Primary Agent - August 2025

AUGUST 2025

MEG ASHMEAD PACELLA & GREG SMITH REFLECT ON THEIR PATH TO AGENCY OWNERSHIP

EXCLUSIVE MEMBER MAGAZINE

ALSO INSIDE FACTORS THAT IMPACT AGENCY VALUATIONS

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CONTENTS

AUGUST 2025

FEATURED 10

INTERVIEW WITH MEG ASHMEAD PACELLA AND GREG SMITH From childhood acquaintances, to friendly competitors, to co-managing agency principals, Meg Ashmead Pacella and Greg Smith share their journey to purchasing Ashmead Insurance Associates Inc.

> > > > > > 16 JOIN US ON SOCIAL MEDIA: Facebook.com/IABforME LinkedIn.com/company/IA_and_B Instagram.com/IA.and.B YouTube.com/@IA_and_B IA&B Podcasts can be found at:

6 KEY FACTORS THAT IMPACT INSURANCE AGENCY VALUATIONS The IA Valuations Team shares the risk factors that influence agency valuations and how agency owners can improve the value of their operation and ensure a smooth transition.

MONTHLY 2 CHAIR OF THE BOARD'S MESSAGE 3 DON'S DISCUSSION

IA&B is the premier resource and champion for independent insurance agents in Pennsylvania, Maryland, and Delaware.

Periodical postage paid at Mechanicsburg, PA and at additional mailing offices. Postmaster: Send address changes to Insurance Agents & Brokers, 650 Wilson Lane, Suite 200, Mechanicsburg, PA 17055.

Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2025-08, is published monthly by IA&B Service Group Inc., a subsidiary of IA&B. Copyright 2025. All rights reserved. No material JUNE be reproduced in whole or in part without written consent of the publisher. The information in this publication is general in nature and not intended to serve as legal, accounting, financial, insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult with competent legal, financial, insurance, investment advisory and/or other professional advisors concerning specific matters before making any decisions. We disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in Primary Agent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of IA&B. Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&B endorsement of the products and/or services.

4 COVERAGE CORNER 7 NEWS & NOTES 15 PICS & POSTS 21 UPCOMING EDUCATION IABforME.com |

1

CHAIR OF THE BOARD'S MESSAGE

A PERSONAL NOTE ON PERPETUATION Greetings, fellow agents. This month’s message is bittersweet as it is my final article as the Chair of IA&B. I have loved everything about the role, from serving with and learning from the best agent board members, to watching a truly amazing staff in action, to launching some of the most exciting initiatives at IA&B, like our Insuring Careers Certification Program.

This month’s issue is about perpetuation, so it’s a fitting way to say goodbye. I’ve served proudly, and now it’s time for me to move on to the next endeavor while our Vice Chair, Andy Enders, takes over the helm.

Perpetuation is a topic very close to my heart, and at this moment, painfully so. I’m the fifth generation in my family to lead our 126-year-old insurance agency. My parents did it right. They gave me opportunity, we planned and prepared for years, and they had mostly exited the business. They did this with intention; gracefully, and at a Goldilocks pace – not too fast and not too slow. Sadly, and shockingly, my mother passed away on June 16 of this year. She was healthy, then she was gone.

Her fingerprints are everywhere in our business – from the culture she created, to the high standards she set, and the procedures she implemented. These fingerprints are the greatest gift she could give to me and are a testament to her legacy. While our family and employees are grieving, the business is standing strong because of my parents’ diligent perpetuation intentions.

I hope my story can inspire you to start or follow through with your perpetuation journey. You never know when it’s going to be your time, so start now. Speaking from personal experience, having a plan and seeing it through is the most meaningful thing you can do for your heirs, your customers, and your employees.

