Insurance Brokers Are Running Out of Deals. Wall Street Is Watching What Comes Next
For years, insurance brokers had a straightforward way to grow: buy smaller rivals, collect more commissions, and repeat. That strategy helped build some of the industry's biggest players, but the deals are becoming harder to justify. With acquisition activity at an eight-year low, brokers are turning to cost cuts, AI, and their existing businesses to keep profits growing.
Insurance deals hit an eight-year low
Insurance brokers and agents announced just 439 acquisitions in the first nine months of 2026, down 19% from a year earlier, according to Optis Partners. The rolling 12-month total fell to 600, its lowest level since Q2 2018.
Private-equity-backed and hybrid buyers still accounted for 76% of third-quarter deals, but even the industry's most active buyers are pulling back. Hub International announced 22 acquisitions through September, roughly 50% below its five-year average.
It's not that companies have lost interest in buying. Many simply have other financial priorities.
"Most of the private equity-backed platforms still want to make acquisitions but are facing pressure to prioritize deleveraging, integration, and exits over sheer volume."
Tim Cunningham, Managing Partner, Optis Partners
Buyers aren't paying the same premiums
The slowdown is also changing what buyers are willing to pay. Brown & Brown recently traded at around 11.2x earnings before interest, taxes, depreciation, and amortization (EBITDA), down roughly 32% from 16.5x at the end of 2025, according to Leaders Edge.
But valuations aren't falling evenly. Smaller brokers generating $1M to $10M in EBITDA can still command higher multiples than businesses 50x their size.
Private Buyers Are Paying More Than the Public Market
Price paid or traded as a multiple of EBITDA, a measure of operating profit. Brown & Brown, a bellwether public broker, now trades well below what buyers paid in this year’s biggest broker deals.
Bar chart. EBITDA multiple (x). Baldwin take-private: EV/EBITDA (x) 20. Aon buying USI: EV/EBITDA (x) 17. Brown & Brown, end of 2025: EV/EBITDA (x) 16.50. Brown & Brown, now: EV/EBITDA (x) 11.20.
Baldwin's planned take-private deal with the Dell Family Office and Sequence Holdings values it at roughly 20x EBITDA, while Aon agreed to acquire USI at approximately 17x.
Higher borrowing costs have made acquisitions less attractive, with financing rates rising from around 5% to 10%. Softer insurance pricing is adding another complication, making it harder for buyers to justify the premiums they once paid.
AI becomes the next cost-cutting tool
With acquisitions slowing, the industry's biggest names are looking for savings inside their existing operations.
Marsh McLennan increased the annual savings target for its Thrive efficiency program from $400M to $600M. But achieving those savings will cost more than initially expected, with restructuring expenses climbing from $500M to roughly $750M.
The company is simplifying operations, shifting work to lower-cost locations, and automating administrative tasks. CEO John Doyle also said Marsh is allowing some back-office positions to disappear through natural attrition rather than replacing departing employees.
Competitors are making similar moves. Willis Towers Watson is targeting a 30% operating margin by 2028 through its Propel program, while Arthur J. Gallagher expects AI to improve margins by roughly 400 basis points over three to five years, according to TD Cowen.
Acrisure has taken a more aggressive approach, eliminating 2,250 positions, or approximately 11% of its global workforce, in May as it expanded its use of AI and automation.
Insurance pricing is pulling in opposite directions
Cost reductions can help margins, but brokers still need revenue growth. That's becoming harder as commercial property insurance prices continue to fall.
Global property rates declined 12% in Q2 2026, marking eight consecutive quarters of declines on Marsh's composite measure. Some excess and surplus property accounts are seeing even steeper reductions of 25% to 35%.
Casualty insurance offers some relief. Global rates increased 2% in Q2, while US casualty rates climbed 7%, supported by rising claims costs and large jury awards.
Property Rates Are Falling While Casualty Keeps Rising
Change in commercial insurance rates, second quarter of 2026. Higher casualty prices offset part of the property slide, which keeps broker commissions steadier than the headline declines suggest.
Bar chart. Rate change (%). Global property: Rate change (%) -12%. Global casualty: Rate change (%) 2%. US casualty: Rate change (%) 7%.
That difference matters because brokers earn commissions on the policies they place. Lower property premiums can weigh on revenue, but higher casualty premiums help offset some of the pressure.
TD Cowen expects mid-single-digit organic growth across the brokerage industry in Q3, with its preferred insurance stocks concentrated among brokers rather than carriers.
Reinsurance is facing a tougher environment. Marsh's Guy Carpenter division reported Q3 revenue of $374M, down 6% from $398M, while its primary insurance brokerage business grew 5% on an underlying basis to $3.7B.
There's simply more capital available to insure large risks. Gallagher Re estimates dedicated reinsurance capital has reached $648B, while catastrophe bond issuance hit a nine-month record of $18.9B through September.
What matters for investors
AI could eventually replace some of the simpler work insurance brokers handle, particularly in personal and small commercial policies. But those businesses account for a relatively small share of revenue at the industry's largest firms.
BofA Global Research estimates that more than $15B in US independent agency commissions comes from relatively straightforward insurance products. Larger commercial risks, however, remain too complicated for digital agents to handle independently.
For investors, the immediate question is whether automation can deliver the margin improvements management teams are promising. Marsh's adjusted operating margin was unchanged at 22.7% in Q3, although the company still expects expansion for the full year.
The next test comes with the Jan. 1, 2027 reinsurance renewals, where brokers expect further declines in property catastrophe pricing. With fewer acquisitions to drive growth, the pressure is shifting to how much profit brokers can generate from the business they already have.
