Robust Close for Insurance Brokerage M&A Activity in 2024

With only a month left for buyers and sellers to finalize transactions in 2024, all eyes are on the incoming Republican administration and the 2025 economic outlook. Will the good times continue, or should we brace for impact?

As the year winds down, merger and acquisition (M&A) activity in the insurance brokerage industry is poised to end on a strong note. Deals that have been months in the making are racing to close before year’s end, driven by market momentum and evolving economic conditions. The focus now turns to 2025 and what a new Republican administration may mean for taxes, regulations, and the broader economic environment.

Economic Outlook Under New Leadership

The incoming Republican administration is expected to bring a blend of pro-business policies, including potential tax cuts and deregulation. Historically, such measures have stimulated economic growth, but they come with complexities. For instance, tariffs—a key aspect of the administration’s agenda—may have inflationary effects, depending on their scope and implementation.

Goldman Sachs estimates that a universal tariff of 10% could raise core inflation by one percentage point. While such tariffs could increase costs, they may also serve as negotiation tools, potentially resulting in more targeted measures. Overall, the insurance industry is likely to benefit from stabilized or lower taxes and reduced regulatory burdens, creating a generally positive or neutral environment for carriers and brokers.

2024 M&A Market Update

As of November 30, 2024, there have been 633 announced M&A transactions in the U.S. insurance brokerage sector, a 2.5% increase compared to the 617 transactions announced during the same period in 2023. Private capital-backed buyers have dominated the scene, accounting for 465 of these transactions, or 73.5% of the total. This marks a significant rise from 2019, when such buyers represented 59.3% of all deals.

Independent agencies have also been active, participating in 103 deals so far in 2024—a slight increase from 2023 when they represented 15.6% of the market. Meanwhile, bank acquisitions have continued to decline, with only seven transactions completed this year, compared to nine in 2023 and 18 in 2022. Specialty distributors as acquisition targets have been a notable trend, accounting for 96 transactions, or 15.2% of the total.

Shifting Market Dynamics

The concentration of activity among the top players remains a defining characteristic of the insurance brokerage M&A market. In 2024, the top ten buyers accounted for 50.1% of all announced transactions, while the top three alone captured 25.0% of the market. This trend underscores the competitive nature of the industry, where strategic acquisitions are crucial for growth and market positioning.

DOXA has been an active participant in this dynamic landscape, contributing to the robust M&A activity that has defined 2024. The year has seen a flurry of transactions aimed at expanding capabilities, entering new markets, and deepening expertise in specialty sectors. These efforts reflect broader market trends where private capital-backed firms and independent agencies continue to shape the industry’s future.

Notable Transactions

Several high-profile deals have marked the final quarter of 2024, highlighting the industry’s diverse and strategic approaches to growth:

• November 4: A significant acquisition enhanced services in the agribusiness and farm sectors. The deal exemplified the trend of leveraging acquisitions to deepen specialty practices and offer tailored risk mitigation solutions.
• November 13: Another transaction focused on the residential construction industry, underscoring the value of industry-specific expertise. This strategic move strengthened capabilities in construction-focused insurance offerings, aligning with broader goals of specialization and market penetration.
• November 21: A longstanding family-owned firm in Alabama joined forces with a larger brokerage, solidifying its regional presence and bringing decades of expertise to the table. The partnership emphasized shared values of client-centric service, community involvement, and professional development.

These transactions, among others, illustrate how the industry continues to prioritize strategic growth through acquisitions that align with market needs and organizational strengths.

Key Takeaways and 2025 Outlook

As we look ahead to 2025, the insurance brokerage industry faces a mix of opportunities and challenges. The incoming administration’s policies could foster economic growth and create a favorable environment for business expansion. However, factors such as tariffs, inflation, and interest rates will require careful navigation.

The continued dominance of private capital-backed buyers signals a sustained appetite for investment in the sector. Independent agencies are also playing an increasingly prominent role, highlighting their adaptability and resilience in a competitive market. Meanwhile, the decline in bank acquisitions reflects broader shifts in the financial landscape.

DOXA remains committed to supporting its partners and clients as the industry evolves. By leveraging its expertise and staying attuned to market trends, DOXA aims to empower insurance professionals to thrive in a dynamic environment.

Closing Thoughts

The insurance brokerage M&A market is closing out 2024 on a high note, driven by strategic acquisitions and a favorable economic backdrop. As the year ends, the focus shifts to 2025 and the opportunities it holds for brokers, carriers, and clients alike.

Let’s connect and discuss how DOXA can help you navigate this ever-changing landscape. Reach out to our team today to learn more about our innovative solutions and strategic insights.