On this page
- Fire & general book valuation example
- How are fire & general books valued?
- What determines the value of a fire & general client book?
- Why renewal retention matters so much
- Can a fire & general book be worth more than the indicative range?
- What can reduce the value of a fire & general book?
- How can you increase the value of your fire & general client base?
- Should you sell your book or the whole brokerage?
- Can you sell only part of a fire & general book?
- Does transaction structure affect the real value?
- Frequently asked questions
An established fire and general client base can represent decades of relationships, renewals and claims handled well.
Where clients renew each year, the commission and fee income attached to those policies can give a buyer a predictable revenue stream.
As an indicative starting point, an established fire and general book may be valued at approximately:
2.0×–3.0× annual recurring revenue
Indicative only. Actual market value can fall above or below these ranges depending on the characteristics of the client base, transaction structure and buyer demand.
That range sits below the multiples typically discussed for KiwiSaver or life and health books, and the reason is structural rather than a judgement about quality.
General insurance is annually renewable and price-sensitive. Every policy in the book is re-bought by the client each year, often in a market where they can compare it against a direct insurer in a few minutes. A life policy written fifteen years ago does not face that test annually in the same way.
What the range does not capture is how wide the spread is within fire and general. A commercial book and a personal lines book can generate identical revenue and be worth materially different amounts.
Fire & general book valuation example
Example only
- Annual recurring revenue
- $100,000
- Indicative multiple
- 2.0×–3.0×
- Indicative value
- $200,000–$300,000
The actual market value could fall above or below this range.
A buyer will want to understand what sits behind the $100,000 — how much is commercial, how much is personal lines, and how reliably it renewed over the last three years — before deciding what they are prepared to pay.
How are fire & general books valued?
Fire and general books are usually discussed as a multiple of recurring annual revenue.
The basic calculation is:
Annual recurring revenue × valuation multiple = indicative book value
The complication is deciding what counts as recurring revenue.
A fire and general book can generate income from several sources, and buyers do not weight them equally:
- Commission on premium, paid by the insurer
- Broker fees charged directly to the client
- Premium funding arrangements
- Profit share or contingent commission, where applicable
Commission and established broker fees are generally treated as the core of the recurring revenue. Profit share and contingent arrangements are often discounted or excluded, because they depend on claims performance and on arrangements a buyer may not inherit on the same terms.
Before comparing your book to any published multiple, it is worth knowing which of these your revenue figure includes.
What determines the value of a fire & general client book?
1. Commercial and personal lines mix
This is usually the first thing a buyer looks at, and often the single biggest driver of where a book sits in its range.
Commercial accounts tend to attract stronger multiples. The average revenue per client is higher, the advice is harder to replace with a comparison website, and the relationship usually involves genuine broking work — placement, wordings, renewal negotiation, claims advocacy.
Personal lines sits at the other end. Motor, house and contents are the most directly comparable products in the market, clients shop on price, and direct insurers compete for the same customer. A large personal lines book is a real asset, but it is a different asset.
Most books are a blend. A buyer will want the split.
2. Renewal retention
Retention is to a fire and general book what persistency is to a life book.
A buyer wants to know what proportion of revenue renews each year, and will generally want to see it rather than be told it. Useful evidence includes:
- renewal rates by year for the last three to five years
- retention split between commercial and personal lines
- lost accounts and the reasons, where known
- whether losses were price-driven or service-driven
- movement in the client count as distinct from movement in revenue
That last point matters more than it sounds, and it is covered below.
3. Premium rate movement in the revenue
Because commission is a percentage of premium, revenue rises and falls with premium rates — not only with the number of clients.
New Zealand has been through a period of significant premium increases, driven by reinsurance costs and natural hazard exposure. A book can show revenue growth over several years while quietly losing clients, because rate increases more than covered the attrition.
A book growing on client numbers and a book growing on rate are not the same proposition.
A careful buyer will separate the two. So should you, before you go to market — the second carries more risk if the market softens.
