How much do insurance agency owners make?

Our business plan for an insurance agency will help you build a profitable project

The average annual income for insurance agency owners in the United States varies significantly based on factors such as the type of agency, size, and location. On average, owners make between $82,000 and $134,000 a year. However, successful independent agency owners can earn much more—up to $500,000 or even more, with top performers exceeding $1 million annually. Franchise and captive agency owners typically earn less, with average incomes between $93,000 and $144,000, while those in entry-level captive positions may earn as little as $40,000, with the potential to grow up to $300,000 in established roles.

If you're looking to start an insurance agency, understanding these income ranges and the factors that influence them is crucial. The following table breaks down key comparisons between different types of agencies to give you a clearer idea of what you can expect.

Category	Independent	Franchise/Captive
Average Owner Income	$150k–$500k+ [2]	$93k–$144k [2][4]
Net Profit Margin	10–25% [13]	2–10% [13]
Revenue Split: Commission/Renewal/Fees	80–95% / 40–60% / 5–20% [7]	90–100% / 25–35% / 0–10% [7]
Typical Owner Income: Year 1 / Year 5	$40k–$70k / $150k–$250k+ [2][9]	$40k–$70k / $100k–$200k [2][4]

How much do insurance agency owners earn on average?

The average income for insurance agency owners is between $82,000 and $134,000 annually. However, the earning potential varies greatly depending on the business model and scale of operations.

Independent insurance agency owners can see incomes as high as $500,000 or more, especially when their operations mature and build up a large portfolio of clients. Franchise and captive owners, on the other hand, earn lower average salaries, with franchise owners averaging $93,000 and captive owners ranging from $40,000 to $300,000 depending on experience and location.

What are the income differences between independent agency owners and franchise/captive agency owners?

Independent agency owners typically earn more than franchise or captive agency owners. Independent agents often enjoy greater freedom and profit potential as they manage their own businesses, while franchise and captive agents operate within more controlled environments.

Independent agency owners with successful operations can earn anywhere from $150,000 to over $500,000 annually, and in some cases, up to $1 million or more. Franchise owners earn between $93,000 and $144,000, while captive agency owners' earnings range from $40,000 to $300,000, based on experience and location.

What percentage of revenue comes from commissions versus service fees or renewals?

Insurance agencies typically rely heavily on commissions, which account for 80–95% of total revenue, with the remainder coming from service fees or renewals. This breakdown can vary depending on the type of insurance sold and the agency's business model.

For established agencies, residual income from renewals becomes a significant contributor, sometimes making up 40–60% of the total revenue, providing passive income for agency owners over time.

How do agency size and book of business affect earnings?

Agency size and the total book of business have a substantial impact on owner income. Small, newer agencies with fewer employees and a small book of business typically generate lower income, ranging from $40,000 to $75,000 per year.

Mid-sized agencies with more employees and a larger book of business see significantly higher earnings potential, ranging from $100,000 to $300,000 annually. Larger, well-established agencies with substantial books of business can generate incomes well over $500,000, especially as they benefit from increased passive income from renewals.

What are the main expenses impacting net profit for agency owners?

Key expenses that affect the profitability of an insurance agency include staff salaries and commissions, office space and rent, technology and management software, marketing and lead generation costs, and carrier/payroll advances and E&O insurance.

How does the type of insurance sold affect owner compensation?

The type of insurance sold can significantly influence an agency owner's compensation. For example, property and casualty (P&C) insurance is the most common and offers relatively stable income from commissions and renewals. Life insurance typically offers higher first-year commissions, but lower renewal rates. Health and Medicare insurance are growing sectors with varying compensation structures based on membership and policy type.

What are the typical profit margins for established versus new agencies?

Established agencies tend to have higher profit margins, ranging from 10–25%, with the potential for up to 30% for top operators. New agencies, however, experience slim margins—usually between 2–5%—due to startup costs and low initial renewal income.

How do location and state regulations influence earnings?

The location of the agency plays a critical role in determining income. High-income states such as New York and California offer more opportunities but also have higher operating costs and stricter regulations. In contrast, agencies in southern and rural states face lower costs but may also experience lower revenue ceilings.

What role does technology adoption play in improving profitability?

Adopting new technologies, including CRM systems, automation tools, and management platforms, can improve an agency’s efficiency and reduce operational costs. These technologies can increase profitability by 5–10% or more by streamlining processes, reducing overhead, and enabling smaller teams to handle more clients effectively.

How much passive income can agency owners expect from renewals?

As an agency matures, passive income from renewals and residual commissions becomes a major source of earnings. For established agencies, renewals can account for 40–70% of the total gross revenue, supporting significant income even in periods with slower new business acquisition.

What is the income growth potential in the first five years of running an agency?

Income growth over the first five years of owning an insurance agency is typically gradual. In the first year, owners can expect to earn between $40,000 and $70,000, often breaking even. By year three, earnings typically range from $100,000 to $150,000. By year five, successful agency owners may earn between $150,000 and $250,000 or more, with a growing proportion of their income coming from renewals and residuals.

How do top-performing agency owners structure their operations to maximize income?

Top-performing insurance agency owners maximize their income by focusing on high client retention, diversifying their product offerings, and investing in technology. They also prioritize cross-selling, staff training, and acquiring smaller agencies to scale their operations efficiently.

You’ll find detailed market insights in our insurance agency business plan, updated every quarter.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.