This article was written by our expert who is surveying the industry and constantly updating the business plan for an insurance agency.

Starting an insurance agency requires understanding the financial benchmarks that define success in this industry.
The insurance agency business operates on specific revenue models and margin structures that differ significantly based on agency size, specialization, and operational efficiency. Knowing these numbers helps you set realistic financial goals and measure your performance against industry standards.
If you want to dig deeper and learn more, you can download our business plan for an insurance agency. Also, before launching, get all the profit, revenue, and cost breakdowns you need for complete clarity with our insurance agency financial forecast.
The insurance agency industry shows significant variation in financial performance based on agency size and specialization.
Independent agencies typically generate revenues under $500,000 annually, with profit margins ranging from 10% to 25% depending on operational efficiency and market focus.
Financial Metric | Industry Average | Top Performers |
---|---|---|
Average Annual Revenue | Under $500,000 for 52% of agencies; large brokerages exceed $80 billion collectively | $5 million+ in premiums managed |
Net Profit Margin | 10% to 25% (industry average 10-12%) | 20% to 25%+ |
EBITDA Margin | 18.8% to 21.7% | 25%+ |
Revenue Composition | 80-90% commissions, 10-20% fees and other sources | Similar structure with higher fee penetration |
Operating Expenses | 75% to 85% of revenue | 70% of revenue |
Revenue Per Employee | $150,000 to $250,000 | $300,000+ |
Client Retention Rate | 85% to 90% | 92%+ |
Acquisition Multiples | 6-9x EBITDA; 1.5-2.5x revenue | 8-10x+ EBITDA for specialty/InsurTech |

What is the current average annual revenue of an independent insurance agency in the United States?
The current average annual revenue for an independent insurance agency in the United States sits under $500,000 for approximately 52% of agencies.
This figure reveals a significant concentration of smaller agencies in the market, with a notable segment generating under $150,000 annually. These agencies typically serve local communities and maintain smaller books of business focused on personal lines insurance.
The revenue distribution shows considerable variation across the industry. While the majority of independent agencies operate at the lower revenue tiers, top-performing agencies manage to generate substantially higher revenues, often exceeding several million dollars annually through specialized services and larger commercial accounts.
Large brokerages in the top 100 collectively generate revenues exceeding $80 billion, but these firms represent a different segment of the market and are not representative of typical independent agencies. The independent agency model focuses on personalized service and local market expertise rather than scale.
For new agency owners, understanding this revenue distribution helps set realistic expectations and identify growth opportunities within your specific market segment.
What is the typical profit margin percentage for insurance agencies, and how does it vary by size and specialization?
Typical net profit margins for insurance agencies average between 10% and 25%, with significant variation based on agency size and operational efficiency.
Agency Type | Net Profit Margin | Key Factors |
---|---|---|
Small Agencies | 10% to 12% | Higher relative expense ratios, limited economies of scale, smaller commission base |
Mid-sized Agencies | 12% to 18% | Better expense management, diversified revenue streams, established client base |
Large Agencies | 16% to 20% | Economies of scale, efficient operations, technology investments paying off |
Top-Performing Agencies | 20% to 25%+ | Exceptional operational efficiency, strong client retention, strategic market positioning |
Specialty Commercial Lines | 18% to 25% | Higher commission rates, complex risk management services, expert knowledge premium |
Health/Benefits Specialists | 15% to 22% | Recurring revenue models, consulting fees, strong client relationships |
Personal Lines Focused | 10% to 15% | Lower commission rates, higher volume requirements, competitive pricing pressure |
What is the industry average EBITDA margin for insurance agencies?
The 2025 industry average EBITDA margin for property and casualty insurance agencies is approximately 21.7%.
For insurance brokers specifically, the average EBITDA margin stands at 18.8%. This difference reflects the operational structures and revenue models between traditional agencies and brokerage firms, with agencies often maintaining slightly higher margins due to more streamlined operations.
EBITDA margins serve as a critical benchmark for agency valuation and operational efficiency. They strip out interest, taxes, depreciation, and amortization to provide a clearer picture of core operational profitability, making them particularly useful when comparing agencies of different sizes and structures.
Top-performing insurance agencies consistently achieve EBITDA margins of 25% or higher through superior client retention, efficient expense management, and strategic revenue diversification. These agencies invest in technology and talent while maintaining disciplined cost control.
Understanding your agency's EBITDA margin relative to these benchmarks helps identify operational improvement opportunities and positions your business more favorably for potential acquisition or investment scenarios.
You'll find detailed market insights in our insurance agency business plan, updated every quarter.
What percentage of total revenue typically comes from commissions versus fees or other sources?
Commissions represent the vast majority of insurance agency revenue, typically accounting for 80% to 90% or more of total income for standard agencies.
The remaining 10% to 20% of revenue comes from fees, consulting services, and ancillary income sources. This commission-dominant structure reflects the traditional insurance distribution model where agencies earn a percentage of premiums for policies they sell and service.
