Insurance Agency and Brokerage Valuation
29 valuation methods · 43 industries · Results in under 10 minutes
In short
An insurance agency is valued on its commissions: premium rolled forward by retention, rate changes and new business, core commission and cash flow projected from it, contingent commission counted at part of its value, and the result read through a discounted cash flow and a multiple of projected EBITDA.
Who this is for
Owners of independent insurance agencies and brokerages, retail and wholesale, planning a sale, a perpetuation plan or a merger, and buyers who need retention, new business and contingent commission read with the earnings.
How is an insurance agency valued?
VA values an insurance agency on its commissions. Premium is rolled forward each year: the share that renews, rate changes on what renews, and new business. Core commission follows it, while contingent commission from carriers is counted at no more than part of its value because it swings with carrier results, and a book heavy in it is valued more on its cash flow. The model reads the result two ways, a discounted cash flow and a multiple of the EBITDA it projects for year three checked against a multiple of core commission, and blends them. In a full report this reading carries the most weight, with a discounted cash flow, comparable companies and precedent transactions alongside. This tool is informational only. Output is driven by your inputs and does not constitute a formal appraisal or certified valuation.
What drives the value of an insurance agency?
- Premium retention: the share of the book that renews each year
- New business written by producers who will stay
- Core commission, kept apart from contingent commission that swings with carrier results
- Carrier appointments and the mix of personal and commercial lines
- Producers and account managers who hold the client relationships
- Concentration in the largest accounts
What lowers the value of an insurance agency?
- Producers who could take accounts with them
- Retention slipping as carriers exit lines
- Earnings leaning on contingent commission
- A few accounts behind much of the premium
How much is an insurance agency worth? A worked example
An insurance agency, on its commissions
Take an insurance agency placing $40 M of premium at a 12% commission, $4.8 M of core commission, plus $500 K of contingent commission from carriers. VA's broker model keeps 92% of premium each year, lets rates add 3% on what renews and adds 6% in new business, and counts contingent commission at 50% of its value because it swings with carrier results. At a 28% EBITDA margin, it discounts five years of cash flow at 18%, the lowest rate VA uses for a firm this size, with 2.5% growth after year five: about $6.62 M. It also applies 9.5× to the $1.45 M of EBITDA it projects for year three, $13.7 M, and checks it against 3× the $4.91 M of core commission it projects for that year, $14.7 M; weighted 85% and 15%, the multiple view reads about $13.9 M. Weighted 45% to the cash flow and 55% to the multiples, the agency is worth about $10.6 M. If only 88% of premium renews each year, the multiple drops to 7.5× and the value to about $7.92 M. In a full report, this reading carries the most weight, with a discounted cash flow, comparable companies and precedent transactions alongside.
Illustrative figures from the industry model alone. A full report blends it with a discounted cash flow, comparable companies and precedent transactions.
Value your insurance agency in under 10 minutes
- 1.Upload your financial statements, or type the figures in.
- 2.Confirm the add-backs and the industry details the model asks for.
- 3.Get a valuation range, the methods behind it and a PDF memorandum.
Which numbers matter most?
Premium retention
The share of premium that renews each year. It sets both the growth the model projects and the band of multiples it applies.
Core commission
Commission on placed premium that renews with the policy. It is the base the model grows and values.
Contingent commission
Profit-sharing bonuses from carriers. They swing with carrier results, so the model counts only part of them and never at par.
New business growth
New premium written each year. With retention it sets the growth, and it moves the multiple band.
Largest account share
The part of premium from the largest account. Heavy concentration lowers the multiple and puts more weight on the cash flow.
What do you need to value an insurance agency?
- Profit and loss statements and balance sheets, ideally for the last three years
- Figures for the current year to date
- A list of add-backs: the owner's pay and perks, and any one-off costs
- Loan and lease balances
- Book of business by carrier, line and account
- Retention and new business by year
- Commission statements split into core and contingent
Example scenarios
A book that renews less
A producer leaves and takes accounts, or a carrier exits a line, and retention falls. The worked example shows what lower retention does to the multiple and the value.
A strong year of carrier bonuses
Contingent commission spikes after a good loss year. The model counts it at part of its value, so a buyer is not asked to pay for a bonus that may not repeat.
Further reading
Business Valuation Methods Explained: DCF vs. Comps vs. Precedent Transactions
The five business valuation methods professionals actually use (DCF, comparable companies, precedent transactions, SDE/EBITDA multiples, and asset-based), when each wins, and how they combine into one defensible number.
WACC Explained: Why Your Discount Rate Can Make or Break a Valuation
WACC is one of the most misunderstood terms in business valuation. Here's what it is, why it matters, and how it directly affects what your business is worth.
DCF Analysis Explained for Private Companies
A clear, practical guide to discounted cash flow analysis for private companies. Learn the five key steps, how to estimate WACC without public market data, terminal value approaches, and common pitfalls to avoid.
Frequently asked questions
How is an insurance agency valued?
On its commissions. VA rolls premium forward, projects core commission and cash flow, and reads them through a discounted cash flow and a multiple of projected EBITDA checked against a multiple of core commission. In a full report this reading carries the most weight.
Why is contingent commission counted at less than its value?
Because it depends on carrier results and can disappear in a bad year. The model counts it at part of its value, and when it is a large share of commission it tightens that share and leans on the cash flow.
How much does retention matter?
A great deal. It drives the growth the model projects and chooses the multiple band, so a few points of retention move the value noticeably, as the worked example shows.
Is my agency valued on a multiple of revenue?
Only as a check. The multiple of EBITDA carries the multiple view, and a multiple of core commission takes a small part of it, because two books with the same commission can earn very different margins.
What about producers who own their books?
Buyers check who controls the client relationships. Producers who could take accounts with them are a risk the model does not see, so they belong in the diligence.
Is this a certified appraisal?
No. This is an informational estimate. A bank loan, a partner buyout or an estate matter may require a certified business appraisal, which this does not replace.
Terms used on this page
- Recurring revenue
- Revenue that repeats without a new sale, such as maintenance agreements, service plans or contracts customers renew.
- Valuation multiple
- The number earnings are multiplied by to reach a value. It rises with how durable the earnings are and how easily a new owner can keep them.
- Discounted cash flow (DCF)
- A valuation that projects the cash a business will generate over the coming years and discounts it to today at a rate that reflects the risk of receiving it.
- Discount rate
- The yearly return a buyer requires for the risk of owning the business. A higher rate lowers what future cash is worth today.
- Precedent transactions
- A method that values a business at the multiples paid in past sales of similar companies.
As featured in
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Last reviewed September 26, 2026 against VA's valuation models.