How to Grow an Agency in 2026

By Andrea Wells

After years of rate inflation in nearly all lines of property and casualty insurance, 2026 offers some reprieve for insurance buyers. Agents and brokers can no longer rely on agency growth through rate increases and exposure changes.

“We’ve been in a fairly high inflationary rate environment for the last five or six years in terms of rate inflation,” said Tony Caldwell, the founder of OAA (One Agents Alliance), which is the top-ranked Strategic Master Agency of SIAA. “And that tends to mask real organic growth.”

Organic agency growth in the new year should get back to the basics of adding new business to the agency’s book and with a clear plan to focus on retention. And those agencies in a position to buy might see a more vibrant merger and acquisition market to spur growth.

This report offers six recommendations from industry thought leaders on how to enhance agency growth in 2026: retention, bottom line, talent, alternative revenue, M&A, and innovation.

A Focus on Retention

Consumer dissatisfaction over sky high insurance premiums over the past several years will continue to drive considerable shopping.

Shopping rates for auto, homeowners, and rental insurance rose throughout 2024. While shopping cooled during the second quarter of 2025, switching rates overall remained up, reported J.D. Power in July. For small commercial lines, retention rates fell significantly this year, according to another J.D. Power study released in August. Customers cited competitive pricing as a key reason they select and stay with an insurer, but service is just as important for retention, J.D. Power said.

OAA’s Caldwell said retention is an area that agencies should focus on in 2026 as retention numbers for many agencies may have slipped due to hard market conditions, and the rapid run-up in prices.

“I would suggest building a retention plan and making that a top business priority in 2026,” he said. “Measure your retention over the last three years, and whatever it is, set a goal to improve it.” Caldwell said it’s a lot easier to make money by increasing retention than it is to sell new business.

A focus on retention could also keep current customers from shopping around.

“Agents would do well to develop a strategy as to how they are best suited to respond to shoppers and keep their current clients from shopping,” said Chris Burand, founder and president of Pueblo, Colorado-based Burand and Associates, and author of Insurance Journal’s monthly column, The Competitive Advantage.

Also, the agency should have plans to capture other shoppers, he added. Agencies that focus on capturing shoppers will win new business. The challenge might be that some agencies simply cannot respond well to shoppers, Burand added. But those that do often have focused marketing programs specifically geared to attract shoppers.

“Along these lines, many carriers cannot support their agencies adequately in this environment,” Burand said. “They don’t have the financial wherewithal and/or lack the structure required. Agencies without the right carriers will not be able to take advantage of this growth opportunity even if they do everything else correctly.”

Many agencies that wish to improve retention may not know where to begin.

According to Caldwell, there’s no better way to start than simply going out and thanking current customers. “I don’t think we’re grateful enough for the business that we already have,” he said. “We write letters to say ‘thank you for your business,’ but when is the last time a producer took a client to lunch and the client said, ‘What’d you want to talk about?’ And the producer says, ‘I have one agenda item today–and that’s just to say thank you?'”

Another opportunity for more sophisticated clients and agencies is to utilize risk management tools to help decrease the need for insurance. This might also help with retention.

“Commercial clients should be primed to listen to this approach because high insurance premiums are a top-three expense that they must manage in the next year,” Burand said.

Focus on the Bottom Line

Another way agencies can bolster profitability in 2026 is by taking a hard look at their bottom line.

“I think this is a great time to benchmark your agency, to take a look and ask yourself if your expenses are under control. And if they’re not, are there adjustments that you can make?” Caldwell recommended. “Because gross profit is just a function of revenue minus expenses, and revenue is going to be declining on a per policy basis over the next couple of years.”

Caldwell suggests that agencies look at all agency expenses including compensation. “There’s been such a scramble for talent in the last five or six years that salaries have gone up and commission rates for producers have gone up, far faster than inflation,” he said.

“Most of us that run businesses in this industry are salespeople, and we tend to think about growing the top line. But the real thing to grow is the bottom line.” And if the bottom line is growing, that usually means the top line is growing, too, he added.

Another area to consider is the agency’s contingency income.

“Contingency income has been pressured from lots of different directions by unpredictable weather as well as social inflation and other things,” Caldwell said. Contingencies make up a significant portion of a typical agency’s net income. “So, there’s an opportunity for agencies to bolster their net by taking a really hard look at where they’re placing business,” he added.