Agencies specializing in risk management or benefits consulting may see a higher proportion of fee-based revenue, sometimes reaching 20% to 30% of total income. These agencies position themselves as strategic advisors and charge consulting fees for comprehensive risk assessments, loss control services, and claims management support.
The trend toward fee-based services is growing as agencies seek to diversify revenue streams and reduce dependence on commission volatility. However, commissions remain the primary revenue driver across the industry due to the fundamental economics of insurance distribution.
New agency owners should build their business model around commission revenue while strategically developing fee-based services that leverage their expertise and provide additional value to clients.
What are the average operating expenses as a percentage of revenue for insurance agencies?
Average operating expenses for insurance agencies typically range from 75% to 85% of revenue.
This expense ratio encompasses all operational costs including staff salaries, office rent, technology systems, marketing, errors and omissions insurance, licensing fees, and other overhead expenses. The largest expense category is typically employee compensation, which can account for 50% to 60% of total revenue in a well-run agency.
Top-performing agencies manage to reduce operating expenses to approximately 70% of revenue through operational efficiency, technology automation, and strategic resource allocation. These agencies invest in systems that streamline workflows, reduce manual tasks, and improve producer productivity.
Expense management becomes increasingly efficient as agencies scale. Smaller agencies often struggle with expense ratios above 85% due to fixed costs that don't decline proportionally with lower revenue. Mid-sized and larger agencies benefit from economies of scale that allow better expense control.
For new insurance agency owners, maintaining disciplined expense management from the start is crucial for achieving profitability and building a sustainable business that can weather market fluctuations.
What is the average annual growth rate in revenue for insurance agencies in the past five years?
Insurance agency revenues have grown at a compounded annual growth rate (CAGR) of approximately 1.5% over the past five years.
This modest growth rate reflects the overall market dynamics influenced by a "hardening" insurance market with increasing premium rates. The hardening market has benefited agencies through higher commissions on existing policies, though organic new business growth has remained challenging in many segments.
Top-performing agencies and specialized segments have experienced significantly faster growth, with rates ranging from 5% to 10% or higher annually. This accelerated growth comes from strategic market positioning, aggressive organic expansion efforts, and merger and acquisition activity that has consolidated the industry.
The growth rate varies considerably by agency type and focus area. Agencies specializing in commercial lines, cyber insurance, and other emerging risk areas have seen stronger growth than those focused primarily on personal lines insurance where competition remains intense.
New agency owners should target organic growth rates of 5% to 8% annually through strategic marketing, excellent client service, and expansion into profitable niche markets where competition is less intense.
This is one of the strategies explained in our insurance agency business plan.
What is the average book of business size in terms of premiums managed per agency?
The average book of business size for independent insurance agencies varies widely, but a large proportion manage under $5 million in total premiums.
In 2024, total direct written premiums in the United States reached $1.05 trillion, with independent agency participation exceeding 60% of this market. This indicates that while individual agencies may manage smaller books of business, collectively they control a substantial portion of the insurance market.
Top-performing agencies handle hundreds of millions of dollars in premiums, reflecting their market dominance, extensive client bases, and ability to write larger commercial accounts. These agencies often operate multiple locations and employ specialized teams for different insurance lines.
The book of business size directly correlates with agency revenue since commissions are calculated as a percentage of premiums. Agencies managing $5 million in premiums with an average 15% commission rate would generate approximately $750,000 in annual revenue before expenses.
For new agency owners, building a sustainable book of business starts with consistent prospecting, excellent client retention, and strategic focus on profitable market segments that align with your expertise and resources.
What is the average revenue per employee in insurance agencies?
Revenue per employee in insurance agencies typically falls in the $150,000 to $250,000 range.
This metric serves as a key indicator of agency productivity and operational efficiency. Agencies at the lower end of this range may be overstaffed, have less experienced producers, or focus on personal lines business that generates lower premiums per transaction.
Highly productive or specialized agencies exceed $300,000 in revenue per employee by leveraging technology, maintaining lean operations, and focusing on high-value commercial accounts. These agencies invest in automation tools that reduce administrative workload and allow producers to focus on revenue-generating activities.
The revenue per employee metric varies significantly based on agency structure. Agencies with a high ratio of producers to service staff typically show higher numbers, while those with extensive service teams may show lower figures but potentially better client satisfaction and retention.
New insurance agency owners should target revenue per employee of at least $200,000 within the first few years of operation, gradually working toward $250,000 or higher as the business matures and operational efficiency improves.
What is the typical net income range for small, mid-sized, and large agencies?
Net income for insurance agencies varies substantially based on agency size and operational efficiency.
