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An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money.. Buffett also touches on what makes valuing an insurance company difficult.nsurance Valuation Insight. A couple of key metrics can be used to value insurance companies, and these metrics happen to be common to financial firms in general. These are price to book (P/B) and return on equity (ROE).
Average business insurance costs for E & O coverage for small firms is typically in the range of $1,000 to $3,000 annually per million dollars of coverage.There are many ways to package policies, get discounts, and reduce your business insurance costs. A sole proprietor might pay $500 per year for general liability insurance, but a small consulting firm is likely to pay over $3,000 per year. 2  A sole proprietor who hems garments out of a home office has limited liability concerns, but a landscaper may pay upwards of $15,000 annually due to increased risk.