After years of easy growth powered by consolidation and market tailwinds, insurance brokerage is entering a more demanding era. Success will hinge on organic growth, cost rigor, and the ability to turn scale into system advantage.
Executive Summary
The U.S. insurance brokerage industry has reached an inflection point after a decade of rapid consolidation and valuation expansion due to hardening commercial markets, private equity capital, and low interest rates. Today, those tailwinds are fading. Growth alone no longer guarantees performance. The next decade will reward operators—not aggregators—who can deliver margin expansion, organic growth, and structural efficiency through disciplined execution, data-driven decision-making, and rigorous cost transformation. There are fundamental structural shifts redefining the brokerage model and the capabilities that will distinguish the leaders of the next era.
Growth Without Efficiency Is No Longer Sustainable
Between 2012 and 2022, leading public brokers grew revenues by about 6 percent annually and delivered a five-fold increase in total shareholder return. Organic growth exceeded 10 percent in 2022 amid 22 consecutive quarters of commercial-line rate increases. Yet, despite these results, operating margins expanded by only ~2 percent annually, barely outpacing inflation (Exhibit 1). More than half of this improvement came from premium inflation rather than operational efficiency. As rate momentum slows, firms must convert revenue scale into cost leverage through automation, process redesign, and disciplined expense control. The shift from volume to value underscores a broader industry inflection: consolidation can no longer substitute for performance
Exhibit 1 – Revenue, Operating Margin and Shareholder Return of Leading Public Brokers [Source: S&P Global, 10k and publicly available information]
The Consolidation Era Has Peaked
The last decade’s brokerage landscape was defined by consolidation. In 2021, more than 1,000 agency transactions closed in the U.S., with private equity accounting for nearly 40 percent of deal volume (Exhibit 2). That dynamic has shifted: rising interest rates have increased the cost of debt, while public broker valuations—once near 20× EBITDA—now sit in the mid-teens (Exhibit 3). The once-lucrative multiple arbitrage between platforms and tuck-ins has narrowed. The question is no longer who can buy fastest, but who can integrate best.
Exhibit 2 – Broker M&A Activity [Source: Optis Partners, Conning Research]
Exhibit 3 – Public broker multiples (EV / LTM EBITDA) [Source: S&P Global Market Intelligence, McKinsey analysis, Equity reports]
From Roll-Ups to Platforms
Leading brokers such as Marsh McLennan, Aon, Gallagher, Brown & Brown, and WTW are transforming from federations of agencies into integrated, technology-enabled platforms. These firms are centralizing shared services, harmonizing technology, and embedding analytics across the value chain. Marsh McLennan’s modernization initiative and WTW’s $300 million efficiency program exemplify how integration and systemization—not acquisition velocity—now define performance.
Beyond Brokerage: Integration Across the Value Chain
As traditional consolidation slows, brokers are expanding into adjacent and vertically integrated models—wholesale, MGA, and TPA platforms—to capture more of the insurance value chain. Adjacencies such as RIA advisory, title, and PEO services provide diversification and recurring revenue (Exhibit 4). The strategic shift from distribution scale to value-chain compression is enabling brokers to deliver end-to-end risk solutions—placement, analytics, and administration—within one integrated platform.
Exhibit 4 – Adjacencies for Retail Brokerage firms [Source: McKinsey Analysis]
Digitization and the Professionalization of the Front Line
Brokers are embedding data science into frontline operations. Predictive analytics now identify at-risk accounts, optimize renewals, and reveal cross-sell opportunities across lines. Tools like Aon’s CyFi and Marsh’s Blue[i] Analytics illustrate how technology is transforming producers into data-informed risk advisors. The next-generation sales model—built on agility, insight, and talent—marks a shift from a culture of salesmanship to one of commercial science.
Cost Transformation as Competitive Strategy
Cost transformation has become a core element of strategy. Marsh McLennan’s $400 million savings initiative, WTW’s 300-bps margin improvement program, and Brown & Brown’s shared-service expansion illustrate a fundamental industry shift: efficiency is the new growth engine. Up to 40 percent of middle- and back-office activities remain automatable, giving disciplined firms a lasting cost advantage (Exhibit 5).
Exhibit 5 – Seven Categories for Brokers to reduce Costs [Source: McKinsey analysis]
The Next Decade: From Aggregators to Operators
The brokerage model now stands at a turning point — the decade ahead will not be defined by those who acquire the most, but by those who integrate the best. Leaders will embed integration as a core capability, harmonizing data, technology, and workflows across their enterprises. Post-merger platforms will evolve from administrative consolidations into strategic engines of efficiency—standardizing playbooks, aligning performance metrics, and unifying culture.
Growth strategies will shift from acquisition to precision. The firms that win will combine analytics-driven segmentation, pricing governance, and cross-sell execution to generate organic expansion even in soft markets. They will operate as digital ecosystems—integrating placement, servicing, and analytics within unified client platforms that mirror the responsiveness of modern B2B marketplaces.
Expansion will continue, but with focus. MGAs, RIAs, and TPA services will attract investment not for diversification alone, but for their superior return on invested capital and recurring revenue potential. Success in these adjacencies will hinge on disciplined governance and cultural integration. Human capital will remain central, but the talent model will evolve: one-firm collaboration, analytics-enabled sales, and structured capability development will raise productivity and retention.
Innovation will increasingly center on emerging risk domains—climate, cyber, and intangible assets. Brokers that develop proprietary analytics and advisory capabilities in these spaces will strengthen their role as strategic partners, moving beyond placement to help clients anticipate and manage complex risks. The brokerage of the future will not be defined by size, but by operational precision, insight, and adaptability.
Exhibit 6 – 16 levers for Retail Brokerage Firms
A More Demanding Future
The structural tailwinds that powered the last decade—premium inflation, leverage, and consolidation—are giving way to new imperatives: discipline, efficiency, and differentiation. Investors now reward firms that demonstrate operating leverage, not just growth. Clients favor brokers who combine expertise, analytics, and speed. The era of easy growth is over. The era of disciplined performance has begun. The next generation of leaders will transform scale into system advantage, harness analytics as an engine of insight, and redefine what it means to create value in risk intermediation. In the decade ahead, only brokers that pair growth with discipline will endure — and only those that make discipline their growth engine will lead.
