Three Ways to Improve the Value of Your Agency in 2023

The turn of the year is the classic American business timeline for owners to assess their past performance and plan for the future. Independent agency owners undergo this annual ritual at a time where the IA system and the economy are undergoing rapid changes and uncertainty.

As agency owners begin to look into the new year, we believe there are three essential ingredients to increasing their agency value in the new year and beyond. In the following paragraphs we will breakdown the 3 critical components to increasing the value of your agency:

  1. Foster a Growth Culture

There are many factors that impact agency value but by most accounts the single greatest factor is the YOY organic growth rate. Growth starts with the culture set by the agency ownership. Infusing a growth mindset into the agency’s culture is the starting point for organic growth.

According to the Reagan Best Practices Study (BPS), there are four primary components that drive organic growth: exposure changes, rate changes, client retention, and new business. Although exposure and rate changes are market driven and largely out of agencies control, client retention and new business are two things that agencies can control.

The same study states that best practice agencies retain 95% or more of their clients while weaker agencies retain 88-90%. As you can see, the difference between the best practices agencies and the rest of the field is only a few percentage points but can have a profound impact on annual revenue and agency value.

The key differentiator and most metric for consistent best practice agencies is their commitment to writing new business. Writing new business is the greatest challenge in the IA system, but there are ways to make sure new business is emphasized in your agency. However, as the Reagan BPS has shown, high performing agencies with a growth mindset are achieving double digit organic growth rates.

First and foremost, invest in the future and the next generation of young people in the IA system. Live by the IA moniker of “Always Be Recruiting”. If you find a talented person in another industry, company or profession, try to envision a role and place on your team.

Once you make the decision to hire, set them up for success and growth. Establish the proper onboarding and training systems to ensure these individuals are prepared and motivated to continue to grow the business and are on a pathway to validation. Set specific goals, monitor progress closely, especially early, mentor and coach through the bumps and hold them accountable to the daily tasks that lead to successful production.

Finally, once they are onboarded and progressing towards validation, establish the proper culture, incentive programs and metrics to encourage and emphasize a growth mindset across your agency and you will reap the rewards of increasing agency value in the future.

  1. Have a Documented Perpetuation Plan

Many agency owners spend their lives dedicated to building their business and protecting those in their communities. They have spent their career ensuring that their clients are taken care of and are available in case anything goes wrong. They are the safety nets for the people they serve.

And that is why agency owners should have that exact mindset for themselves and their agency, to be prepared and ready with a plan for their next steps in the future. When the time comes to transition the agency, those without a written plan are unprepared, which makes the transition much more difficult and negatively impacts agency value.

The perpetuation plan will put the pieces in place to transition agency stock, book of business, and ensure your valued clients are taken care of for years to come.  The start of a new year is a great time to look at your agency and determine the proper next steps for its continued success.

In addition to being a good business practice, IA Valuations data shows that agencies that conduct annual business planning and have documented perpetuation plans grow at double the rate of those that do not plan and have to sell externally. Over the course of the 200 valuations we have conducted in the past few years, agencies using the valuation as a business planning tool have experienced 10.2% annual growth rates whereas those without a plan other than to sell externally are experiencing a 5% growth rate.

Starting can be as simple as creating an outline of your perpetration plan, a timeline to hold yourself accountable and beginning the documentation process. The key is to get something down in writing. Stop letting time go by with your perpetuation plan in your head instead of in a written document. Even if you keep it to yourself and one other person, at least take the time to plan and begin documenting it.

  1. Know Your Agency Intimately

If you do not know where you are, you will not know where you are trying to go.

Unfortunately, many owners do not intimately know the performance, financial and operational metrics of their agency. By failing to closely track the performance of the agency, owners are missing out on the opportunity to plan for success and more likely to miss red flags and the risks inside their agency.

For instance, agency owners that have 60% of their written premiums with a single carrier, have an entire staff within 3 – 5 years of retirement and have their top ten accounts make up 50% of their total annual commissions, putting their agency value at significant risk.

There is risk involved in nearly every decision you make, which is why it is so important to know your agency and understand things to embrace and those to avoid. That is why the professionals at IA Valuations encourage getting an annual planning valuation.

A valuation will give you an unbiased, third-party fair market value of your agency. In addition to learning your agency’s fair market value, you also get a comprehensive report and consultative session learning about the agency opportunities, risk and value factors that make up your single greatest financial asset.

In conclusion, independent insurance agents and brokers are the dominant distribution source in the insurance industry. We have so many competitive advantages but to continue to grow market share it requires each agency to thoughtfully plan for success.

Getting the new year started with a valuation is a great way to truly get to know your agency and business plan for a strong and successful year! For questions about how IA Valuations can help you know the value of your agency and grow it into the future, reach out to Luke Hippler at

About IA Valuations – Founded in 2017, the IA Valuations team has performed over 200 valuations to independent insurance agencies across the U.S. Our advisors have 25+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process. To learn more about IA Valuations, please visit or

Copyright ©2022 by IA Valuations and Ohio Insurance Agents Association (OIA). All rights reserved. No portion of this document may be reproduced in any manner without the prior written consent of IA Valuations or OIA. In addition, this document may not be posted as a link on any public or private website without the prior written consent of IA Valuations or OIA.

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