4. Client and account concentration
Personal lines books are naturally diversified. Commercial books frequently are not.
Where a handful of accounts generate a large share of revenue, a buyer will look at those relationships closely: who holds them, how long they have been with the business, whether they are tendered regularly, and what happens if the principal leaves.
Concentration is not automatically a problem, but it changes the risk profile and can change the structure a buyer offers.
5. Insurer and agency arrangements
A buyer needs to be able to place your business.
Relevant questions include which insurers and underwriting agencies the book sits with, whether the buyer holds the same agency agreements, whether any binder or delegated underwriting authority exists, and whether those arrangements transfer.
A book placed largely through an agency the buyer does not hold creates work, and sometimes creates a discount.
6. Renewal date profile
Fire and general renewals are often clustered rather than spread evenly across the year.
A heavily concentrated renewal calendar affects a buyer's servicing capacity and their cash flow, and it concentrates transition risk into a short window. A book with renewals spread across the year is generally easier to absorb.
It also affects settlement timing. Selling three weeks before your largest renewal month is a different conversation from selling just after it.
7. Claims servicing
In general insurance the claim is the moment the relationship is proven.
A book where claims have been handled promptly and advocated properly tends to retain clients. A buyer may want to understand claims volumes, how claims are handled and by whom, and how much of that work depends on you personally.
Claims servicing is also a workload question. A book with heavy claims activity requires more capacity from the buyer, and that can be reflected in the price.
8. Quality of records
Documentation affects buyer confidence and the speed of due diligence. Useful records include:
- current contact details
- policies held, insurer and expiry dates
- premium and commission or fee by policy
- sums insured and material declarations
- renewal and review history
- claims history
- file notes and advice records
- any outstanding underwriting requirements
Broking system data that reconciles cleanly to the revenue figure makes a book easier to buy. Data that does not reconcile makes every other conversation harder.
9. Compliance and advice records
Where the book involves regulated financial advice, a buyer will want to understand the arrangements it has been provided under, and that advice records and disclosure obligations have been met.
Unresolved compliance questions are one of the more common reasons a transaction slows down.
10. Dependence on you
If clients deal with you personally, your involvement in the handover carries real value.
Transition options include personal introductions, joint renewal meetings for key accounts, a defined handover period, and working the first renewal cycle alongside the buyer.
The aim is to transfer the relationship, not simply redirect a commission stream.
Why renewal retention matters so much
Consider two books, both generating $200,000 of recurring revenue today.
One retains 88% of revenue each year. The other retains 95%.
After ten years, assuming no new business is written:
| Annual retention | Approximate revenue remaining after ten years |
|---|---|
| 88% | $55,700 |
| 95% | $119,700 |
That is more than double, from a seven point difference.
This is the arithmetic behind why a buyer may pay a stronger multiple for a book that can demonstrate its retention — and why “our clients are very loyal” is worth considerably less than three years of renewal data.
Can a fire & general book be worth more than the indicative range?
Potentially. There is no ceiling that applies to every transaction.
A book that prices strongly may have:
- a meaningful commercial component
- demonstrable renewal retention
- revenue growth from client numbers rather than rate alone
- diversified accounts and insurers
- a well-spread renewal calendar
- clean, reconcilable records
- transferable agency arrangements
- limited dependence on the selling broker
- competitive buyer interest
A book carrying more risk may attract a lower multiple, or the same multiple with more of the price deferred. The market determines the actual price.
What can reduce the value of a fire & general book?
Common issues include:
- declining renewal retention
- revenue growth that is entirely rate-driven
- heavy concentration in a small number of accounts
- agency arrangements the buyer cannot replicate
- poor or unreconciled broking system data
- out-of-date contact and policy information
- unresolved compliance or advice-record gaps
- high claims workload relative to revenue
- a renewal calendar concentrated in one or two months
- significant exposure to a single geography or hazard
- strong reliance on the selling broker personally
Identifying these early gives you time to address some of them before going to market.
