing, and will test your revenue figures against the carrier statements behind them. Run that test yourself first. Tie the commission income in your agency management system or profit-and-loss statement to the statements, carrier by carrier and month by month. Write down a reason for every line that doesn’t tie, and keep contingent and one-off income apart from the commission the book pays year after year.

Lapidar is in development. Join the early-access list.

Most advice on selling an agency covers succession, timing and choosing a buyer. This guide covers the part of the preparation that sits in your commission records: what a buyer will test, what to keep apart, and why the work needs a long lead time.

By Lapidar, the team building it ·

TL;DR

  • A buyer pays for the commission your book will keep producing, and checks your revenue figures against the carrier statements that paid them.
  • Run that check first: tie your commission income to the statements, carrier by carrier and month by month, for the whole period you will present.
  • Explain four kinds of line before a buyer finds them: payments with no policy, policies with no payment, rates off the schedule, and one-off catch-ups or corrections.
  • Keep contingent, bonus and other one-off income in its own column, and know which revenue sits under codes, networks or producer arrangements a buyer may not inherit.
  • Gathering and checking years of statements is slow. Start well before you list, and leave price, terms and late chargebacks to your advisors.

We’re building Lapidar, software meant to check carrier commission statements line by line against an agency’s book. It isn’t ready yet. This guide covers one part of selling your book of business, or the agency that holds it: getting the commission records into a state that holds up when a buyer checks them.

This is not valuation, legal or tax advice. It is general information for property and casualty agencies; life and health books are outside its scope. It says nothing about what your book is worth or how a sale should be structured. Doug Levi, who wrote about the process in IA Magazine after merging his own agency, points out that your regular business attorney or accountant probably doesn’t work on agency deals often, and that the field is specialized (IA Magazine, 2022). Ask advisors who do before you rely on anything here.

What a buyer of your book will test

A buyer pays for future commission: the renewals your book should keep producing after you hand it over. A 2025 IA Magazine article on acquisitions notes that independent agencies earn most of their revenue from commissions on the policies they sell (IA Magazine, 2025). Your profit-and-loss statement shows that revenue as a line or two. The carrier statements show which policy, carrier, code and month each dollar came from, and a careful buyer will ask for them and set one against the other.

The formal review comes late in the process. MarshBerry describes confirmatory due diligence as beginning once a letter of intent is signed, often driven by the buyer or the buyer’s advisors (MarshBerry, 2023). Levi adds that during the letter-of-intent period the seller commits to exclusivity and stops talking with other buyers (IA Magazine, 2022). A gap the buyer finds at that stage is one you explain with no other buyer in the conversation. The documents a buyer is likely to request are listed in our guide for the other side of the deal, what a buyer of a book will ask for.

Run the buyer’s check yourself first

MarshBerry’s advice to sellers is plain: “a seller should consider conducting their own pre-due diligence assessment in order to be prepared for questions from the buyer” (MarshBerry, 2023). IA Magazine’s 2026 article on preparing an exit quotes Scott Freiday of InsurBanc on why tidy books matter when an agency is valued, and closes that advice with a short instruction: “Overall, ensure your reporting is accurate and reconciles” (IA Magazine, 2026).

For commission, “reconciles” has a specific meaning. Take the commission income recorded in your agency management system, or in your profit-and-loss statement, for the period you plan to present. Tie it to the carrier statements that paid it, carrier by carrier and month by month. Then look below the totals, because a carrier-month can agree in total while the lines inside it cancel each other out. The method a buyer uses is set out in tying the revenue to the statements. Running it yourself means you see the result first, while you still have time to act on it.

On a book with many carriers and several years of statements, this is a large job. Most of the hours go into reading statements and matching lines to policies; the arithmetic takes the least time.

Lines to explain before a buyer finds them

Under the totals, four kinds of line need a reason you can show. Each one can be harmless or costly, and only someone who knows the account can tell which.

