Mergers and acquisitions among insurance agencies are picking up speed again, but a common problem is causing headaches after the deals close: errors and omissions (E&O) claims related to the integration process. The Independent Insurance Agents & Brokers of America, known as the Big “I,” has put a spotlight on this issue, warning that many agencies are not ready for the challenges that come after the deal is done.
Nancy Germond, the Big “I”’s executive director of risk management and education, explained that these claims often show up well after the merger, making them harder to spot and stop early. She described them as “lagging indicators,” meaning they happen after the deal, not during.
To help agencies avoid these problems, the Big “I” has put together a new handbook called The Handbook for Preventing Errors & Omissions Claims in Insurance Agency Mergers & Acquisitions. It comes at a crucial time, as one-third of agencies say they plan to change ownership in the next two years.
Germond pointed out that one big mistake agency owners make is focusing only on the financial side of a deal and not enough on how the acquired business will be checked, handled, and combined into the existing operation. A common slip-up is not auditing the acquired insurance policies soon enough. Waiting for renewal time, which might be months away, can leave agencies open to risks hidden in those policies. She recommends taking a structured approach, reviewing a portion of the book regularly instead of leaving it to chance.
Technology also causes trouble. When two companies with different systems come together, those systems may not work well together. Germond shared an example where system failures stopped renewal processing altogether. She says it’s important to test and align technology early to catch problems before clients notice.
Staff issues add to the risk. New ownership often brings uncertainty, and employees may leave or struggle to keep up without proper training. There’s also a trend of hiring away employees from the bought agency. Germond stressed the importance of handling cultural changes honestly. Saying “nothing will change” isn’t realistic and can break trust.
Finally, client relationships during the transition can be a risky time. Many clients have strong connections with their agents. If the handoff is bumpy, clients might leave or be less forgiving when mistakes happen. Germond highlighted that clients are usually more familiar with customer service reps than with producers, so sudden switches can cause confusion. A smooth, clear transition helps keep trust intact.
With mergers on the rise and operational risks growing, the Big “I” encourages agencies to pay close attention to the hours and details after the deal closes. Taking steps early can avoid expensive and frustrating mistakes down the road.