The Impact of Insurance Aggregator Consolidation

Insurance aggregator consolidation is happening at a rapid pace. Every week, it seems like a new merger and acquisition (M&A) deal has gobbled up another company. Both individual agencies and the networks that serve them are undergoing consolidation. Find out what this means for insurance agency networks and your agency.

M&A Activity Is High

According to Bain & Company, 2021 was a blockbuster year for M&A deals. This trend continued in the first half of 2022. Although the Federal Reserve’s interest rate hikes midway through the year did cool M&A activity somewhat, deal volume only dropped by 12%.

PwC says M&A activity tends to slow amid market volatility and uncertainty. Fears of a looming recession and rising interest rates are key factors right now. Nevertheless, 60% of respondents to the Global CEO survey said they don’t plan to delay deals. Within financial services, 65% said they don’t plan to delay deals.

Some Major Deals Have Rocked the Insurance Sector

Insurance agency owners know the value of M&A deals. When agencies want to grow, an insurance agency consolidation can be the most effective way to obtain new business and expand into new lines and regions. When agencies want to sell, an acquisition can be a solid exit strategy and a way to capitalize on all the hard work the agency owner has accomplished.

M&A deals are also attractive to insurance agency networks, aggregators, and clusters. Some of the recent deals that have impacted major insurance agency networks include:

  • Odyssey Investment Partners, a private equity firm, acquiring Strategic Insurance Agency Alliance (SIAA) in 2021, as reported inInsurance Journal.
  • SIAA acquiring three independent agency networks in 2022: Deforest Group, North American Insurance Alliance and Michigan Agency Partners.
  • First Choice Alliance combining with MarshBerry Platform in 2022.
  • Keystone Insurers Groups announcing a merger with New Jersey Agents Alliance in 2022.
  • Renaissance Alliance acquiring Agency Network Exchange and United Valley Insurance Services in 2022.
  • SecureRisk partnering with Georgia Agency Partners, creating the fourth largest agency partnership in the nation, according to Insurance Business.

What Happens After a Network Merger or Acquisition?

Insurance Journal says SIAA had signed 527 new member agencies the year before its acquisition by Odyssey Investment Partners. What happens to agencies when another company acquires their network?

M&A deals offer a fast and effective way for businesses to grow and gain additional resources. At the same time, these deals can be extremely disruptive for the employees, clients, and other individuals involved.

The level of disruption varies. Some acquiring companies strive to keep the status quo more or less the same – at least in the immediate future – whereas others may bring in sweeping changes right off the bat. Employees may discover they are no longer needed, and policies may change. Insureds that are used to personalized agency support may be transferred into a service center where their only line of help is a 1-800 number. Agency owners working with a network or aggregator might see their contracts or access change.

For these reasons, insurance agency network acquisitions can be a source of worry for agency owners who belong to the network. Agency owners will have spent time selecting the right network for their needs; now, the things that attracted them to the network in the first place might change. Whether they’ll be happy with the changes is unclear. In the meantime, they may be thinking about leaving the network and considering how much strain an exit will put on their businesses.

A Stable Option Amid a Chaotic Time

The current economic situation may cause M&A activity to cool slightly, but deals are still possible – it’s likely more will occur in the coming months and years. This may be good news if you’re hoping to buy an agency or sell your agency in the near future. However, if you’re looking for stability, it may be a source of concern.

If you want a stable insurance network amid the widespread insurance agency consolidation, turn to Heffernan Network.
Heffernan Network is a privately held company. We’re owned by a top national retail agency, and all our staff have either owned independent agencies or operated as insurance brokers in the past.

As a result, we understand the needs and concerns of the agencies we serve. We’re a strong partner with key wholesale relationships to help you serve your clients. We can help with both traditional insurance and E&S needs.

Our mission is to help local/regional insurance agencies grow – and we’re in it for the long haul. We are not planning to sell to a larger agency network. If that sounds like the kind of stable relationship and support you need, reach out to us to learn more.