  • Statement lines with no policy. A carrier paid on something that isn’t in your book. The policy may never have been entered, or it may sit under a producer or code that isn’t part of the sale. Either correct the book or record why the line belongs elsewhere.
  • Policies with no commission. Your system shows an active policy and no statement pays on it. Some of these were cancelled and never marked, some are paid under another code, and some are commission you were owed and never received. The last kind is worth raising with the carrier now. To a buyer, all three look like a book that claims more than it pays.
  • Rates off the schedule. A line paid at a different rate from the one on your commission schedule. It may be a renewal rate, a mid-year schedule change or a carrier error, and a buyer who compares your rates with the schedules will ask about each.
  • One-off catch-ups and corrections. A back payment, the reversal of an earlier error, or a correction across several policies, landing in a single month. Mark them, so nobody reads a one-time correction as a trend in either direction.

No rule sorts these for you. Telling a cancelled policy from an unpaid one, or a renewal rate from an underpayment, takes someone who knows the carrier and the account. The answer often sits in an old email or in the memory of a person who has since left.

Keep recurring and non-recurring revenue apart

Writing in IA Magazine about agency valuations, Craig Niess of IA Valuations says that examining an agency’s financials turns up “things such as growth rates, non-recurring revenues or expenses,” along with costs that aren’t needed to run the agency day to day (IA Magazine, 2025). If you don’t mark the non-recurring revenue yourself, the buyer’s advisors will draw that line for you.

Contingent and bonus income goes in its own column, by carrier and by year. The 2025 IA Magazine article on contingent compensation in acquisitions says buyers “generally appreciate an agency with a history of receiving contingency payments, but they approach it with caution.” It adds that buyers may need convincing that the income came from deliberate work rather than market forces, and it names transferability of profit-sharing agreements as a critical issue (IA Magazine, 2025). What you can bring to that conversation is the record: each payment tied to the carrier’s worksheet, kept apart from base commission, with any disputed years noted. How these payments are calculated and checked is covered in insurance agency profit sharing.

The same goes for other one-offs, such as a large account written once or an unusually heavy month of new business. They are real money, and a buyer will want to see them apart from the commission the book repeats each year.

Codes, appointments and networks

Some of your revenue may depend on arrangements a buyer can’t take over by signing. Before you present the book, sort its commission by the code it is paid under: codes from your own carrier appointments, codes held through a network or aggregator, and any business paid under someone else’s code.

A 2025 IA Magazine article on agency alliances lists “Who owns the codes?” among the questions to ask before joining one. It also tells agencies to find out whether they own their expirations, “as well as whether you own your carrier code should you decide to leave” (IA Magazine, 2025). A seller needs the same answer for every code in the book. Revenue under a code that stays with a network, or that a buyer would have to obtain separately, belongs on its own line where both sides can see it. Business placed through an aggregator may also be paid on the aggregator’s statement, after its share, so that revenue has to be tied to a different set of documents.

What your network or alliance agreement says about leaving is for your advisors to read. The operational part is yours: knowing which statement lines each code covers, and how much commission each one carried in the period you present.

Producer-owned and split accounts

If producers own accounts, or share the commission on them, what their agreements say changes what is for sale. Niess lists producer and employee contracts among the items a valuation weighs (IA Magazine, 2025). What those agreements mean is for you and your advisors to settle. The commission records can show how much rides on the answer: which accounts each producer writes, what those accounts paid, and where a split applies.

Producer pay is also where carrier errors spread. A line paid short reduces the split on it, and an unmatched line can sit outside every producer’s statement. Our guide to producer commission splits covers how splits are calculated and where those errors come from.

Chargebacks on business written before closing

Commission paid on recent new business isn’t necessarily commission you keep. If a policy cancels after closing, an endorsement lowers its premium, or an audit returns premium, the carrier takes back the commission on the returned premium, often months later. How that works, and how to check each one, is in commission chargebacks explained.

Who carries a chargeback that lands after closing is a deal term for you and your advisors. Your statements already hold the history a buyer will ask about: the negative lines, when they arrived, which carriers sent them and what kind of business they followed. The buyer’s view of the same question is in chargebacks on recently written business.

