Agency of the Future

What will the insurance agency business model look like 10-15 years from now?

Today, several key trends are already shaping the future of the industry, including the ongoing trend of agency consolidation, the relative ease of starting new businesses, a widening generational and workforce age gap, and the rapid rise of insurtech and artificial intelligence.

The first three trends are steadily reshaping the traditional agency model, gradually evolving it into a more modern structure. By contrast, insurtech and artificial intelligence represent true disruptors–technologies with the potential not just to reshape but to transform how insurance agencies operate and deliver value fundamentally.

Agency Consolidation

The first major trend shaping the industry is consolidation. Agencies of all sizes are being acquired, primarily by well-capitalized private organizations backed by private equity and large publicly traded firms.

Private equity investment has surged into the insurance sector, now driving a vast majority of agency acquisitions. Recent reports indicate that approximately 750 reported acquisitions occurred in 2024, a decrease from more than 830 in 2023. However, unreported acquisitions may be of a similar amount, although this is difficult to assess.

This consolidation trend has been building momentum for years. One clear outcome is that professionally run agencies with national reach now manage an increasing share of insurance accounts. This shift aligns with evolving consumer expectations, as many clients value access to firms with broad resources and extensive support networks.

For small, independent agencies, this environment presents both challenges and opportunities. To remain competitive against larger firms, independent agencies must emphasize personal relationships, specialized services, and unique value propositions. In many communities, the days of having multiple small independent agencies are gone. Still, direct writers such as State Farm and Farmers continue to serve personal lines and small commercial markets, filling part of that gap.

New Agencies

In contrast to the consolidation trend, the second major development is that starting a new insurance agency has never been easier. The shift is primarily driven by expanded market access–opportunities that didn’t exist 50 years ago.

Today, entrepreneurs can launch a new agency and quickly access multiple carriers through aggregators and market access groups such as AmWins Access (formerly Networked Insurance Agents), Ironpeak (formerly Iroquois Group), United Valley, or Insuror’s Group. This model allows new agencies to be viable almost immediately.

In the past, startups had to place business through another established agency until they built enough premium volume–often $250,000 to $500,000–to qualify for direct contracts with carriers. That process could take years. Personal lines carriers are being very selective in contracting new agencies due to the current turmoil in that insurance segment, which makes it less likely to obtain a direct appointment.

Beyond aggregators, there are several other paths to support new or smaller agencies:

Clusters and Networks. These involve two or more agencies pooling resources to share carrier appointments, facilities, systems, staff, or services. These can be small clusters of 10 or fewer agencies, or large regional or national networks. Traditionally, this has been an option once an agency is somewhat established. There is also some overlap when defining an aggregator with a cluster or network, since the key feature is market access. However, a cluster or network will offer additional services, such as peer collaboration and marketing support. Large networks include Keystone, ISU, Renaissance, and SIAA, in addition to the aggregators listed above.

Franchise Models. New systems such as Fiesta Insurance, Brightway, and Goosehead bring a franchise approach to the insurance industry. In exchange for an upfront franchise fee (often $25,000 or more) and reduced commissions or monthly fees, franchisees receive comprehensive support, including market access, branding, back-office functions (like accounting and customer service), and consistent operational procedures. This structure allows entrepreneurs to focus primarily on sales and building their book of business, without the burden of managing employees or carrier relationships. However, franchisees must adhere to the franchisor’s rules, and compensation may be lower compared to a fully independent agency.

These partnerships–whether through clusters, networks, aggregators, or franchises–have effectively become incubators for new agencies. According to a 2022 Insurance Networks Study, more than half of all independent agencies in the U.S. participate in a cluster, network, or aggregator, with network membership widespread among agencies seeking better market access, higher commissions, and support services. Insurance Journal’s annual list of the “Top 20 Agency Partnerships” (see page 21) highlights the impressive combined revenues generated by member agencies, underscoring the growing role of these models in shaping the industry.