INSURANCE AGENTS & BROKERS 650 Wilson Lane, Suite 200 Mechanicsburg, PA 17055 191 Main Street, Annapolis, MD 21401 800-998-9644 | IABforME.com

IA&B BOARD OF DIRECTORS OFFICERS Sarah Brown, CIC, CRM, AFIS - Chair

Keller Brown Insurance Services | Shrewsbury, PA

Andrew Enders, Esq. - Vice Chair Enders | Harrisburg, PA

MEMBERS Greg Bennett

Lisa Parry, CPIA

Kate Dawson, CPIA

Bill Purdy

Michael Gaetano

Kent Reynolds, CIC

Bruce D. Kraft, AAI, CIC

David Rivell, CIC, CRM

Debra McAfee

Jason Rodriguez, CIC

Michael McGroarty, Jr., CIC

Donna Roper

McGroarty & Bradburn Insurance Pittsburgh, PA

E K McConkey & Company York, PA

Shayne McIntosh, CIC

Ashley Stafford, CPIA

Famous & Spang Associates Aberdeen, MD Ferri Dawson Insurance Murrysville, PA The Hartman Group Montoursville, PA Arbor Insurance Group Allentown, PA

McAfee Insurance Agency, LLC Wilmington, DE

JPI Insurance Associates Dillsburg, PA

Chris Miller, CIC

Miller Insurance Protection Team Jonestown, PA

Purdy Insurance Agency, Inc. Sunbury, PA Blue Ridge Risk Partners LLC Hagerstown, MD Element Risk Management West Chester, PA Prominent Insurance Svcs Wilmington, DE

Williams Insurance Agency, Inc. Rehoboth Beach, DE

Michael Thomas

Lighthouse Insurance Svcs Gambrills, MD

Michael Papa, CIC, MBA

All the best,

Diversified Insurance Industries, Inc. Hunt Valley, MD

Sarah Brown, CIC, CRM, AFIS Chair of the Board

NATIONAL DIRECTORS Mike Ertel (PIA)

AssuredPartners | Columbia, MD

Diana Hornung, CIC (IIABA)

IOA National, Inc. | Wilmington, DE

Mark Monroe (IIABA) Downingtown, PA 2

Parry Insurance Langhorne, PA

AUGUST 2025

DON'S DISCUSSION

DON'S DISCUSSION IA&B Legal & Corporate Affairs Director Don Bankus

Are you a member with a question?

Contact Don at 717-918-9204 or DonB@IABforME.com.

QUESTION: Are there steps we can take to mitigate our website-related E&O exposures?

ANSWER: Great question, and, yes, there certainly are! What information you include or don’t include on your website – as well as what steps you do or don’t take to protect customer data – can be used to support or strengthen an E&O claim against the agency. Statements or information you might consider innocent or benign can unintentionally increase the agency’s duty of care to its customers and prospects, which can be harmful to and weaken your E&O defense in a claim situation.

With that in mind, the following do’s and don’ts are worth considering when creating, updating, or reviewing your agency’s website: DO: ▲ Accurately specify states in which the agency is licensed; ▲ Clearly state that both misstatements or omissions of relevant information provided by current or prospective customers can result in price variations, or declinations or rescissions of coverage; ▲ Clearly state that requesting coverage does not guarantee that coverage can or will be provided.

Coverage can only be initiated/ confirmed via a specific statement from a licensed member of the agency’s staff; ▲ Clearly state via a disclaimer that information provided on the website is not a guarantee that insurance can or will be provided, or that the agency is obligated to procure insurance for website visitors; ▲ Include a Privacy Statement, and encrypt any and all pages which collect personally identifiable information provided by a customer or prospect, including online quote forms; ▲ Request and obtain written consent from carriers if you use their name and/or logo on your website.

DON’T: ▲ State that the agency does things or provides services it doesn’t do or provide; ▲ Include language that expressly states, or can be interpreted to suggest, that any claim will be fully covered; ▲ Include language such as “exceptionally skilled,” “expert,” “specialist,” or “partner” to describe the agency and/or its IABforME.com |

staff, or language such as “fully covered” or “guarantee” to describe the product; ▲ Include language promising absolutes, such as “addressing all your coverage needs,” “constantly reviewing,” or “immediate response time”; ▲ Utilize a quote mechanism, and then fail to respond in a timely manner; ▲ Utilize open text boxes for customers and prospects to type messages, unless the information is adequately encrypted; ▲ Launch a website without carefully reviewing its content. Template agency websites or web designers may not consider or be aware of potential E&O ramifications specific to an insurance agency.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice.

Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.

Rather listen?

Also available in audio format at IABforME.buzzsprout.com 3

THE MOST OVERLOOKED RENTERS’ INSURANCE COVERAGE

By Bill Wilson Like many young people, after graduating from college I rented an apartment for six years before I had enough money and credit to buy a house. For three of those years, I rented an apartment in a complex that had 12 to 16 units in each two-story building.