Assemble the statement archive

The check needs the statements themselves, for every carrier and every month of the period you will present. They may be scattered: some downloaded from carrier portals, some attached to emails, some left in the portal, some on paper. Each carrier uses its own layout, many statements arrive as PDF, and network or aggregator statements add another set. For agency-billed business, the commission sits on the carrier’s account current instead.

Gaps show up only when you lay the months side by side. Don’t assume a portal still holds the older months. Check how far back each carrier’s portal goes, and download what is there while you still control the logins.

After closing, renewals are measured against the expiration list

Once the book changes hands, the buyer turns your expiration list into a list of renewals that should pay. Each statement after closing is checked against it, policy by policy, until every policy has come up for renewal. A renewal that isn’t paid leaves no line on a statement, so it shows up only when someone starts from the list, as our guide to missing renewal commissions explains.

If any part of what you receive depends on retention after closing, those statements are the evidence. Ask your advisors how you will see them once the book is no longer yours.

Why it takes time

IA Magazine’s 2026 article on preparing an exit calls “at least two years” of preparing the firm for a transaction ideal. In the same article Keith Schuler of InterWest Insurance Services adds: “It’s not solely about valuation; staff readiness is equally critical,” and Brent Phelan says most buyers will either want to see a year or two of clean financials or discount the valuation if the sale comes sooner (IA Magazine, 2026). Levi’s advice from 2022 is shorter: “Get to know your financials like the back of your hand.” He also warns that some deals can take three to six months or longer (IA Magazine, 2022).

The commission records are part of that runway, and they are slow for reasons that have little to do with arithmetic:

  • Every carrier formats its statements differently, and a carrier that changes its layout breaks whatever worked the year before.
  • Policy numbers in your system rarely match the carrier’s exactly. Prefixes, term suffixes, dashes and leading zeros differ by carrier.
  • Codes change over the years, especially in an agency that has bought books of its own, so one carrier may pay under several codes.
  • Each unexplained line needs someone who remembers the account, and the reasons get harder to reconstruct the longer they wait.
  • Contingent payments need the carrier’s worksheet for each year, and older worksheets may take time to obtain.

An agency that reconciles every statement as it arrives reaches a sale with much of this already done. One that starts after signing a letter of intent does it under exclusivity, on the buyer’s timetable.

Where Lapidar fits

This is the work Lapidar is being built to do: read carrier statements in their own formats, match each line to a policy in the book, and flag commissions that are missing, underpaid or paid twice, across carriers and months. For a seller, that would mean seeing the tie-out a buyer will ask about before the buyer asks. What your book is worth, and the terms of a sale, stay with your advisors. Lapidar is in development, it has no customers yet, and it can’t help with a sale you are preparing this month. If you’d like to try it when it’s ready, the early-access list is below.

Frequently asked questions

How many months of statements should we prepare?

There is no fixed number. Prepare statements for the same period your revenue figures cover, so that every figure you present can be traced to the statements that paid it. The buyer’s request sets the final period, and it can reach further back than you planned, so find out early how far back each carrier’s portal goes.

Do contingent commissions count as revenue in a sale?

Show them, but show them apart from base commission, by carrier and by year, with the carrier’s worksheet for each payment where you have it. A 2025 IA Magazine article says buyers generally appreciate a history of contingency payments but approach it with caution. How those payments are valued is a question for your advisors.

Should we audit our commissions before listing the agency?

A commission audit runs the same comparison a buyer will run, over a past period of statements against your book. Doing it before you list gives you time to raise underpayments with carriers, correct your own records and write down the reasons for the rest, instead of finding them during the buyer’s review.

Is this valuation advice?

No. This is not valuation, legal or tax advice. This guide covers the commission records a buyer is likely to check. It says nothing about what your book is worth, how a sale should be structured or what your agreements allow. Ask advisors who work on agency sales.

Sources

Lapidar is commission reconciliation software for independent insurance agencies, in development. Related: commission audit for independent agencies.

Every line, every carrier, before the buyer asks.

Every carrier formats its statements differently, and the lines rarely match the book on the first pass. Lapidar is in development. It will check each statement line by line against a book and flag missing, underpaid and paid-twice commissions. Join the early-access list and we’ll write once, when the first agencies can upload their statements.

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