Broker Opportunities Abound in 2025

Insurance brokers have had an incredible run of profit and growth over the past four years, but what does the future hold?

Few would have predicted, during the depths of the COVID-19 pandemic five years ago, that 2021-2024 would represent our industry’s best stretch in over 40 years. But that is exactly what happened. A four-year expanse of nearly 10% average organic growth and record profit levels is a pretty good response to the scariest economic event of our lifetime.

Still, there are reasons to be cautious about the future. The seven-year hard market is showing signs of age, so softening could be on the horizon. The U.S. economy is growing, but $36 trillion of federal debt will pressure interest rates for the foreseeable future. Thousands of brokers have been gobbled up by mega-acquirers, leaving a smaller number of independent, privately held firms.

History has shown there are always reasons for caution. But for brokers committed to growth, 2025 offers some uniquely exciting opportunities.

Opportunity No. 1: The Greatest Recruiting Opportunity in a Generation

Producer mobility has increased recently as more producers have elected to vote with their feet and join a rival firm that best suits them. What is fueling this trend?

Our industry has been in a talent war for decades, and brokerages that have created a compelling value proposition for producers have been the winners. Each is vying for “employer of choice” status—claiming to have the best culture, the most useful resources, the greatest economic opportunity.

Competitors are making these claims more boldly than ever as they relentlessly woo producers.

The second trend is an evolution in societal norms. Free agency in professional sports and the advent of the transfer portal in college sports have made “team-changing” a normal occurrence. This flexibility extends into professional industries: law, accounting, medicine—and insurance.

The third major driver of producer mobility—and perhaps most impactful—is the explosion in agency values in recent years. The stock market has been trading at record highs; publicly traded insurance brokers have been major beneficiaries, as have the private equity-backed brokers whose values are influenced by public broker valuations.

Publicly traded insurance brokers, which have traditionally traded at valuations of approximately 12 times EBITDA, today trade at a median multiple of 18 times EBITDA. Expressed as a multiple of revenue, valuations have more than doubled—from a median of 2.7 a decade ago to an eye-popping 5.8 today.

To illustrate why this matters, consider the hypothetical example of Mega Broker in its recruitment of Tom, a producer with a $1 million book of business, who earns $250,000 annually at employer Mini Broker. Mega Broker offers to match Tom’s current pay level for a couple of years, during which he focuses on producing new business while honoring his two-year non-piracy agreement. Mega’s offer is based on the expectation that when the agreement expires, at least half of Tom’s accounts will follow him to his new employer.

Ten years ago, the risk versus reward of this deal looked very different than today: Mega’s deal costs were the same ($250,000 annually for the two years of the non-piracy wait-out period), but the $500,000 of client revenue expected to follow Tom was only half of today’s value.

The doubling of the client revenue value means this deal’s financial returns have doubled as well. Considered another way, the risks for Mega are significantly lower since even if only half the expected business follows Tom, the deal still generates the same return as a decade ago. As a result, Mega can afford to do many more of these deals today and offer Tom and others sweeter back-end incentives for the accounts they bring over.

THE UNIQUE 2025 MOBILITY TRIGGER

So several factors are contributing to producers’ greater mobility, but 2025 is unique because it follows a year of blockbuster deals.

Below are the three largest acquisitions ever in insurance distribution. The acquired firms generated nearly $6 billion in combined annual revenue—an unprecedented amount, even compared to the recent record M&A years. But it’s not merely the size of these deals that is unusual, it is the amount of overlapping integration that they will require.

Over the past decade, most large M&A transactions were geographic expansions that didn’t require the acquired firm to be consolidated into an existing operation. They were “greenfield” opportunities that didn’t create significant day-to-day disruption for the acquiree or the acquirer. Aside from a few back-office functions (e.g., accounting and IT), the integration requirements were minimal.

Today’s mega-deals are different. Although some geographies won’t overlap, these deals will generally require delicate post-deal integration of two formerly competing brokers in the same geography. Potential employee disruptions, ranging from terminations to teams having to learn new agency management systems, won’t be limited to the acquired firm. They will also occur within certain of the buyer’s legacy operations, which represents a new chapter for some of the industry’s most active buyers. Some affected producers (and other talented individuals) will look elsewhere. Some will even be encouraged to do so.