A tenant whose apartment was on the first floor of one of the 12-unit buildings in the complex was starting his charcoal grill on his patio when his phone rang. Being distracted for several minutes while on the call, he did not realize that the flames from his grill had spread to the balcony above him, then into the roof space above the second-floor unit, quickly racing down the entire length of the building.

To make matters worse, it was later determined that the building lacked attic fire stops, and when the fire department finally arrived, they discovered that the water supply was inadequate to control a fire of this size. The 4

building was a total loss, as were the contents of the renter and the other 11 tenants. Fortunately, no one was injured.

According to a local television station’s news broadcast that evening, not a single tenant they interviewed had renters’ insurance, including the tenant who started the fire. The news coverage on every station focused entirely on the lack of first-party property insurance. From the negligent tenant’s perspective, this missed the most important coverage in most renters’ policies … liability coverage.

Today, the likely amount of property damage for a claim like this would probably be in the $3M range. How many tenants with renters’ insurance carry $3M in liability coverage? Almost certainly far less than 1% of tenants have renters’ insurance and a personal umbrella policy.

In many ways, the liability of an apartment dweller is potentially greater than that of a private homeowner.

AUGUST 2025

COVERAGE CORNER When my son moved into his first apartment, the management required renters’ insurance. If a tenant didn’t have his or her own coverage, the management company had an arrangement where such coverage could be bought online from an affiliated broker and the policy actually could be reviewed before purchase.

When I looked at this non-ISO form, I saw that it covered very limited basic named perils with few additional coverages and only $50,000 in liability coverage. This amount of coverage is grossly inadequate for a residency in a multi-unit apartment building with a swimming pool.

So, I insisted that my son procure an open perils renters’ policy with replacement cost personal property coverage.

He already had a personal umbrella policy that included his auto policy as underlying coverage.

When selling renters’ insurance, do you stress the importance and value of the liability coverage in the policy? Do you offer higher liability limits or, better, an umbrella policy that can extend over the insured’s renters and auto policies? Do you have a “minimum limits” standard for all coverages you sell?

In addition to liability coverage, given that rental space is limited in some areas or available only at a premium, do you offer higher limits of Additional Living Expense coverage in the event that a renter is forced to move out of an apartment?

Admittedly, the commission on a renters’ policy is low, but today’s renter is often tomorrow’s homeowner. In the meantime, consider that most renters also have autos, and all of them are umbrella policy prospects. Also, given the cost of rentals today, it is not unusual for two or more people to rent a home or apartment, and these are potential customers as well.

Bill Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including the Amazon 4.8 star “When Words Collide…Resolving Insurance Coverage and Claims Disputes” which BookAuthority ranks as the #1 insurance book of all time. He can be reached at Bill@InsuranceCommentary.com.

IABforME.com |

LIVE CE WEBINAR Learn about tricky personal lines coverage scenarios in this upcoming live webinar.

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Cheryl Shiffer, IA&B Insurance Team Member 800-998-9644, ext. 203 | CherylS@IABforME.com

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Learn more at iavaluations.com

BUSINESS PLANNING TO HELP YOUR AGENCY REACH ITS GOALS Elevate your independent insurance agency with IA Valuations’ specialized services. Whether you’re transitioning internally, acquiring, selling externally, or looking for additional consulting services, our team offers expert guidance specific for your agency’s future success. We provide tailored planning and consulting services so you can trust us to navigate the complexities of your agency’s future and help you achieve your business goals.

INTERNAL PERPETUATION PLANNING

AGENCY LINK: BUY-SELL ADVISING

BUSINESS CONSULTING SERVICES

Jeff Smith, JD, CIC, CAE Chief Executive Officer jeff@iavaluations.com

Jodie Shaw, CLCS, CPIA, TRA Director of Business Development jodie@iavaluations.com

www.iavaluations.com

6

Jarod Steed Business Planning & Valuation Analyst jarod@iavaluations.com

Craig Niess, CVA, MBA Director of Business Planning & Valuation craig@iavaluations.com

Colleen Barbara Marketing & Communications Manager colleen@iavaluations.com

contact@iavaluations.com

AUGUST 2025

614-607-1657

NEWS & NOTES

Joy Keller-Brown (right) with (left to right) husband Jeff Brown, daughter Sarah Brown, and father Barry Keller

IN MEMORIAM Joy Keller-Brown, CIC, of KellerBrown Insurance Services in Shrewsbury, PA, passed away unexpectedly in June. She was a loyal advocate for IA&B, serving for many years on a Member Agent Panel and introducing IA&B staff to her daughter, Sarah Brown, who currently chairs the IA&B Board of Directors.

