What Is My Insurance Agency Worth?

Insurance agencies are one of the most actively acquired business types in the country. The recurring commission model, high retention rates, and massive industry fragmentation make agencies a perfect roll-up target. PE firms have spent billions consolidating the space.

Here's how to think about what your agency is worth.

Typical Valuation Ranges

Insurance agencies are typically valued on a multiple of revenue (annual commissions) rather than earnings:

• Small agencies (under $500K revenue): 1.2x to 2x revenue
• Mid-size agencies ($500K–$2M revenue): 1.8x to 2.5x revenue
• Larger agencies ($2M+ revenue): 2.5x to 3x+ revenue

Alternatively, expressed as SDE multiples, most agencies sell for 3x to 5x SDE. PE-backed brokerages acquiring larger agencies may pay 8x to 12x+ EBITDA.

Factors that push toward the higher end:

• High client retention rate (90%+ annual)
• Diversified book (commercial + personal lines)
• Revenue growth above 10% annually
• Commercial lines heavy (higher commissions, stickier clients)
• Young book of business (not aging out)
• Multiple producers (not just the owner selling)
• Technology-enabled operations

Factors that push toward the lower end:

• Owner is the only producer
• Personal lines dominated (auto/home — lower commissions, higher churn)
• Aging book with declining policy count
• Cluster or aggregator dependence (limited carrier access without the group)
• Concentrated in one carrier (30%+ of premium)

Why Insurance Agencies Are So Attractive

Recurring revenue. Policies renew annually. Retention rates of 85–95% create a highly predictable revenue stream.

Low capital requirements. No inventory, no equipment, minimal overhead. Cash flow margins are excellent.

Massive fragmentation. There are over 35,000 independent agencies in the US. The top 100 brokerages still represent a fraction of the market.

PE interest. Firms like Marsh, Gallagher, Hub, and Acrisure have been on acquisition sprees. This competition for agencies has pushed multiples up over the past decade.

Key Metrics Buyers Evaluate

Retention Rate

This is the single most important metric. 90%+ retention indicates a sticky, well-serviced book. Below 85% raises concerns about service quality or competitive vulnerability.

Commission Revenue Mix

Commercial lines (business insurance) are worth more than personal lines. Commercial accounts are larger, stickier, and harder for competitors to poach. A 60/40 or 70/30 commercial-to-personal ratio is attractive.

Producer Diversity

If 80% of revenue comes from the owner's relationships, the buyer is purchasing goodwill that may not transfer. Agencies with multiple producers generating revenue independently are significantly more valuable.

Organic Growth Rate

Agencies growing organically (new business minus lost business) at 5%+ annually demonstrate a healthy sales culture. Flat or declining books need a turnaround.

Average Account Size

Larger accounts (higher premium per client) are more efficient to service and harder to lose. Average commercial accounts above $5K in annual premium are solid.

How to Increase Your Agency's Value

1. Grow commercial lines. Shift your book toward commercial accounts. They're stickier, higher commission, and more valuable to acquirers.
2. Hire producers. Adding even one additional producer who builds their own book diversifies revenue away from the owner.
3. Improve retention. Systematic account rounding, annual reviews, and proactive service programs keep clients from shopping.
4. Diversify carriers. Reduce dependence on any single carrier. Broad market access makes your book more portable and less risky.
5. Document your book. Clean data in your agency management system — client information, policy details, renewal dates, cross-sell opportunities. Buyers need to evaluate the book efficiently.
6. Plan your transition. Buyers want to know clients will stay after you leave. Introduce an account manager or second-in-command who builds relationships with key accounts before the sale.

Ready to Find Out What Your Insurance Agency Is Worth?

Browse the valuation multiples guide for current industry data, or schedule a free call for a confidential assessment of your agency.