Most owner-operated insurance agencies are worth somewhere between roughly two and a half and four and a half times their seller's discretionary earnings (SDE), with a typical agency landing near three and a third. SDE is the owner's total benefit from the business: the profit plus the owner's own pay, benefits, and any one-time costs a new owner would not carry. Value is that number times a multiple, and in an agency the multiple turns on one question above all: how well does the renewal book transfer without you?

If that range looks lower than the numbers you have seen elsewhere, you have just met the most confusing thing about insurance agency valuation, and it is worth clearing up before anything else.

Why the multiples you have read do not agree

Search this topic and you will find three different answers on three different pages: one to one and a half times commission revenue, four to six times EBITDA, and eight to twelve times EBITDA. All three are real figures from publicly available transaction data and M&A advisory reports. They just describe different things, and mixing them up is how agency owners end up with a number that is wrong by half.

The revenue multiple (one to one and a half times annual commission) is the old rule of thumb, still used for book-only sales, where a buyer takes over the accounts and nothing else. It is a shortcut, not a valuation: it prices every dollar of commission the same regardless of retention, mix, or how the book was built.

The 8x to 12x EBITDA headlines come from the top of the market: large brokerage and consolidator transactions, typically on agencies with a million dollars or more of EBITDA, competed over by well-funded acquirers. Those deals are real, and they are also not your market if you run an owner-operated agency. Reading platform-deal multiples as a guide to a Main Street agency is like pricing a house off skyscraper sales.

The 4x to 6x EBITDA range for smaller agencies is the real mid-market figure, and here is the key: at owner-operator scale, EBITDA and SDE diverge sharply, because your own compensation is a large share of what the agency actually earns you. EBITDA treats your pay as a cost; SDE counts it, because it is part of the owner's benefit. Run the conversion and the bases agree. An agency producing $125,000 of EBITDA after a $100,000 owner salary has SDE of about $225,000; a sale at five times EBITDA is $625,000, which is about 2.8 times SDE. Same deal, same dollars, two multiples. That is why this page quotes SDE: it is the base that describes what an owner-operated agency actually earns its owner.

So when you see a quoted multiple, ask one question first: multiple of what? Converted to the same base, most of the apparent disagreement disappears, and what remains is the real variation, which comes from the book itself.

What is an insurance agency worth by size and profile?

Two forces set the range. The first is size: larger earnings bases attract more buyers, finance more readily, and carry less key-person risk, so the multiple climbs with SDE. The second is the profile of the book, which decides where an agency lands within its size band.

At the smaller end, an agency where the owner personally produces most of a personal-lines book tends to sit near the bottom of the range, around two and a half times SDE or below. The renewal income is real, but most of it walks out the door with the owner, and that risk is priced in. A typical established agency, with some staff, reasonable retention, and a mixed book, lands near the middle. At the top, around four times and above, sit the larger agencies with commercial-weighted books, producers and account managers who own the client relationships, strong sustained retention, and no dangerous concentration in any one carrier or client.

Insurance sits high on the industry spectrum overall, and for a structural reason: the renewal book is genuinely recurring revenue with low capital requirements, which is the combination that earns premium multiples in any industry. A well-built agency is one of the more valuable Main Street businesses per dollar of earnings. The range is wide precisely because "well-built" is doing so much work in that sentence.

Want the market's ballpark for an agency your size? The free valuation calculator gives you a size- and industry-adjusted range in about two minutes. Where you land inside it is what the full assessment measures.

The multiple measures transferability

Strip away the deal jargon and an agency multiple is answering a single question: if you stepped away, how much of the renewal income would still be here in three years? Everything that moves the number is a version of that question.

How much of the book you personally produce. This is the largest lever in most owner-operated agencies. When clients renew because of their relationship with you, the income is real but fragile. When producers and account managers hold the relationships, and the owner runs the business rather than the book, the income is durable, and the multiple says so.

The personal and commercial mix. Commercial lines tend to carry higher premiums per account, stickier renewals, and deeper relationships; heavily personal-lines books price lower and are more exposed to rate shopping. The mix is not destiny, and a superbly retained personal-lines book beats a leaky commercial one, but the weighting matters.

Retention. Sustained retention is the proof that the renewal income deserves to be called recurring. A book that holds its clients year after year is an asset; a book that churns is a treadmill.

Concentration. A single carrier writing a dominant share of your premium, or a single client producing a large slice of revenue, is risk sitting on top of the whole valuation. Diversified books price better because they can absorb a loss that would wound a concentrated one.

The records. An agency whose book lives in a well-kept management system, with clean policy data and documented processes, transfers. An agency whose book lives in the owner's head does not, whatever the spreadsheet says.