Joy was passionate about community service and the role that independent agents play in it. Her legacy will live on in Keller-Brown Insurance Services, a vibrant, communityfocused agency which is now in its fifth generation of continuous family ownership under Sarah.

AGENT EARNS INSURING CAREERS CERTIFICATION

WEBINAR FOR WOMEN IN INSURANCE

We’re pleased to announce that Gianna Cosentino successfully passed the Pennsylvania P&C insurance licensing exam and earned IA&B’s Insuring Careers Certification.

She is employed by Hutton-Blews Insurance, an IA&B member agency in Indiana, PA.

Join Lisa Purk, a presenter from the 2025 IA&B Women’s Conference, for this interactive webinar. You’ll explore practical strategies for shifting your perspective to reduce pressure and enhance resilience.

ABOUT THE INSURING CAREERS CERTIFICATION PROGRAM The Insuring Careers Certification Program (ICCP) is an online, flexible program for industry newcomers.

It provides education on insurance basics, preparation for the state licensing exam, and application of the material to real-life scenarios.

Participants have six months to complete the program.

From Reaction to Reflection: Reframing Stress and Managing Thought Triggers Tuesday, Aug. 19 Noon-1 PM There is no cost for IA&B members to attend.

Learn more and register: IABforME.com/women-in-insurance

Do you have an employee who is new to insurance and needs licensed? Consider ICCP. Questions?

Contact Heather Ulrich IA&B Career Services Director HeatherU@IABforME.com 717-918-9441 Learn more: IABforME.online/ insuring-careers-agencies

IABforME.com |

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NEWS & NOTES

STRICKLER AGENCY CELEBRATES 100 YEARS Strickler Agency, an IA&B member agency with offices in Carlisle and Chambersburg, PA, celebrates its 100th anniversary this year.

Founded by Fred. S. Strickler in 1925, the agency now employs over 40 professionals and serves clients in over 30 states.

“For 100 years, we have provided our clients with peace of mind, and we truly believe that our clients are our most valued asset,” said President & CEO Erik Olsen.

Is your agency celebrating a milestone anniversary? Whether it’s five years or 125 years in the business, we want to acknowledge your accomplishment. Email announcements and images to IA&B Public Relations Director KarenR@IABforME.com.

PA ADDS ETHIC, FLOOD CREDITS Effective April 29, 2025, new requirements became effective in Pennsylvania: ▲ All resident producers with Property, Casualty, or Personal lines of authority are required to complete two (2) hours of Flood continuing education (CE) credits. ▲ All resident producers and both resident and nonresident Title agents must complete three (3) hours of Ethics per licensing period.

HOW TO COMPLY IA&B offers web-based courses that can assist producers in their compliance, including these upcoming options: Ethics, Diligence, Success: What Agencies Need to Know (3 Ethics credits) Aug. 5, 1-4 PM

Strickler Agency staff marked the anniversary with the Greater Chambersburg Chamber of Commerce.

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AUGUST 2025

Flood Insurance: What You Need to Know (3 Flood credits) Aug. 7, 9 AM-Noon An Hour with Dave: What Everyone Must Know About Flood (1 Flood credit) Sept. 17, 2-3 PM Ethics in Insurance: Protecting the Client and the Agency (3 Ethics credits) Sept. 18, 1-4 PM Murky: Understanding Flood Coverage, Rules and Claims (2 Flood credits) Sept. 22, 1-3 PM Register today: IABforME.com/eventregistrations 800-998-9644, option 1

amerisafe.com 800.256.9052 asksales@amerisafe.com *Policyholder retention rate based on voluntary business that we elected for renewal quote: 94.2% in 2024. © 2025 AMERISAFE, Inc. AMERISAFE and the AMERISAFE LOGO is a registered trademark of AMERISAFE, Inc. SAFE ABOVE ALL is a trademark of AMERISAFE, Inc. All rights | reserved.