The past several years agencies have been under pressure to just maintain their business. “To keep business on the books, agencies have had to focus on just remarketing and getting business placed wherever they could find a home for it,” he said. “Well, as the market softens, this creates the opportunity to now ask, ‘Is this business where it belongs, or should we be moving it someplace else?'”

Now is the time to find opportunities for clients in better markets that may also benefit the agency, through higher commission revenue and better management of loss ratios that maximize contingent income. “That’s an area that has a lot of promise for the bottom line of all agencies,” Caldwell said.

Focus on Talent

Kevin Stipe, CEO and partner of Reagan Consulting, believes that agencies looking to grow organically in 2026 need to take a close look at their sales talent.

Reagan’s quarterly update of the insurance distribution marketplace released in late August showed the fourth consecutive quarterly decline in organic growth. Brokers responding to the report posted median organic growth of 7.8% for Q2 2025 compared to 7.9% in Q1 2025 and 8.5% in Q2 2024.

While the decline from Q1 2025 was miniscule (0.1%), the drop is significant when compared to the peak organic growth in 2023 at over 11%. Stipe said that nearly all of that decline is driven by softening commercial property rates and cash pricing.

For agencies to grow in 2026, they need to add more talent to sales. “Generally speaking, firms need to hire more salespeople than they’re hiring now,” Stipe said. “Every study we’ve ever done shows that agencies tend to underhire salespeople because they don’t really account for how many they need to reach the goals that they want to reach.”

Burand believes it’s time for agencies to snag talent. “With all the acquisitions resulting in good employees not wanting to stay with their new employer, and now large layoffs by some of those same firms, agencies have a great opportunity to acquire quality, experienced employees,” he said.

‘Measure your retention over the last three years, and whatever it is, set a goal to improve it.’

But hiring new producers is really a long-term answer to ramping up organic growth, Stipe added. “You hire a new salesperson today, you’re not going to see significant results for two or three years. … You have got to be able to move faster than that.”

The immediate focus that can be done now is to improve results from the agency’s current sales team. “For many, that means figuring out how to deploy better accountability, how to crystallize their message to make their sales efforts more effective,” Stipe said.

That also means focusing on how to get more out of existing salespeople now. “Not by driving them into the ground but by helping them become more efficient and effective in the marketplace, and with retention strategies that can really help you hold down your most important clients,” Stipe advises.

Focus on Alternative Revenue

Another way that agencies can look at more strategic agency growth is in alternative revenue areas such as wealth management.

“There’s been a movement over the last 20 years to offer corporate retirement benefits. So, you’ve got corporate clients, you’re doing their group medical, and say, ‘let’s do their retirement, their 401(k),'” Stipe said. “That’s been an extension of group benefits for a lot of agencies, but now they’re taking that even further and saying, ‘let’s go into individual wealth management investment advisory.'”

Is that a better, more fruitful growth path than just focusing on their bread-and-butter business and getting better at the blocking and tackling of competitive brokers? That question is up for debate. “I’m not sure it would be the best prescription to go into a new line of business,” Stipe said. Maybe for some, but certainly not everyone.

Some larger brokers are doing more to vertically integrate, add specialty capabilities, and potentially bring in underwriters and add MGA capabilities. But Stipe contends that the jury’s still out on that growth opportunity.

“That could be very successful for those that really do it well, but I also think that some underestimate the strength of the competition,” he said. “There’s plenty of MGAs out there, and that’s their bread and butter,” he said. That model may succeed for some, but it also may be a tougher competitive landscape than expected.

“So, my advice for most brokers is to lean into technology and look at your new business sales and your account retention and figure out how to improve both of those by 10%,” Stipe said. “Be better at new business sales, be better at retention, and then continue to focus on producer hiring that you need to do systematically every year, and you’ll do fine.”

Focus on M&A

Mergers and acquisitions (M&A) activity overall is down 7% this year compared to last year, according to financial consulting firm OPTIS Partners. But that downward trend seems to be changing as the pace of insurance agency M&As picked up during the third quarter of 2025.

