What happens to your insurance agency when you're ready to retire or can no longer run the business? For independent agency owners, that question is at the heart of perpetuation planning — a crucial yet often overlooked part of running a successful business.
According to Liberty Mutual’s 2023 Agency Growth Study, nearly half of agency principals anticipate a major ownership change within the next decade. This is driven not just by retirement but also by unexpected circumstances that could force a transition. A solid perpetuation plan protects the agency, its employees, and its clients by ensuring continuity and stability during leadership changes.
Internal Transitions vs. External Sales: Navigating Agency Perpetuation Options
There are two main options for perpetuation: an internal transition or an external sale. Internal perpetuation remains the preferred route, but it’s not without challenges. The insurance industry is facing a talent shortage, and finding qualified successors can be tough. Even family succession — though common in plans — is less common in reality. Only 17% of current owners took over from a family member, while 53% started their agencies from scratch.
For agencies unable to transition internally, selling becomes the next option. While the M&A market was strong in recent years, activity has slowed due to economic uncertainty. Smaller, P&C-focused agencies may now find fewer offers or lower valuations. That’s why it’s vital to build agency value early and remain competitive regardless of exit strategy.
Building Future Leaders and Strengthening Your Agency’s Legacy
One of the most effective ways to prepare for future transitions is to invest in leadership development. Many Millennial and Gen Z employees express interest in becoming agency leaders, yet only 42% say they are being prepared for that role. This gap is even wider for women, who are significantly less likely than men to receive leadership development and mentorship.
To retain and develop future leaders, agencies must foster inclusive environments, provide mentorship, and create clear growth paths. At the same time, investing in technology, digital tools, and operational efficiency can help increase agency value, attract buyers, and smooth leadership transitions.
Whether you're five years or fifteen years away from stepping back, creating a perpetuation plan now ensures your agency’s legacy — and your hard work — will continue for years to come.
AAI is a network for independent insurance agents offering the tools, training, and guidance to help you grow your agency efficiently and plan for the future. Contact us today to learn more.