How can you increase the value of your fire & general client base?
- Separate rate from retention Be able to show client numbers and revenue movement side by side.
- Evidence your renewals Three to five years of renewal data, split by commercial and personal lines.
- Reconcile the revenue Make sure the revenue figure ties back to the underlying policies in your system.
- Clean the records Contact details, expiry dates, sums insured, file notes.
- Review concentration By account, by insurer, by renewal month, by region.
- Document the process Make it possible for another broker to run the renewal cycle without you.
- Plan the handover Particularly for the accounts that matter most.
- Start early Succession planning works better when you have time to improve the business rather than being forced to transact quickly.
There is more on each of these in seven ways to increase the value of your client base before you sell.
Should you sell your book or the whole brokerage?
They are not the same transaction.
A client book sale generally involves the client relationships and the recurring revenue attached to them.
A business sale may also include staff, brand, systems and broking software, premises and leases, agency agreements, referral relationships, and future new-business capability.
A brokerage that runs without its founder is a different proposition from a book of renewals, and is usually valued differently. Knowing which one you are selling matters before you compare your book to any published multiple.
How much is a financial adviser client book worth in New Zealand? sets out how the different revenue types are assessed alongside each other.
Can you sell only part of a fire & general book?
Yes. You may decide to sell:
- the personal lines book while keeping commercial accounts
- the commercial book while winding down personal lines
- clients outside your region
- a particular industry segment
- accounts that no longer suit your capacity
- enough of the book to reduce your workload without retiring
Splitting a book is common in fire and general, because the commercial and personal halves often suit different buyers.
Does transaction structure affect the real value?
Considerably.
Take a $150,000 book.
Offer A
2.5× = $375,000, fully paid at settlement.
Offer B
2.9× = $435,000, but $145,000 is dependent on retention through the next full renewal cycle.
Offer B has the larger headline. It also leaves $145,000 exposed to whether clients renew, in a class of business where every client makes that decision annually.
When comparing offers, consider:
- payment at settlement
- deferred payments and how long they run
- what the retention test actually measures, and when
- whether the test runs across a full renewal cycle
- who services the book during the earn-out period
- restraint of trade obligations
- treatment of accounts lost on price
- security for deferred amounts
The best transaction is not necessarily the one with the largest headline multiple.
Frequently asked questions
How much is a fire and general book worth in New Zealand?
There is no standard market price. As an indicative starting point, The Client Base uses approximately 2.0×–3.0× annual recurring revenue, with the position in that range depending heavily on the commercial and personal lines mix and on demonstrable renewal retention.
Why are fire and general multiples lower than life or KiwiSaver?
General insurance is annually renewable and more price-sensitive.
Clients re-buy every policy each year, often against directly comparable alternatives. That makes the future revenue less certain than a long-standing life policy or a KiwiSaver servicing relationship.
Are commercial books worth more than personal lines?
Often, yes.
Commercial accounts typically carry higher revenue per client, involve genuine broking work, and are harder to replace with a direct or online alternative. Most books are a mix, and the split is one of the first things a buyer asks about.
Does premium rate movement affect my valuation?
It can.
Because commission follows premium, several years of rate increases can mask client attrition. A buyer will generally want to see revenue growth separated from rate movement.
Do my insurer agency agreements transfer?
Not automatically.
Whether the buyer holds the same agencies, and how any binder or delegated authority is treated, is usually worked through during due diligence.
Can I sell my fire and general clients without retiring?
Yes.
Selling one part of a book, or a segment of clients, while continuing to operate is common.
Should I get an appraisal before I am ready to sell?
It can be useful.
Knowing what your book may be worth several years before an exit gives you time to improve the things buyers price on.
Indicative information only. Actual market value can fall above or below the ranges discussed depending on renewal retention, client characteristics, revenue quality, transaction structure and buyer demand. This content is general information and is not legal, financial, accounting or tax advice.
