Insurance Brokerage Themes to Watch in 2025

One point is certain as we look into our crystal ball: the next 12-24 months will look nothing like the past five years. Several themes will impact the brokerage industry in 2025 (and beyond), but growth outlook is first and foremost, and the past is not necessarily prologue.  

Growth will be the most intensely examined theme in this “new normal” organic growth environment and shift to more disciplined M&A (in a market that remains ultra-competitive). Management teams are focused on how to take market share from their competition and what gives them the right to win. M&A pipelines are being heavily scrutinized, while platforms focus inward on organic growth initiatives, expense rationalization and integration. Differentiation in value proposition, technology investments, competition for talent, and the path to liquidity will round out the brokerage themes impacting 2025.  

Organic growth expected to remain above long-term averages

From an organic growth standpoint, the macro backdrop for brokers remains favorable to sustain above long-term averages, however, organic growth has been decelerating versus the levels seen in 2023. This “new normal” will depend on the offsetting dynamics highlighted across property (decelerating) and casualty (accelerating) against a backdrop of macro rate stability.

M&A activity expected to accelerate

On the M&A side of the growth equation, we witnessed shifting market dynamics in 2024, which led to larger transactions for the publics and a slowdown in overall deal pace. Broker deal pace was relatively muted, largely due to a lower volume of deals from PE-backed buyers (a total of 535 U.S. deals versus 771 in 2023 and compared to the 1,161 peak in 2021). However, we’ve now seen each of the “Big 3” public brokers acquire large PE-backed platforms, with the expectation of more deal activity from the large publics and PE-backed platform exits in 2025. 

We see a few themes as having emerged in brokerage M&A:  

1. Both management teams and investors are more disciplined around the acquisition opportunities they decide to pursue (both tuck-in and new platforms);  

2. the M&A engine alone has by and large become table stakes – the market now sees value in a differentiated M&A approach; and  

3. valuations for assets viewed as “best-in-class,” either platform or tuck-in, have not softened, and competition is fierce.  

The importance of differentiation  

Defining, articulating, differentiating, and defending your value proposition is top of mind regardless of bull or bear market, or hard or soft insurance cycle. However, as we sit here today, ~45% of the top 50 U.S. brokers are PE-backed (either majority or minority), with the remainder being either public or privately owned by management and employees. As a result, management teams and sponsors remain keenly focused on differentiation, seeking answers to key questions such as: How and why are you taking market share from your competitors? Why are you attracting and retaining your clients and producers?  

The continued focus on value proposition differentiation, whether demonstrated through organic growth performance, industry and/or product specialization and expertise, technology enablement, M&A strategy, and integration, will continue to be top of mind in 2025. Again, those who define, articulate, and demonstrate their value proposition clearly will continue to command a premium in the market.

Clients and producers alike are requiring more content and market access. The war for talent is as intense as ever. As one broker CEO put it, “We’re in hand-to-hand combat” for talent. While this is not a new phenomenon, management teams continue to be in investment mode as they look to boost their growth profiles (namely organic growth) versus their peers. The ever-present enticement to higher compensation for a producer, whether they stay (e.g., compensation is matched) or leave, is here to stay for the time being. Importantly, in a business where ~75% of the average expense base is on people, that is an important consideration against the sector’s moderating organic growth outlook.

"Trapped capital” 

Various sources have highlighted up to $200 billion of “trapped capital” currently invested in the insurance brokerage ecosystem. This is a staggering number versus the number of sponsors invested in the sector 15 years ago. There are now 17 PE-backed platforms with more than $1 billion in revenue (also a staggering number). Given the number of sponsors with the ability to pay, and without an investment in the space getting smaller and smaller, how will the path to liquidity develop? For starters, we’ll continue to see methods such as continuation vehicles, structured equity, and minority stake sales continue to play out; however, given the sheer magnitude of trapped capital and number of $1 billion-plus platforms, a couple of themes must emerge:  

1. Emergence of broker IPOs (see Vickers’s note on equity capital markets expectations);  

2. more sponsors invested in several brokerage assets;  

3. increased sovereign wealth and pension activity, and  

4. larger and more complex consolidation among the consolidators. 

Again, the past is not necessarily prologue. 2025 will hold new avenues for liquidity for management teams and sponsors, increased strategic activity (maybe even cross border into the U.S.), and an intense focus on platform differentiation. With that backdrop, I expect 2025 to be a busy one.