Seven Steps to Increasing Your Agency Profitability in 2026 

• By: Nancy Germond
• March 31, 2026

Running a successful insurance agency requires many skills. Building success is more than simply securing new clients. A successful agency management plan is a strategic approach to profitability, efficiency and growth. In today’s competitive landscape, agencies must focus on high-value clients, improve internal operations and leverage opportunities like outsourcing, acquisitions and refinancing. 

This article explores seven actionable strategies to enhance your agency’s financial health to build long-term value. From implementing account guidelines to prioritizing higher-commission carriers, developing talent and exploring mergers and book acquisitions, these insights can help you navigate challenges and unlock your agency’s full potential.  

Whether you’re looking to streamline operations or position your agency for future success, these tips offer a roadmap to thrive in a rapidly evolving industry. 

1. Implement Account Guidelines 

Many agents, especially newly licensed agents, chase every lead, regardless of the quality and income potential of that lead. This approach usually leads to a discouraged agent, wasted time and reduced return on their time investment. To increase profitability, your agents must transition from a number-of-clients mindset to a profitability mindset. 

Develop agency guidelines for the customers you decide to quote. And if they’re “difficult” during the quoting process, carefully consider if you want them for a customer. When you focus on quoting and winning only potentially profitable accounts, your service costs decrease, retention rates increase and your employees will be much happier with a less burdensome clientele.  

Citing extensive research from Roger Sitkins private client group of larger agencies, they discovered a dramatic reality facing insurance agencies. “What we found was that the top 25% of the customers are 88% of the revenue,” Sitkins explains. “The next 25% are only 8%, but that means the top 50% of the customers are 96% of the revenue.” With statistics like that probable in your agency, why focus on that lower 50% as determinedly as you do that top 50%? 

However, remember that defining an “A” list customer and “B” list can present an errors & omissions exposure. Consider one of your “B” customers presents an E&O claim against your agency. Now consider if the plaintiff attorney requested any list that categorizes your clients, such as an “A” or “B” customer. That attorney would inevitably ask you, “Do you treat all your “B” list customers like this, Ms. Agent?” It is not a good look at deposition or especially if the case goes to trial.  

The Challenges of Serving High Net-Worth Clients 

High-net worth clients pose special challenges. In fact, there’s at least one high-net worth professional designation available. According to one E&O underwriter, high net-worth clients present different challenges and must be treated differently from ordinary customers.  

First, their real property tends to be high-end, and there may be more than one residence. Finding the correct carrier that will allow more than one primary residence can be difficult. Also, you must obtain the correct value of the property to be able to insure it properly. They likely have more toys, yachts, planes, high-end cars, etc. And they may scatter these toys around the country. 

Finally, they may have unique insurance needs you have never handled before. This type of dabbling is dangerous unless you associate yourself with someone who can walk you through the process.  

Finally, carefully evaluate wealth protection. Liability coverage for every exposure is a must. Determining all their liability exposures can be difficult. Do not assume you insure everything they have. They may have other primary insurance in place that you need to be aware of. 

Guidelines, Not Directives 

Establish some core account guidelines for your agency.  

• Minimum Premium Amount: Set a floor for the premium amount you are willing to quote and write. You may make exceptions for relatives, of course. However, you can’t treat them differently than other customers, for example, reminding them of late notices when you don’t notify other customers.  

• Screen out the price shoppers. Why quote people who only price shop the program each year? Ask in your initial conversation why they’re looking for other coverage and what lines of coverage they’re looking to move. Why quote a recreational vehicle or antique car when they have other lines of coverage with another carrier? As we say in the southwest, we want the whole enchilada.  

• Multi-Line Requirements: Avoid mono-line accounts. Consider a policy requiring a minimum of two lines of coverage or only quote the entire household or business account. This can avoid those expensive and unintentional coverage gaps and prevent their other agent from using a broker of record to take your account in a year or so.  

• Business Type: Clearly define the types of businesses you won’t write. While it’s tempting to quote that big manufacturer you met at your Rotary Club, if it’s not your specialty, it would be better to refer them to someone you trust or at least cowrite the account with an agent seasoned in manufacturing coverages. Specialization is key to becoming a larger commercial lines agency; however, most insurance experts now agree that stepping outside your area of expertise can be dangerous without partnering with an agent experienced in type of organization. 

