How Much Is a P&C Insurance Agency Worth? 2026 Valuation Multiples and Worked Examples

Independent agencies (see selling a P&C insurance agency) are unusual among small businesses because the revenue renews. A book of policies that renewed last year will, with reasonable management, renew at close to the same rate next year. Acquirers price that predictability, which is why agencies trade at higher multiples than most service businesses of the same size.

Below roughly $2M of enterprise value the buyer pool is individuals and local agencies and the price is set on SDE, with a revenue multiple as the quick screen. Above that, national brokers and aggregators underwrite on adjusted EBITDA, because it accounts for what it costs to service the book. When a revenue-based offer and an EBITDA-based offer diverge, the buyer thinks your margins are above or below what they would run the book at.

• Retention. The single biggest driver. Books that retain the large majority of policies year over year trade at the top of the range. Every point below that comes off the price, because the buyer is paying for revenue that is about to walk.
• Commercial versus personal lines. Commercial lines books carry higher average premiums, higher commission dollars per account, and more opportunity to cross-sell, and they trade at a premium. A book that is 60% commercial is worth more than the same revenue at 20% commercial.
• Carrier mix and contingents. A spread of appointments with strong standard carriers is worth more than concentration in one or two, and contingent commissions are valued cautiously because they swing with loss ratios.
• Producer dependence. If the owner writes 70% of new business and holds the relationships on the top accounts, the buyer is paying for a producer who is about to retire. Agencies with producers under contract who stay post-close trade higher and with less of the price held back.
• Organic growth. A book that grows 5% to 10% a year on its own gets paid for growth. A flat book gets paid for what it is.
• Agency management system and data. Clean, current data in a standard system shortens diligence and shows the buyer the book can be integrated without rebuilding it.
• Niche. Specialty books (coastal property, trucking, contractors, nonprofits) attract strategic buyers who pay for the expertise, not just the premium.

An agency's price is set on the book, so the buyer's diligence is about proving the book is what the owner says it is. The requests are standard across national brokers and aggregators:

• Book of business report. Policy count, written premium, and commission by carrier and by line, pulled directly from the agency management system, for the last three years.
• Retention. Policy and account retention by year and by line, calculated the way the buyer calculates it (policies in force at the start of the year still in force at the end). Owners who cannot produce this are priced as if retention is average.
• Carrier agreements and contingents. Every appointment letter, the commission schedule, and three years of contingent commission statements. Buyers model contingents separately and at a discount.
• Producers. Who writes what, their contracts, and whether non-solicit terms survive a change of control. A book where the owner writes most of the new business is priced with a longer earnout.
• Top accounts. The largest commercial accounts by commission, with renewal dates, so the buyer can see concentration and timing risk.
• E&O history and licensing. Claims history, the agency's and each producer's state licenses, and any regulatory actions.
• Financials. Tax returns and P&L with the add-back schedule, reconciled to the commission statements.

Clean data in a standard agency management system shortens this from months to weeks and signals that the book can be integrated without being rebuilt, which shows up in the offer.

Illustrative. A Southeast independent agency with $1.8M of annual commissions, 55% commercial lines, two producers under contract plus the owner, and $600K of adjusted EBITDA after a market salary for a replacement principal.

With a majority-commercial book the realistic marketed range is $4.2M to $5.4M. The offers that arrive will differ more in structure than in headline price. A national broker might offer near the low end with most of the price in cash at close and a two-year earnout tied to retained revenue. A PE-backed aggregator might offer near the high end with less cash at close, a slice rolled into the parent's equity, and an earnout. The right choice depends on how confident you are in retention after you leave and whether you want a second payday on the parent's equity.

Expect an asset purchase of the book and the agency's assets, with the price split between cash at close and a retention-based earnout or holdback measured over one to three years. The earnout exists because the buyer cannot verify retention until the renewals come through. Negotiate the measurement: gross retained commissions rather than net of the buyer's own pricing changes, and a measurement period that matches your policy cycle.

Larger acquirers will offer equity rollover into the parent. That can be very valuable in a growing aggregator and worth very little in one carrying heavy debt, so ask for the parent's capital structure, not just the share price.

Non-compete and non-solicit terms of three to five years are standard. Producer agreements for anyone staying should be signed before close, and carrier appointment transfers should be confirmed with each carrier early in diligence, since a carrier that declines to appoint the buyer removes that revenue from the deal.