IABforME.com

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Q&A with

MEG ASHMEAD PACELLA AND GREG SMITH Ashmead Insurance Associates Inc. is a full-service independent insurance agency based in Colmar, PA. Co-managing Principals and Owners Meg Ashmead Pacella and Greg Smith, along with partner John Blystone, oversee the IA&B member agency.

Q. Meg, you’re the third generation in the family business. Tell us about the agency’s history.

Q. How did you meet? And how did you find your way into the insurance industry?

A. My PopPop, Bill Ashmead Sr., started Ashmead Insurance in 1957. From there, my dad, Bill Ashmead Jr., joined Ashmead 40 years ago, and my mom, Jeanine Ashmead, joined the agency 25 years ago. Bill and Jeanine expanded upon what my grandfather started and really grew Ashmead Insurance into a well-oiled, profitable, growing insurance agency. Eleven years ago, I joined Ashmead in a production role.

A. [Greg:] Meg and I actually met when we were both 12 or 13 at a church camp in the Poconos. Years later – after a job selling mutual funds to financial advisors – I took a position with Federated Insurance. While I was working on a prospect in West Chester, I saw a post card from Meg to this same prospect, and I recognized her picture. I called her about some personal lines leads that I had, and we continued to stay in touch. Finally, we started talking about me coming to work for Ashmead, and the rest is history.

Greg Smith and I formally purchased Ashmead Insurance from my parents on Jan. 1, 2025, making me a thirdgeneration owner! In addition to the formal purchase of my parents’ shares of Ashmead Insurance, we have our partner, John Blystone, whose agency merged with Ashmead three and a half years ago. John joining Ashmead Insurance was an integral part of our perpetuation plan.

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[Meg:] The church camp story is true! As we all say, insurance is a small world. Funny how things worked out all these years later.

My start in insurance came after graduating from James Madison University with a degree in Justice Studies. I went to work for a non-profit in Philadelphia as a Contact Center Manager. I loved my job, but I started to think about my future and saw the life my parents had built for my sisters and me. I realized how proud I was of their hard work and wanted to be a part of that.

AUGUST 2025

ON THE COVER

Our relationship with John Blystone started many moons ago on the beaches of Ocean City, NJ where my dad was friends with John’s mom, Jean Marie. John started his own independent agency from scratch in Hatfield ( just down the road from ours). Ashmead maintained a close working relationship with The Blystone Group and three and a half years ago formally acquired the agency. The acquisition was a tremendous benefit for all parties. It gave John more time to do what he is great at – sell. And on Ashmead’s side, the partnership allowed us to transition some of my dad’s book to John as he looked to retire. It was, and continues to be, a great partnership all around.

Q. Tell us about the agency’s perpetuation plan. How long was your ownership in the works, and what steps did you take to implement the transition?

A. [Greg:] Perpetuation was talked about before I even started at Ashmead, and that was the main reason that I came over to the agency in 2018. The chance to work with Meg and put our stamp on something that already had been such a well-oiled machine was the major attraction. Once I started, Meg and I were brought into all management meetings and were given increasing responsibilities over the years. By the time the transition happened, we were already making the majority of the important decisions with the blessing of Bill and Jeanine.

Q. Did you use consultants or other outside help to streamline the transfer of ownership? If so, what did you find most beneficial?

A. [Meg:] We did have an insurance-centric third party put together a business valuation, and then we used a local attorney to help us complete the corporate documents.

Because we did everything well in advance, we were able to take our time and make sure all of the i’s were dotted and t’s crossed. Having plenty of time to review the business valuation and new corporate documents allowed for everyone involved to have an incredible level of comfort in the transfer of ownership.

Q. Overall, what advice would you give others who plan to perpetuate their independent agency?

[Meg:] To expand on what Greg said, we had such a unique opportunity to be brought into the decision-making process of agency management many years prior to the formal transfer of ownership, thanks to my parents. This allowed our team at Ashmead to get comfortable with the transition of ownership well before it was formalized.

In doing so, our amazing team felt well informed of the transition; there were no surprises. Having buy-in from your team is critical!

Q. What are your goals for the agency?

A. [Meg:] The sky is the limit for us. We want to thoughtfully grow the agency and build on the great foundation that has been laid here. Watching my parents methodically evaluate the impacts of every decision, big and small, set such an incredible example for us to take every situation (ups, downs, and in between) and give ourselves the space to think thoughtfully through the outcome we wish to see for the agency. We have short- and long-term goals for the agency. We plan to reevaluate those at the start of each year and appropriately plan (to the best of our ability) the steps we need to take to achieve those goals.

