As we step into 2026, independent insurance agencies face a valuation landscape shaped by a softening insurance market, prolonged economic uncertainty, continuing agency consolidation, shifting ownership dynamics, and rapidly evolving technology. For agency owners contemplating perpetuation, a sale, or simply benchmarking their business value, understanding the following trends is critical for 2026 business planning.
1. Organic Growth Rates Will Get Greater Focus
According to IA Valuations, agencies have experienced an average revenue growth rate of 11% over the past two years. However, we do not expect this to continue in the soft market.
The past several years have given agencies rate-driven revenue growth, and now organic growth is returning to center stage. The hard market that fueled premium increases is softening, meaning agencies can no longer rely on pricing momentum to inflate top-line results. Instead, growth will depend on traditional organic growth fundamentals: producer investment and development, growing PIF count, and successful new business acquisition.
While retention will always be a top priority, agencies that can couple high retention rates with organic growth rates in the high single to double digits will likely outperform the industry and experience higher valuation multiples. 2026 will be a true test for the IA system in discerning which agency owners made the necessary investments and stayed committed to unvalidated producers during the hard market, as those will likely reap the rewards of greater organic growth in this soft market cycle.
2. The Stress of Ownership and Management Will Be Reduced
With COVID, prolonged economic turmoil, and the hard market all stacked on top of each other, owning and managing an agency has been stressful in recent years. However, with the softening market, we expect the stress of owning and managing an agency to be reduced.
Specifically with an improving rate environment, we anticipate the stress on staff to be significantly reduced as remarketing accounts should decrease dramatically. This should lead to less burnout for the agency staff and an opportunity to focus on new business sales and upskilling in technology.
In addition, most carriers have now experienced a year or two of highly positive underwriting results with combined ratios in the low to mid-90s. The return of carrier profitability should reduce some pressure on agencies at risk for compensation changes or losing appointments.
With these positive factors, we expect to see aging agency owners put off the urgency of selling in 2026. Owning an insurance agency will feel more like “business as usual” than the recent past.
However, if maximizing agency value is still a desire, the aforementioned factors do not give owners a reason to be complacent. Agency owners who leverage this period of “normalcy” to create a clear succession plan and strong leadership continuity will be considered lower-risk investments and be rewarded with higher valuation multiples. Conversely, agencies lacking depth in their leadership, production team, and service staff will experience lower valuations and limited buyer interest.
3. M&A Activity: Still a Sellers’ Market
Merger and acquisition activity remains robust, though down slightly from the peak years of 2020 and 2021. Rising interest rates and tighter capital markets recently tempered deal volume, but M&A activity remains strong, and therefore valuations for high-quality agencies remain at all-time highs.
The M&A landscape remains largely the same as the previous decade, where Private Equity (PE) backed platforms continue to dominate, driving consolidation and competitive valuation multiples for sellers.
Current IA Valuations data shows EBITDA multiples range from 6x – 9x for small to mid-size generalist agencies to 10x – 13x for larger, growth-oriented commercial lines agencies in major metropolitan areas with strong leadership and scalable processes. Talent and strategic fit now matter as much as financial performance as buyers seek agencies that add production talent, complement their carrier and geographic footprint, and deepen specialty expertise.
For agency owners looking to maximize agency value, they should operate their agency like a business they may sell tomorrow. Investing in the fundamentals that drive organic growth, like producer development and technology adoption, will drive higher valuation multiples.
We expect demand to remain robust throughout 2026 and beyond. Consolidation in the IA system is no longer a trend, but now a transformational business principle. Knowing this, growth-oriented agencies will continue to draw significant buyer interest and high valuations. Even average agencies will continue to be appealing in this extended sellers’ marketplace.
The only lingering question is around the personal lines (PL) marketplace and whether heavily concentrated PL agencies will experience declining valuations. This has been a persistent question in the marketplace, and one that thus far has not proven to have a significant impact on valuations for PL agencies. We generally see less interest in PL agencies from large buyers, but there is still a competitive marketplace for these agencies. Stay tuned, as we expect AI to make greater progress in the insurance distribution marketplace in 2026, but do not see it as a watershed moment just yet.
4. Technology Changes: From Modernization to Transformation
Technology is the true wild card in the valuation model for 2026 and beyond. While we are starting to see technology proficient agencies outperform peer agencies at a wider margin from a YOY growth perspective, true valuation impact has been somewhat limited. Technology investments are expensive, and those investments can have an impact on YOY profitability without immediate corresponding ROI.
However, increasing investment in technology is no longer optional; it is the cost of doing business in the IA system. It’s also a valuation driver. Agencies that embrace modern technology tools like AI-driven sales and service models, CRM platforms, cloud-based accounting, and automation demonstrate scalability and efficiency, qualities that enhance agency value. Conversely, agencies clinging to legacy systems risk being viewed as operationally fragile.
The emphasis in 2026 is on actionable technology: not just adopting tools but integrating them into workflows to enhance client experience and reduce costs. Agencies that can show measurable tech ROI, such as improved retention through digital engagement or streamlined back-office processes, will stand out with higher valuation multiples.
Conclusion
For agency owners, 2026 will be another year of steady valuation multiples and positive profitability results. True organic growth and technological proficiency will get greater focus as valuation factors and will be a more obvious differentiator between average and high valued agencies.
Whether you are creating a business plan for the future or preparing for an internal perpetuation or external sale in 2026, we encourage you to proactively perform a valuation of your agency so you can know which of these trends to focus on to maximize your agency value. Please reach out to OIA and IA Valuations CEO, Jeff Smith, JD, CIC, CAE, at jeff@ohioinsuranceagents.com to discuss your agency’s business plan.
About the Author:
Jeffrey S. Smith, JD, CIC, CAE serves as Chief Executive Officer for Ohio Insurance Agents Association (OIA) and IA Valuations. He is responsible for leading the organization’s strategic initiatives and day-to-day operations.
As CEO of IA Valuations, Smith has consulted and reviewed over 200 agency valuations for independent agents across the US. IA Valuations serves independent agencies as a trusted advisor and strategic business partners as they implement strategies to increase their agency value, grow their businesses, and transition their agencies. Smith provides insights into the agency’s operations, risk factors, and legal guidance on how to perpetuate and maximize value in a sale.
About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 400+ 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. Agency Link is a platform that connects buyers and sellers together to further the growth and strength of the IA system. To learn more about IA Valuations, please visit IAValuations.com or contact@iavaluations.com.
The information provided in these documents is general in nature and shall not be construed as personal legal, tax or financial advice for your situation. Please contact@iavaluations.com to discuss your personal situation.