Age Gap

Like many industries, insurance faces a significant demographic challenge: a widening generational gap in the workforce. The Baby Boomers are retiring in large numbers. The first Boomers turned 65 back in 2011, and today, approximately 11,000 reach retirement age every day. The youngest Boomers are now in their early 60s. While the youngest Millenials began entering the workforce less than a decade ago, the generation between them and the Boomers–Generation X–is considerably smaller. This creates a structural gap: Seasoned professionals in their 60s are exiting the workforce and are being replaced primarily by those in their 20s, with fewer individuals in their 30s and 40s to bridge the transition.

This shift also presents significant challenges in terms of agency ownership. Baby Boomers still own roughly 41% of privately held small businesses and franchises in the U.S., with 80% to 90% of their wealth tied up in their companies. In total, this represents an estimated 12 million businesses and over 25 million jobs. Within the insurance industry, as many as 75% of Baby Boomer agency owners plan to transition ownership within the next eight years, with nearly half intending to do so within just three years. For now, this trend aligns with the appetite of private equity firms, which continue to acquire agencies aggressively.

The demographic gap also translates into an experience gap. Someone often replaces a producer or manager with 20-plus years of expertise with less than 10 years in the industry. While this loss of experience may reduce efficiency in the short term, it creates space for new ideas and approaches. In fact, the next major trend–technology and insurtech–may align naturally with the Millennial workforce, which brings fresh perspectives, even if it lacks deep experience in traditional agency models.

Technology

Insurtech has emerged as the dominant disruptive force in the insurance industry–the “800pound gorilla” among current trends. Broadly defined, insurtech refers to the application of technology across the insurance sector and the ways it is reshaping the marketplace. This includes innovations such as smartphone apps, wearable devices, sensor-enabled appliances, real-time access to consumer data, enhanced claims tools, risk-assessment algorithms, online policy issuance and servicing, as well as automated compliance systems.

What makes insurtech so impactful is its unpredictability. Its full potential is unknown, but the implications are profound. For example, the rise of self-driving cars will likely reduce accident-related liability and will shift primary responsibility from drivers to manufacturers. When this shift becomes widespread, traditional personal auto insurance policies could become largely obsolete.

In addition, everyday products–from household appliances to vehicles–are increasingly embedded with connected technology. These devices continuously monitor usage, performance, and surroundings, which will inevitably reshape how liability is determined and assigned.

Artificial intelligence amplifies this transformation by redefining how data is collected, analyzed, and applied. Today, a consumer seeking an auto insurance quote needs only to provide their name and address–systems can automatically pull vehicle details and other relevant information from existing databases. With AI, the entire process of underwriting, claims, and customer service will increasingly be automated, delivered with speed and accuracy that human staff alone cannot match.

Several major insurance companies base their premium pricing on data collected from how a car is driven, using telematics and usage-based insurance programs. Tesla’s insurance program will show how recent driving history affects the premium, which is updated monthly.

In short, insurtech and AI are not just reshaping the insurance agency model–they may fundamentally reinvent the way insurance itself works.

Conclusion

Over the next five to 10 years, insurance agencies are likely to undergo a gradual evolution, primarily shaped by three major trends: consolidation, new agency formation, and shifting demographics. Mid-sized agencies are expected to decline in number, while large firms are expected to capture an increasing share of the market. At the same time, a new wave of small, highly nimble agencies may emerge–lean operations where producers focus on sales while outsourcing service and back-office functions.

Looking further ahead–15 years into the future and beyond–the picture becomes far less certain. Advances in technology, particularly insurtech and AI, could transform the industry so radically that the role, and even the very existence, of traditional insurance agencies may be redefined or eliminated altogether.

Oak is the founder of the consulting firm Oak & Associates, based in Northern California and Central Oregon, and Bill Schoeffler is an associate of the firm. Oak & Associates is an international consulting firm that specializes in financial and management consulting for independent insurance agencies, including valuations, mergers acquisitions, sales and marketing planning as well as perpetuation planning. Phone: 707-935-6565. Email: catoak@gmail.com.

Topics Trends