John Wepler, chairman and CEO, MarshBerry, sees agency M&As picking up again in 2026 as pressure on organic growth continues.

“As organic growth slows, the desire and the need to grow by acquisition becomes amplified–and that trend is even more exacerbated by the fact that there’s growing confidence,” he said. Lowering interest rates also have created even more headroom on covenants and even additional cash flow to support acquisitions, he explained.

Another reason he foresees additional M&A activity in the new year is a strong hold on valuations for privately-held independent agencies. “Valuations have been holding for insurance agencies, and they will, in our opinion, continue to hold,” Wepler said.

In particular, valuations for high-quality firms have not declined. “There is a distinction today in valuations between those firms that are growing organically at a higher double-digit organic growth rate, and those that are not,” Wepler said. “And those firms that are more specialized versus generalists are trading at a higher value,” he said. “Quality of a firm’s growth and leadership is being rewarded more today than it was in the past.”

Plus, there’s a limited supply and a tremendous amount of demand in the market. Those trends are leading 2025 to be the second most active year on record for agency M&A deals, according to Wepler. “The year 2021 was the most active year; 2025 we believe will be the second most active year, and that’s with about a six-week break during Trump’s Liberation Day tariffs. The whole market needed a little bit to just digest that.”

Now the market has not only rebounded, but the level of demand has increased substantially, Wepler said. “So, rolling into 2026, we feel that 2026 could be as active as 2025, and if there’s no systemic shock to the system, it could even come close to 2021.”

Reagan’s Stipe said that while M&A deals trended down in 2025, it’s difficult to get the full picture. “Some of it is because folks aren’t announcing deals like they have in the past,” he said. “There’s a movement to keep deals quiet,” he said. That’s in part due to the risk of talent poaching. “People don’t like to announce deals because they’re afraid that it’ll just turn them into a target.”

Stipe also sees M&A trending up again in 2026 as acquisitive firms look for added growth. “We’re also getting back into a realm where deals now make marginally more sense,” he said.

Burand added that as the market changes, large “buyout” firms will have a more difficult time achieving true organic growth beyond rate/exposure increases. “So, they must keep buying agencies and related firms” to grow.

Focus on Innovation

While technology has been working to help independent agencies innovate for years, new tools empowered with artificial intelligence promise to bring greater efficiencies and profits. But the hype, and volume of AI products on the market today, is overwhelming and actually “absurd,” said Graham Blackwell, president of Applied Systems.

However, he maintains that the right AI tools and products, made for and by the insurance industry, will absolutely help to drive efficiency, solve the need to scale, and free up time so agencies can get closer to their customers. “And they actually work,” Blackwell said.

“Our strategy is to help agencies connect with their partners, whether that’s a premium finance company or a carrier, and actually AI is something we’re trying to infuse into every single workflow that we facilitate,” Blackwell said.

Why? “People are busy, and they don’t want to go hire more folks to drive growth,” he said. AI can take the friction out of the growth process, bring intelligence to agencies that allows for growth, and eliminate manual keying, creating greater efficiencies and more time to sell and service clients. “It can really drive a lot of growth potential,” he said. Blackwell cautions that agencies not investing in these tools should be wary because someone else already has.

Work done behind the scenes in an agency is a great area to focus on when it comes to implementing AI, said James Thom, chief product officer at Vertafore

“The agency back office is full of potential for artificial intelligence to deliver immediate value by turning the avalanche of information in PDFs, emails, and carrier statements into structured, searchable data,” he said. “In 2026, AI will become more embedded in this flow, so teams can ask natural-language questions like, ‘Which policies include this exclusion?’ and get instant, accurate answers,” Thom said. “That shift won’t just save time; it will help agencies provide better service and find new opportunities for growth.”

“Now, I will say, I think it’s really important for insurance agencies, insurance carriers to find insurance AI-specific partners–and there’s a sea of AI partners out there. Whether it’s Applied or some other provider, a native AI insurance company, AI expertise is going to matter,” Blackwell said.

Agencies need to ask the right questions to make the right decisions on the most helpful AI tools.

“My advice is don’t pick the random player off the street. OpenAI is a great business, but they don’t care about insurance. Applied cares about insurance, and there are many other software vendors that care about insurance,” Blackwell said.

Topics Trends