• In personal lines, focus on preferred accounts eligible with your admitted markets when you can. While today’s experts tell us that a growing percentage, as high as 12% of both commercial and personal lines, went into the surplus lines market in 2024. Some industry experts predict that in high-risk zones, nearly half of homeowner policies may end up in the non-admitted market. 

• Lead Source: Don’t spend money on useless leads. While you’re probably deluged with marketers touting their ability to rank you higher with Google leads and other lead generation sources, you may be wasting time on internet price shoppers. It is understood these tire-kicker prospects rarely value coverage advice, probably have low retention rates and often require high-maintenance service for small commissions. 

2. Prioritize Higher-Commission Carriers 

I’m learning that carriers are changing their bonuses and contingency plans. Prioritize partnerships with carriers that offer competitive commissions and contingency bonuses. 

Agency owners place great value on compensation. According to a Vertafore survey, 64% of their insurance agency respondents found competitive commissions a “must-have when they select an agency partner. Negotiation is key. I once interviewed a very successful Arizona agent who admitted his average commission across his carrier partners was 16%. Granted, this was a few decades ago, but I recall his wife and business partner was upset that he disclosed that “above normal” commission rate.  

Focus on these key areas in your agency to boost contingencies. 

• Premium Growth: Writing more business leads to higher contingencies. 

• Client Retention: Keeping profitable existing clients means that you’re providing the valuable service they demand. It also means that your ability to keep clients through excellent year-long servicing and helping when claims don’t go as expected builds agency value and enhances your reputation.  

• Loss Ratio: Keeping low loss ratios increases carrier and agency profitability. Carriers rely on you, the agent, as their front-line underwriter. If you walk through a garage prospect and their floor is greasy, their mechanics use unsafe practices and they are dismissive to risk management suggestions; you know you’re going to insure a higher risk than a cleaner, well-organized garage. Do your due diligence so that “great prospect” does not hit your agency loss ratio. An agency known for its front-line underwriting receives quicker approvals from its underwriters, I believe. They know you are not bringing them poorly managed clients.  

By directing your business to partners that pay fairly, communicate quickly, and don’t treat your applications with a “doesn’t’ fit this box” rejection, you improve your margins and have more satisfied customers. In the big picture, your refusal to be treated less than fairly may help to improve the insurance marketplace. If agencies stop feeding low-paying carriers, this may force carriers to increase commissions to regain market share. Always ensure you follow your state laws on business placement; however, never undervalue the value and service your agency brings to the carrier. 

3. Focus and Develop Internal Talent While Always Scanning for New Hires 

Even in this employer-centric labor market, the insurance industry struggles to find and retain talent. Keeping your employees, even if they experience career bumps and family issues, can make your agency more competitive.  

In his article, Sitkins advocates redeploying existing staff to higher-value functions rather than hiring more employees. By addressing inefficiencies in both sales and service roles and using underutilized technology, agencies can significantly improve profitability. He reports one agency had 17 excess employees, representing $20.4 million in lost valuation. Right-sizing, Sitkins argues, is about placing the right people in the right roles to serve the most profitable clients, unlocking hidden value, and ensuring long-term success. 

Many human resources experts will say that compensation doesn’t matter to employees; that culture is what matters. However, many studies show that money motivates employees. They see how their agency owners live and understand you receive contingencies. If you are nickeling and diming your staff, it won’t be long before they’ll be seeking employment elsewhere, especially in this talent world where an agency in another state may woo them away with a remote job offer.  

Additionally, recent Liberty Mutual research found that insurance workers are increasingly suffering burnout as their workloads rise. 51% of those surveyed said they felt burned out, with 65% stating they “often feel stressed at work.” According to the report, “burned out agency employees are two times more likely to seek a new role.”  

Even a small raise may be enough to help employees who face increasing rent payments, food costs and childcare costs.  

4. Cross-Sell Well 

Here are my five main reasons to cross-sell. You can think of more.  

1. To earn more premium. 

2. Your clients are better protected against risk. 

3. To guard against an E&O claim by not offering a coverage or an endorsement to broaden existing coverage. 

4. Cross-selling keeps you in touch with your customers and builds a stronger client bond. 

5. To position yourself as highly experienced in an industry or with a particular client type, e.g., high net-worth clients or artisan contractors.  

Cross-selling occurs in many scenarios. You may insure a new professional services business that, as it grows, adds employees and office space. However, your client may not understand that in many states, adding even one employee, even if they’re a family member, requires workers’ compensation insurance.  

