09/08/2026
"A softening market has direct and often underappreciated implications for agency valuation. Because most agencies earn a fixed commission percentage on premium, downward pressure on rates can quickly translate into slower or even declining revenue growth. At the same time, agencies are managing fixed costs such as service labor, occupancy and technology that do not contract simply because premium volume does. The result is margin compression, reduced cash flow and greater earnings volatility, all factors that buyers scrutinize closely when valuing an agency."
Early in my insurance career, I was advised to pay close attention to the reinsurance market, the place where insurance companies go to insure their own balance sheets. That advice has proven particularly relevant following one of the longest and most challenging hard markets the industry has faced....
