Exclusivefocus Summer 2012.pdf - National Association of ...

schedule. You can highlight those agencyexpenses such as entertainment, etc.which will not be a fixed agency expensefor the buyer. The buyer should subtractthese amounts from his/her cash flowanalysis. This information, includingyour Schedule C, will also be needed bythe buyer’s lender in order to underwritethe loan.• Current year-to-date CSRP Reportplus the year-end CSRP Reports fromthe two previous years.• Two years of your Agent ProgressReport.• List of all the companies that canbe written, including all the separate Allstatecompanies.• Detailed income and policy countsfrom NFIP, Northeast Agencies and anyother sources of policies that do not showup on CSRP• Zip code audit for number of policiesin each Zip code. A serious buyerwill want to know the areas where mostof your policies are written.• Copy of current lease.• A listing of lenders, including contactinformation, who are willing to financeAllstate agency purchases.• It may also helpful to contact theunderwriter and discuss the sale of youragency before you have a buyer. You maybe able to send them your CSRP and requesta sample cash flow for a buyer.• Any other information about youragency that will help identify the potentialwithin the agency, such as policy andprocedure manuals, staff job descriptions,staff history and production levels, etc.• A complete audit of the entire bookof business should be kept separately inthe event it is needed prior to closing.Suggested Departure ChecklistProfessional AdvisorsBe sure to involve your accountant andattorney in this process prior to closingthe sale. The contract should establishthe allocation of the proceeds that willdetermine the appropriate reporting procedureson your tax returns.Extended Coverage E&O InsuranceAutomatic Extended Reporting Period.Your coverage ceases on the datethat your EA Agreement terminates.You then are entitled to an automaticone year period from the date of terminationto report any claims. For an additionalpremium, you can purchase anextension of your E&O coverage. Thisis sometimes referred to as an “E&OTail,” but is more properly called an ExtendedReporting Period policy. You caneither buy the five-year plan or the lifetimeplan. While the extended policy isnot mandatory, NAPAA highly recommendsthat sellers buy it. The limits forthe Extended Reporting policy will bethe same as the limits purchased in thelast policy period, so plan ahead. If youopt to purchase the extension, you mustsend a completed “ERP Election Form”with payment to CalSurance within 60days of the termination of your Allstateagreement. To contact Calsurance bytelephone, call (800) 745-7189.E&O Insurance cancellationYou may also want to notify CalSuranceof your termination. This should be donein writing. Be sure to include the effectivedate of your termination and ask for arefund of the unearned premium of yourcurrent policy. We know of at least oneagent who successfully received a refundon his E&O policy, so it’s probably worthpursuing. To read his story, please see OneAgent’s E&O Experience in the fall 2008issue of Exclusivefocus magazine.Securities RegistrationYou should file form U5 to terminateyour registration. The AFS RegionalCoordinator should file this for you. Youwill then receive a letter from Allstateaccepting the termination and advisingthat you have two years to either movethe license to another firm or reinstate it.Dissolve your CorporationCheck with your state to determinethe requirements.Office SpaceIf you are leasing, contact the landlordto subcontract your lease. Obtain a letterfrom the landlord acknowledging transferof lease to the new agency owner. Ifyou own the space, be sure to secure alease from your buyer.Customer filesMost states require that you maintaincustomer records for a minimum of threeyears. If you release your customer filesto your buyer, you may want to have himsign a release assuming responsibility,and granting your access to the recordsin the event the department of insurancerequests information from you.Your Allstate ContractYour contract expressly incorporatesseveral documents – “as they may beamended from time to time.” Access tothese documents is limited to “active”agents via the Allstate Gateway. We recommendthat agents save each of the followingPDF files from the Gateway toyour hard drive, flash drive or compactdisk for future reference: R3001 Supplement,R3001 EA Independent ContractorManual, R3001 Reference Guide,and the Allstate Agency Standards. Thiswill be your last opportunity to accessand preserve this part of your contract.In addition, if you do not have a copy ofyour signed, executed R3001 Agreement,we recommend that you contact HumanResources prior to your termination dateand ask for a copy. It is doubtful that itwould be given to you at some point inthe future if you were to need it. EfSummer 2012 Exclusivefocus — 37