Often, the last thought on your client’s mind is “I wonder if this step impacts my insurance?” The more you talk with your clients, the more you’re learning what they may have bought or changed in their business that may impact their coverage.  

The annual review of your client’s policies is one way to discover coverage gaps. However, a phone call or an onsite meeting with commercial clients may allow you to spend more time and view their facility, which can lead to surprises, such as a new building, improved signage, or enhanced security.  

Cross-selling should include some questions about your client’s life and health insurance needs. If you are a P&C agent, consider partnering with a life and health agent you trust to help your clients consider coverages like key person insurance or long-term care coverage. 

Your current book of business can be a goldmine if you take the time to mine it.  

5. Leverage Outsourced Staffing 

In a tight labor market, hire key talent stars when you can. However, before you hire, can you find temporary talent that can help bridge those busy times? While large corporations outsourced globally for decades, modern agencies now turn to global outsourcing to significantly reduce overhead. 

Key Benefits and Reasons to Outsource. 

Reasons to outsource include fixed labor costs, less turnover, less training needs in most cases, and of course, less overhead. But risks outweigh financial gains if your outsourcing generates an E&O claim.  

Benefits include the following.  

• Cost Savings: A 2024 ISG report found that outsourcing savings for insurance programs averaged 15%, and policy administration and processing automation generated savings of 30-40%. Businesses with substantial outsourcing as a full strategy may reduce operational costs by 40-50% within 12 to 24 months, this report found. 

• Reduced HR Burden: The outsourcing provider provides their employees with benefits, payroll, workers’ compensation insurance and HR management. 

• Operational Efficiency: Using outsourced staff for back-office tasks like rating and market placement can provide your key team members with time to focus on client relationships, risk management offerings and sales. Organizations like wahve offer expertise from retired or unemployed insurance professionals. Consider bringing back a recent retiree to help at peak times or to assist in training newer hires.  

Agencies often underserve their best customers while overserving less profitable accounts, resulting in inflated costs, reduced revenue per employee, lower agency profitability, and ultimately, agency value. 

6. Grow Through Acquisition 

Mergers and acquisitions have heated up again since the end of COVID-19. However, you don’t have to buy an agency to acquire; buying a book or books of business as agents retire or change careers is another solid growth strategy. Buying another agency or a book of business is a quick route to increased profitability and in this current market, new carrier access. With economies of scale, as your revenue grows, your fixed expenses — such as location expenses, management systems and E&O insurance — often remain relatively flat, decreasing your expense ratio. 

Additionally, increased premium volume can put you in a more lucrative profit-sharing tier with carriers. Any acquisition could push your total volume over a threshold that qualifies you for added bonuses and increased profits, potentially thousands of dollars in profit-sharing bonuses not triggered by your current premium volume. 

Mergers and acquisitions are not without threats, however. Experts report increased E&O claims as agents cannot always vet the book they buy as thoroughly as perhaps they should. Time constraints in M&A sometimes create decision deadlines. Errors in insurance coverage and contractual issues regarding “tail” business can also be problematic. It’s critical that you involve your current or future E&O carrier in that process to help guide you in coverage decisions.  

Due to the challenges agencies face when buying a book or agency, Big “I” University in conjunction with Big “I” Professional Liability developed an in-depth handbook to help your agency integrate new procedures, a new management system if applicable and new employees. It’s available at this link.  

7. Effectively Manage Agency Debt 

If you carry high-interest loans, it may be time for you to search for new revenue sources that better understand the agency’s environment. With interest rates fluctuating and your business credit score improving over time, refinancing presents a low-effort opportunity to save thousands. 

Turn to a lender that specializes in working with independent insurance agencies, such as InsurBanc. A skilled agency lender will review your financials, including your book of business, then decide to offer certain terms based on their understanding of your business.  

The Time is Now 

We know you’re busy bringing in new business. However, operating without a diligent eye on and at least an annual deep dive into your financials can be disastrous for your agency. Your agency may never reach its full potential if you don’t focus on the financials. Reviewing these seven areas can lead you toward greater financial stability and greatly increase the value of your agency when it’s your turn to sell. 

Copyright © 2026, Big “I” Virtual University. All rights reserved. No part of this material may be used or reproduced in any manner without the prior written permission from Big “I” Virtual University. For further information, contact nancy.germond@iiaba.net.