What It’s Worth: How Much Is an Insurance Brokerage Really Worth?
Insurance isn’t just about policies and premiums it’s about promises. Every month, millions of people pay for peace of mind, trusting that when misfortune strikes, someone will show up. According to Bharat Kanodia, insurance brokers are the frontline of that promise, ensuring those commitments are fulfilled and that customers remain protected.
The State of the Insurance Brokerage Industry The U.S. insurance brokerage industry is massive, encompassing over 400,000 agencies and brokers. It employs over 1 million people and generates a staggering $160 billion in annual revenue. These brokerages are more than sales operations they’re strategic advisors for individuals and businesses navigating complex risk landscapes.
How Much Is an Insurance Brokerage Worth? Insurance brokerages are generally valued at 4X to 8X their EBITDA (earnings before interest, taxes, depreciation, and amortization). The range depends on several key factors: longevity, the stability of revenue streams, customer retention, and the types of insurance products offered. Firms with diversified products and long-standing client relationships tend to fetch valuations on the higher end.
Client Acquisition Trends Joe Shodeluki, a seasoned insurance professional, pointed out a key shift in customer behavior. While some buyers still look for the cheapest quote, others especially those with complex or high-value needs are moving toward interviewing brokers like professional advisors. These clients expect expertise, customization, and ongoing service, not just a policy in a folder.
Technology: The Industry’s Growth Lever Though parts of the industry are slow to modernize, technology is becoming essential. Improved digital tools shorten underwriting times, enable more customized policies, and make communication seamless. For brokerages, leveraging tech is key to creating a smooth client journey and building long-term loyalty. It also boosts valuation by improving efficiency and scalability.
Workforce and Retention The insurance industry is graying. Many experienced professionals are nearing retirement, and brokerages need to attract and train the next generation. The post-pandemic shift to hybrid work has helped balance flexibility with culture-building, making the industry more appealing to younger talent. Retention strategies now revolve around tech integration, remote work, and continuous learning.
Strategies to Maximize Insurance Brokerage Value
- Institutionalize Relationships: Relationships should exist beyond individual agents. Create a system where trust is built with the firm, not just the person.
- Diversify Product Offerings: A broad product mix cushions against economic swings and attracts a wider clientele.
- Digitize Operations: The more processes you automate from onboarding to renewals—the more transferable and scalable your earnings.
- Train and Empower Employees: Technologically adept and well-trained employees convert relationships into recurring revenue.
Smart Insurance Practices for Clients Porat offered rules of thumb for personal insurance planning:
- Buy life insurance worth 5 to 10 times your pretax income.
- If your auto insurance premium exceeds 10% of your car’s value, consider dropping comprehensive and collision coverage. These tips help both brokers and clients make informed decisions.
Building a Brokerage That Lasts Starting an insurance brokerage is hard, but the payoff is consistent income if done right. Porat emphasized that success in this space is rooted in one thing: relationships. With clients, underwriters, and employees alike, transparency and trust are key. Strong internal processes, diversified income, and a focus on client success ensure long-term sustainability.
A Revealing Interview Question Bharat shared a go-to interview question: “Who is most important to the company: shareholders, employees, or customers?” The answer, he suggests, reveals how candidates view the human side of insurance. Great brokers understand the delicate balance of all three.
Final Thoughts In the world of insurance, business value comes down to more than EBITDA. It’s about trust, longevity, and smart strategy. For brokers who focus on relationships, invest in tech, and build resilient models, the future looks not just secure but profitable.