Q. Shameless plug! You’ve both attended the IA&B Young Agent Conference over the years. (Thank you for that!) We’re gearing up for the 2025 conference, so why would you recommend the event to others?

A. [Meg:] We think the conference is a great way to share ideas with young peers and learn what makes other agencies great. We have taken away many great ideas from the Young Agent Conference. The conference is always well attended by people who hold different roles within their agency, so you can hear many different perspectives all in one room.

Additionally, we have made lasting connections with peers in the room. When we were evaluating a new agency management system, we called on two friends we had made at the Young Agent Conference to get their take on the AMS they are using at their respective agencies. These types of relationships are invaluable! We plan to attend this fall with some of our team!

A. [Greg:] Identify the person internally early, and don’t be afraid to have the conversation with them about your intentions. Give them the increasing responsibility that we received and watch them flourish!

IABforME.com |

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AUGUST 2025

Thank You Franchise Value Model With limited appointments in each geographic area, your agency will have more opportunities to sell NJM Business Insurance.

Visit njm.com/become-an-agent to learn more. * Products not available in all states. Commercial excess and umbrella coverage is available only to NJM ProPack or ProEdge policyholders, subject to underwriting approval and underlying coverage requirements. †

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Key Factors That Impact Insurance Agency Valuations

BY IA VALUATIONS TEAM In the dynamic landscape of independent insurance agencies, understanding the many risk factors that influence agency valuation is crucial. These factors can significantly impact the value of an agency, whether it is being evaluated for internal perpetuation, external sale, or business planning purposes. In this article, we discuss six key factors that impact the valuation of an insurance agency so agency owners can improve the value of their operation and ensure a smooth transition.

We will start with big-picture external macro issues that agency owners have little control over but still have a meaningful impact on the value of an insurance agency. Then we will get into the factors that agency owners can control.

1

the timing of when they are planning to sell their agency.

These factors include:

External Economic Factors

External economic factors play a significant role in determining the value of an insurance agency. The old saying, “You can’t time the market,” also applies to insurance agencies. The timing of external economic factors and an ownership transition can have a uniquely meaningful impact on an agency owner depending on 16

• Supply and Demand: The number of buyers and sellers in the market directly affects agency values. A higher number of buyers compared to sellers can drive up the value. This also supports the interest of a seller in creating a competitive market for their agency. Seeking options when selling will drive greater value in the agency and ensure the owner finds the right suitor for their agency.

AUGUST 2025

AGENCY VALUATIONS • Availability of Capital: The ease with which buyers can access capital and interest rates influence acquisition activity and, consequently, agency values.

• Market Conditions: General economic conditions, such as inflation rates, the unemployment rate, consumer confidence, GDP, and market growth, have a bearing on an agency’s clients’ insurance purchasing decisions and therefore the agency’s bottom line.

2

Insurance IndustrySpecific Factors

The P&C insurance industry has been in the midst of a hard market going on for seven years. This has been great for agency revenues, however your clients and employees are growing tired of YOY rate increases. Several insurance industry-specific factors are crucial in assessing an agency’s value, including the following: • Profitability of the Insurance Industry: The overall profitability of the industry, particularly carriers in an agency’s lineup, will have an impact on its value.

• Carrier Relationships: The quality and diversity of relationships with insurance carriers are important.

3

Book of Business Factors

The composition and quality of an agency’s book of business are critical in determining an agency’s value. The following factors play a role in key factors related to an agency’s book of business: • Carrier Concentration: Agencies with a diversified carrier portfolio (ideally 8-25% with any single carrier) are valued higher due to reduced risk.

• Client Concentration and Mix of Business: Agencies with a balanced client base, where no single client accounts for a large percentage of revenue (over 5%), are preferred. In addition, agencies with a balanced book of business between commercial lines (CL) and personal lines (PL) reduce risk. An ideal percentage of mix is 55% CL and 45% PL. • Age of the Book: The age of the book influences valuation. Older books with long-standing clients may be seen as stable, but there is a risk if these clients are tied to retiring owners. Meaning, if the book of business has an average age of 67 similar to the selling principal, it will be a greater concern to a buyer. An aging book likely means less risk and accumulation of assets.

