State of the Independent Broker
GROWING TO SELL:
The Independent Broker's Shifting Mindset
Contrary to the belief that the number of independent brokers is declining – the independent agency model isn’t going extinct. Even as the insurance brokerage sector rapidly consolidates, for every firm that sells, statistically, a new independent agency pops up. There are nearly as many independent insurance brokerages in the U.S. in 2026 as there were in 2006.
Over the past ten years, approximately 7,900 insurance agencies have sold. This is compared to the prior ten years which only saw 3,500 agencies sold. Overall, the CAGR of transactions in this industry over the past 20 years has been 6.2%. Yet, the total number of brokerages in this industry maintains pace (close to 40K firms). There is a continual cycle of entrepreneurialism and regeneration of businesses in this industry.
However, the independent brokerage model has evolved. In this current environment of high valuations and heavy consolidation, the topic of internal perpetuation, or how to remain independent, has become less and less of a priority for firms.
Why has internal perpetuation become less attractive?
For decades, insurance has often been family-run business, passed down through generations. Today, many brokerage owners still proclaim that their business will remain independent by perpetuating to the “next generation” – whether that be family or other trusted leaders of the business.
Over the last several years, the landscape of insurance brokerage ownership has undergone a significant transformation – one that has seen fierce competition, talent shortages and extreme pressures to grow year-over-year. Many owners have become focused on the crucial operational challenges in order to reach those growth goals, distracting from their plans for how to continue their independence through internal perpetuation.
This realization of the evolving marketplace, compounded by the level of effort to ensure independence has shifted the mindset of owners. Many still may believe they can remain independent, but few are proclaiming it openly – for fear of breaking their promise. As the life cycle of the business progresses, owners inevitably recognize that they haven’t positioned the firm from a financial, cultural, and organizational standpoint for maximizing shareholder value and that internal perpetuation may no longer be possible.
Growing to sell
Today’s independent brokers are now competing with private capital-backed brokers that are pursuing vertical integration in an aggressive way. To be competitive and be a true middle market broker, firms need to invest in people and resources. They must focus on building specialized capabilities up and down the value chain so they can provide more of the services clients are expecting – not just the selling of policies. That becomes a critical decision for firms – do they want to build that specialization in-house or join a firm that already has it?
In the past, many firms used ownership incentives (i.e., equity offerings) as a way to attract talent and plan for internal perpetuation. Today, firms are more focused on incentivizing their people to help the firm grow, with the goal of attracting financial partners or selling outright – rather than handing it over to the next generation.
Top performing brokers are using equity incentives to attract and retain the best talent for building that specialization and growing the business – with the offer of ownership and growing with the firm. Today when firms talk about perpetuation, they are really thinking about ways to use equity or equity like incentives (i.e., stock appreciation rights, phantom equity, profits interest, etc.) to attract and retain key talent.
There is still a place for the independent agency
Independent brokers today will continue to navigate a market defined by technology and investments in AI, intensified competition, talent attraction challenges, shifting perpetuation strategies, and the everchanging customer expectations. To thrive in 2026, the emphasis should be on developing firm specializations, planning for long-term sustainability combined with the signature personalized advisory role independent brokers are known for.
Owners are no longer talking about internally perpetuating their business like they used to, but it is not because it is not possible. MarshBerry has many clients that are committed to internal perpetuation, the numbers are just less than in the past. In today’s marketplace many firms are making the decision to sell their business or take on a capital partner – which is okay, because either choice is simply part of the business owners’ American dream.
The reality is – everyone will eventually need to transfer ownership of their business. It’s not if – it’s when.
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