Agency Size | Net Income Range | Characteristics |
---|---|---|
Small Agencies | $20,000 to $75,000 | Typically owner-operated or with 1-2 employees, limited book of business, building client base, high expense ratios relative to revenue |
Mid-sized Agencies | $75,000 to $300,000 | Established client base, 3-10 employees, diversified revenue streams, improved operational efficiency, stronger market presence |
Large Independent Agencies | $300,000 and above | Multiple producers, extensive book of business, economies of scale, specialized departments, strong technology infrastructure |
Top 100 Brokerage Firms | Millions to tens of millions | National or regional presence, multiple locations, diverse revenue streams, significant M&A activity, institutional investors |
Specialty Commercial Agencies | $150,000 to $500,000+ | Niche market focus, higher commission rates, expert risk management services, lower client volume but higher value per client |
Personal Lines Focused | $30,000 to $150,000 | Higher client volume needed, lower margins, competitive market, efficiency and retention critical to profitability |
Benefits/Group Insurance | $100,000 to $400,000 | Recurring revenue model, strong client relationships, consulting fees, annual renewal cycle provides revenue stability |
What retention rate on clients is considered industry standard, and how does this affect profitability?
Industry-standard client retention rates for insurance agencies are 85% to 90% annually.
High retention rates are strongly correlated with sustained profitability and higher agency value. When clients renew their policies year after year, agencies benefit from predictable renewal commissions without incurring the significant costs associated with acquiring new clients.
The cost of acquiring a new client is typically 5 to 7 times higher than retaining an existing one in the insurance industry. This includes marketing expenses, producer time, underwriting effort, and administrative processing. Every client lost represents both the immediate loss of commission revenue and the future opportunity cost of not serving that client.
Top-performing agencies achieve retention rates of 92% or higher through exceptional service, proactive communication, annual policy reviews, and competitive pricing strategies. These agencies build strong personal relationships with clients and position themselves as trusted advisors rather than mere policy vendors.
For new insurance agency owners, building retention into your business model from day one is essential. This means investing in client relationship management systems, training staff on service excellence, and creating touchpoint strategies that keep you connected with clients throughout the policy year.
We cover this exact topic in the insurance agency business plan.
What average acquisition multiples (revenue or EBITDA) are buyers paying for insurance agencies in recent transactions?
For 2025, average acquisition multiples for private insurance agencies show distinct patterns based on agency type and specialization.
EBITDA multiples range from 6 to 9 times for most traditional agencies, reflecting buyer confidence in the recurring revenue model and operational stability of insurance distribution businesses. Specialty agencies and InsurTech-enabled firms command higher multiples of 8 to 10 times or more due to their growth potential and operational efficiency.
Revenue multiples typically fall between 1.5 to 2.5 times annual revenue for most agencies. InsurTech companies and agencies with specialized lines of business can achieve higher revenue multiples, sometimes exceeding 3 times revenue when growth rates and market positioning justify premium valuations.
The acquisition market remains active with private equity firms, larger brokerages, and strategic buyers actively seeking quality agencies. Factors that drive higher multiples include strong client retention, diversified revenue streams, experienced management teams, modern technology infrastructure, and growth trajectories above industry averages.
Agencies with EBITDA margins above 20%, client retention rates exceeding 90%, and consistent organic growth rates of 5% or higher typically attract premium valuations at the top end of the multiple ranges.
It's a key part of what we outline in the insurance agency business plan.
What benchmarks do top-performing agencies achieve in terms of revenue, profit, and margin compared to the industry average?
Top-performing insurance agencies consistently outperform industry averages across all key financial metrics.
These elite agencies achieve EBITDA margins of 25% or higher compared to the industry average of 18% to 22%. This superior profitability comes from operational excellence, strategic market positioning, and disciplined expense management that other agencies struggle to replicate.
Net profit margins for top performers exceed 20%, substantially higher than the industry average of 10% to 12%. This performance gap reflects better pricing discipline, higher-value client relationships, and more efficient operations that maximize the return on every dollar of revenue.
Revenue per employee at top agencies reaches $300,000 or more, compared to the industry average of $150,000 to $250,000. This productivity advantage comes from technology investments, streamlined workflows, and a focus on high-value commercial accounts that generate more revenue per transaction.
Client retention rates for top performers consistently hit 92% or higher, compared to the industry standard of 85% to 90%. This retention advantage compounds over time, creating a stable revenue base and reducing the constant pressure to replace lost clients.
Organic growth rates at top-performing agencies range from 5% to 10% or higher annually, significantly outpacing the industry average growth rate of approximately 1.5%. These agencies actively pursue new business through strategic marketing, referral programs, and expansion into profitable niche markets.
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.
Understanding these financial benchmarks is crucial for anyone starting or growing an insurance agency.
The data presented here provides a realistic foundation for building financial projections, setting performance targets, and measuring your agency's success against industry standards. Remember that top-performing agencies didn't achieve their results overnight—they built their success through consistent execution, strategic focus, and operational excellence over many years.
Sources
- Agency Equity - The Average Size of Independent Agencies is Growing
- Marshberry - Big Deals Drive Bigger Revenue for the Top 100 Insurance Brokers
- PIA South - Insurance Agency Owner Salary
- Coinlaw - US Insurance Industry Statistics
- IBISWorld - Insurance Brokers & Agencies in the US
- CSI Market - Industry Profitability Ratios
- Full Ratio - EBITDA Margin by Industry
- Insurance Business - Independent Agencies Sustain Market Share
- First Page Sage - EBITDA Multiples for Insurance Companies
- Capstone Partners - Insurance Services Market Update