Agencies that are heavily reliant on a single carrier may be viewed as higher risk, particularly during a hard market stretch where carrier profitability is under stress.

In addition, carriers that turned off new business and implemented restrictive underwriting practices create vulnerabilities for agencies that are overly reliant on one or two markets.

• Market Conditions: Factors such as the hard market, catastrophic losses, and rate increases impact the overall industry and, by extension, individual agency values.

4

Agency Staffing & Generational Health

The structure and health of the agency’s staff are pivotal to determining value. In many acquisitions, a buyer is looking to acquire talent as much as they are looking to acquire the book of business. Therefore, agency owners should pay particularly close attention to the following factors:

Continued on page 18 IABforME.com |

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Continued from page 17 • Generational Health: A diverse age range among staff ensures continuity and reduces risk. Agencies with a mix of younger and older employees are better positioned for long-term success. Having an infrastructure that supports experience and mentorship will be beneficial to talent development and staff retention.

• Non-Owned Books of Business: Agencies with clear agreements and ownership of their books of business are valued higher. Handshake deals and informal arrangements can be problematic and are often deal breakers for agency owners.

• Employment Agreements: Having formal employment agreements, including non-piracy and non-solicitation clauses, helps secure the agency’s value by ensuring key staff remain with the agency post-sale. Almost every buyer will require staff to sign an employment agreement in order to complete a purchase.

5

Growth, Retention, & Profitability

Operational metrics and profitability are critically important to determining an agency’s value. The following factors are essential in the value equation: • Annual Growth Rates: Consistent organic growth is a strong indicator of an agency’s health. Agencies that can demonstrate steady growth are valued higher.

• Retention Rates: High client retention rates (typically in the low 90s) are indicative of client satisfaction and stability. These types of agencies give confidence to a prospective buyer and will garner greater valuations than those with retention rates in the 80s and below.

• Profitability Metrics: Detailed financial metrics, such as EBITDA margins, provide a clear picture of the agency’s financial health and operational efficiency. An agency’s ability to generate consistent profits through strong revenue growth and expense management is a key determinant. The average EBITDA profitability margin for insurance agencies is 26%.

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6

Agency Culture, Operations, & Technology Systems

The final factors are arguably the most important, particularly culture. Owners have the greatest control over these factors, but oftentimes they are the most difficult to quantify. The factors include: • Culture: The agency’s culture, including its sales and service culture, impacts its attractiveness to buyers. A positive, growth-oriented culture is a significant asset.

• Transition Planning: Agencies with a clear transition plan for their owners are better positioned for valuation. Those with multiple owners also increase value and typically show a commitment to talent development and the next generation.

• Technology Systems: Agencies that are technologically advanced, utilizing modern CRM systems and going paperless, are more attractive to buyers. Efficient technology systems streamline operations and reduce costs.

Conclusion Valuing an insurance agency involves a multifaceted analysis of various risk factors. External economic conditions, insurance industry-specific dynamics, the composition of the book of business, staffing and generational health, and operational metrics all play critical roles. Agencies that proactively manage these factors, maintain robust financial health, and plan strategically for the future are positioned to achieve higher valuations.

If you are interested in learning how these factors influence your insurance agency valuation, please reach out to Jodie Shaw at jodie@iavaluations.com.

AUGUST 2025

About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 300 valuations to independent insurance agencies across the U.S. Our advisors have 25+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition.

In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process.

Agency Link is a platform that connects buyers and sellers together to further the growth and strength of the IA system. To learn more about IA Valuations, please visit IAValuations.com or contact@iavaluations.com.

The information provided in these documents is general in nature and shall not be construed as personal legal, tax or financial advice for your situation. Please contact@iavaluations.com to discuss your personal situation.

Copyright ©2025 by IA Valuations and Ohio Insurance Agents Association (OIA). All rights reserved. No portion of this document may be reproduced in any manner without the prior written consent of IA Valuations or OIA. In addition, this document may not be posted as a link on any public or private website without the prior written consent of IA Valuations or OIA.

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PRIMARY AGENT Editor: Karen Robison KarenR@IABforME.com 717-918-9209 Contributing editors: Jennifer Ross, Megan Fioretta, Sarah Haas Sales Account Executive: Rebecca Sieg | 717-430-2351 rebecca.sieg@theygsgroup.com

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