The rule of thumb, tested

One to one and a half times commission revenue survives because it is easy and because book-only deals still close on it. As a gut check it is fine. As a valuation it fails in both directions: it underprices a high-retention, commercial-weighted, producer-driven agency, and it overprices a book that is one owner's relationships wearing a business's name. Two agencies with identical commission revenue can deserve valuations a third apart, and the rule of thumb cannot see the difference. The earnings-and-transferability view can, which is why it is the one worth measuring yourself against.

What increases the value of an insurance agency?

The useful thing about the transferability lens is that every driver on the list is workable, and each one improves the agency you own today, not just the price of one you might someday hand over.

Reduce the share of the book you personally produce, one account at a time if necessary, by moving relationships to producers and account managers. Grow the commercial side deliberately. Treat retention as a managed number with an owner and a target, not a happy accident. Watch carrier and client concentration the way you would watch any other risk on your book. And keep the management system clean enough that the agency's memory lives in it rather than in you. None of this is exotic; all of it moves the multiple.

What is your agency worth right now?

You can get most of the way with an afternoon and your own numbers. Work out your SDE from your latest return: net profit, plus your salary and benefits, plus interest, depreciation, and one-time costs. Apply the range above with your size and profile in mind. Then be candid about the transferability drivers: your produced share, your mix, your retention, your concentration.

The step most owners cannot do alone is the comparison: what do the cost lines, margins, and productivity of an agency like yours normally look like, and which gap between your numbers and those is costing the most value? That is what the assessment measures. It takes your actual financials, benchmarks them against businesses like yours, and returns your valuation with the drivers ranked by dollar impact, so the number comes with its own to-do list.

How do you know if it is growing in value?

An agency's value is worth tracking the way you track the book itself, because the drivers move slowly and quietly. A year of drift in retention, or a book that has crept toward one carrier, changes your number without ever appearing in the monthly commission statement. Owners who re-measure on a cadence catch the drift early, and owners who improve one driver per quarter, produced share this quarter, commercial mix next, compound the multiple the same way the book compounds renewals. That is the whole case for treating valuation as a scoreboard rather than a someday event: the moves that raise the number are the same moves that make the agency easier and more profitable to own now.

See where your agency actually stands

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Common questions

How much is an insurance agency worth?
Most owner-operated insurance agencies are worth roughly two and a half to four and a half times their seller's discretionary earnings (SDE), with a typical agency landing near three and a third. Larger agencies with commercial-weighted, producer-driven books sit at the top of that range; smaller agencies where the owner personally produces most of the book sit toward the bottom. You will also see figures quoted on EBITDA or on commission revenue, which use different earnings bases and are not comparable one to one.
What multiple do insurance agencies sell for?
In SDE terms, commonly around two and a half to three and a half times for a typical owner-operated agency, reaching four times and above for larger, commercial-weighted, producer-driven books. The 8x to 12x EBITDA figures widely quoted online come from large brokerage and consolidator transactions on businesses with a million dollars or more of EBITDA; they do not describe what a Main Street agency trades for.
What is the insurance agency valuation rule of thumb?
The oldest rule of thumb is one to one and a half times annual commission revenue, and book-only sales still happen on it. It is a blunt instrument: it treats every dollar of commission as equal, when a dollar of high-retention commercial commission is worth far more than a dollar of aggregator-dependent personal lines. Use it as a gut check, then value the agency on its earnings and the quality of the book.
How do I value an insurance book of business?
A book-only sale is usually priced on a multiple of the commission revenue the book generates, adjusted for retention, the mix of personal and commercial lines, and how concentrated the book is by carrier and by client. Selling the whole agency, with staff, systems, and operations, is a different transaction priced on earnings. The distinction matters: a strong book inside a weak agency is worth less than the same book inside one that runs well.
Why do quoted insurance agency multiples vary so much?
Because they use different earnings bases and describe different markets. Commission-revenue multiples, EBITDA multiples, and SDE multiples measure different things, and the highest headline numbers come from large consolidator deals that are not comparable to owner-operated agencies. Before comparing any two multiples, confirm they use the same base; converted to the same basis, most of the apparent disagreement disappears.
How do I increase the value of my insurance agency?
Make the renewal book more transferable: reduce the share of it you personally produce, grow the commercial side, keep retention high, avoid dependence on any single carrier or client, and keep clean records in your management system. Each of those moves the multiple, and all of them make the agency stronger to own whether or not you ever sell.

Multiple ranges reflect Honest Assessment's valuation model for owner-operated agencies, expressed on an SDE basis. They are size-spanned ranges, not observed sale prices, and where a specific agency lands depends on the factors above.