Beyond these mega-deals, serious integration pressure persists within several of the private equity-backed brokers that are trying to prepare for a future recapitalization and/or liquidity event. As they attempt to streamline and create more structure within their operations, the risks of fallout from disillusioned employees has increased.

Today we are clearly in a whole new chapter of the unfolding story of our industry’s consolidation movement. The winners of the 2025 recruiting sweepstakes will be brokers who have made their firm unusually attractive to

producers, developed a prospect list of respected competitors worth hiring, and are ready financially to jump in with both feet.

Opportunity No. 2: Capturing Market Leadership

Over 6,000 brokerages have sold in the last decade, marking the most aggressive era of consolidation in our industry’s history. Like a 100-year forest fire that indiscriminately burns everything in its path, this era has cleared the landscape of agencies of all types and sizes. In several states and cities, the largest, most successful independents of 10 years ago have been consumed by a larger broker.

For some of their smaller competitors, this resulted in an unexpected opportunity-of-a-lifetime to grab the mantle of marketplace leadership. As quickly as a forest recovers from a fire to show new growth, these brokers have emerged to become market leaders.

Becoming the alpha player in their marketplace offered valuable competitive advantages. Greater visibility made employee recruiting and client prospecting slightly easier. Carriers took note and gave them more and better attention. Industry associations and networks began calling on them with new urgency. Their opportunities for community engagement became greater and more fruitful.

What enabled these brokers to capture marketplace leadership while others failed? After watching several of our clients emerge into this favored position, we’ve observed four success attributes nearly all have in common.

1. They build a leadership team with a clear strategic vision and sufficient time and energy to execute the vision. This often means adding new executive roles or restructuring existing roles to allow leaders to play to their strengths.

2. Their leadership team performs at a level high enough to enable organizational accountability. They lead by example and hold others to the same standard.

3. Their focus on growth leads to relentless recruiting, creating organic growth that materially exceeds their peers.  4. They place an unusual amount of focus on creating a differentiated, innovative client experience, frequently through deep industry specialization.

Opportunity No. 3: Build a World-Class Farm System

The Los Angeles Dodgers won the 2024 World Series powered by some of baseball’s best free-agent hires. But one of the heroes of the World Series, pitcher Walker Buehler, wasn’t a free agent at all—he was drafted into the Dodgers’ farm system in 2015. Several other key players also came out of the Dodgers’ player development program, widely recognized as one of the best in the league.

Consistent success in Major League Baseball typically comes from a combination of a) savvy free agency hires and b) a strong farm system that invests heavily in player development. The insurance brokerage industry is similar—“free agency” (experienced) producer hires can be impact players, but a brokerage built solely on free agency talent will run into serious perpetuation challenges. Brokers need to build their own farm system.

What does an insurance broker’s farm system look like? It no longer means simply screening and hiring kids upon graduation from college. It begins with a college internship program. Paid internships have exploded across the U.S. economy as companies look for ways to test-drive job candidates and improve the quality and experience level of those they hire following graduation. Universities are encouraging this trend as well. Recognizing the importance of on-the-job training, numerous institutions now require internships as a qualification to graduate.

As in other professional services industries (such as accounting and consulting), entry into these internship programs is competitive, and the best candidates get job offers leading into their senior year. Once hired as full-time employees, they are placed in a development program with broad exposure across the company and receive structured instruction and mentoring.

Many of our best clients have leaned heavily into internship programs. And contrary to the often negative perception of Generation Z, our clients report hiring extraordinarily talented young people who bring energy, creativity, and the potential for innovation into their firms. If you’re wondering about the wisdom of investing in a stronger farm system, 2025 is the year to do so.

We are living in extraordinary and often confusing times. Each day seems to bring new reasons to be both optimistic and pessimistic. For insurance brokers, which have prospered like few other types of businesses over the past couple of decades, 2025 offers a unique array of opportunities to grow, lead, and build organizations capable of tackling whatever the future holds.