Thriving Insurance Brokerage Industry: 5 Stocks to Keep an Eye On
The insurance brokerage industry is currently enjoying a period of robust growth. Several factors are contributing to this positive trend, including better pricing strategies, careful underwriting practices, and the expanding demand for insurance products across the globe. This traditionally fragmented industry is also undergoing rapid consolidation, creating opportunities for key players. Furthermore, increased digitization is expected to enhance efficiency and boost profitability within the sector.
This article highlights five prominent companies poised to capitalize on the dynamic shifts within the insurance brokerage landscape. These companies are expected to see benefits from the industry’s expansion.
The Insurance Brokerage Landscape
The insurance brokerage industry encompasses companies that primarily offer insurance and reinsurance products and services. These brokers act as intermediaries between clients and insurance providers, offering advice and representing their clients’ interests while earning fees. Their performance closely mirrors their clients’ business activity levels.
According to a report by Mordor Intelligence, the insurance brokerage market is projected to reach $331.96 billion in 2025, with an expected climb to $395.41 billion by 2030. This represents a compound annual growth rate (CAGR) of 3.56% during the forecast period (2025-2030). Further advancements in digitization are expected to smooth the industry’s operations.
Key Trends Shaping the Future
Several key trends are driving the growth and transformation of the insurance brokerage industry:
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Increased Demand for Products: Operational results for industry players are tied to their clients’ business activities, which in turn, rely on the overall economic health of the markets they serve. The demand for insurance products is also driven by growing awareness. In response, industry players are broadening their global presence, cross-selling products, adjusting pricing strategies, refining underwriting standards, and developing products that align with customers’ risk appetites. This includes the growing demand driven by an aging population for retirement benefit products, as well as an increased interest in medical, life, and accidental insurance. According to Mordor Intelligence, the expanding awareness of insurance policies is a significant driver of market growth.
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Mergers and Acquisitions: The industry is rapidly consolidating. According to Mordor Intelligence, mergers and acquisitions are a key driver. The historically fragmented industry is experiencing a wave of consolidation, partially fueled by the need for companies to specialize in their offerings. Other factors include private equity investments, increasing competition, and slower organic growth. Willis Towers Watson’s research anticipates an increase in mid-market mergers and acquisitions in 2025.
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Increased Adoption of Technology: Insurance brokers are embracing digital tools to improve policy management, streamline claims processing and enhance customer interactions. Insurers are collaborating with insurtech firms to accelerate the integration of innovative technologies like artificial intelligence (AI), machine learning, blockchain, and the Internet of Things (IoT). The increased use of data analytics and AI integration allows brokers to offer personalized services, enhance operational efficiency, better manage risk, and streamline their operations. Deloitte estimates that insurers could generate around $4.7 billion in annual global premiums from AI-related insurance by 2032, growing at a CAGR of nearly 80%. However, investments in technology can also increase costs.
Zacks Industry Rank and Market Performance
The Zacks Insurance – Brokerage industry is part of the broader Zacks Finance sector. It currently holds a Zacks Industry Rank of #45, positioning it among the top 18% of over 247 Zacks industries. This ranking indicates positive near-term prospects, as studies show that the top-performing industries outperform the bottom ones by a factor greater than 2:1.
The industry’s strong ranking reflects a positive earnings outlook for its constituent companies. Analysts are optimistic, with earnings estimates for the industry increasing by 3.3% in 2025 over the past year.
Industry Performance vs. Sector and S&P 500
Over the last year, the insurance brokerage industry has outpaced both its sector and the broader market, demonstrating its strength in the current environment. The industry has seen a collective rise of 27.7%, compared to a 16.1% increase for the Finance sector and a 9.1% boost for the Zacks S&P 500 Composite, during the same period.
Valuation
Based on a trailing 12-month price-to-book (P/B) ratio, a common valuation metric for insurance stocks, the industry is trading at 6.68X. This compares to the Zacks S&P 500 Composite at 7.97X and the sector at 4.06X. Over the last five years, the industry has ranged from a high of 8.17X to a low of 4.96X, with a median of 6.84X.
5 Insurance Brokerage Stocks to Watch
The following stocks are worth monitoring. These stocks represent a snapshot of the industry and are rated either a Buy or Hold by Zacks:
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Erie Indemnity Company (ERIE): This Erie, PA-based company operates as a managing attorney-in-fact for subscribers at the Erie Insurance Exchange. With a market capitalization of $21.43 billion, its focus on improving the combined ratio through strategic actions is expected to fuel growth.Erie Indemnity holds a Zacks Rank #2 (Buy).
- The Zacks Consensus Estimate for 2025 earnings indicates a 24.9% year-over-year increase.
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Brown & Brown, Inc. (BRO): Headquartered in Daytona Beach, FL, Brown & Brown, with a market capitalization of $33.89 billion, markets and sells insurance products and services across the United States, London, Bermuda, and the Cayman Islands. The company holds a Zacks Rank #3 (Hold).
- Brown & Brown’s earnings have grown 21.5% in the past five years.
- The expected long-term earnings growth rate is 9.1%.
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Marsh & McLennan Companies (MMC): Headquartered in New York, Marsh & McLennan, with a market capitalization of $114.09 billion, provides advice and solutions relating to risk, strategy, and people worldwide. The company holds a Zacks Rank #3 (Hold).
- Marsh & McLennan’s earnings have grown 13.4% in the past five years.
- The expected long-term earnings growth rate is 8.6%.
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Arthur J. Gallagher & Co. (AJG): Based in Itasca, IL, Arthur J. Gallagher, with a market capitalization of $84.50 billion, is a major player in the insurance brokerage space. The company holds a Zacks Rank #3 (Hold).
- Arthur J. Gallagher’s earnings have grown 20.4% in the past five years.
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Aon plc (AON): Based in Dublin, Ireland, Aon (market capitalization $84.31 billion) offers risk management services, insurance and reinsurance brokerage, human resource consulting, and outsourcing services worldwide. The company holds a Zacks Rank #3 (Hold).
- Aon’s earnings have grown 11.4% in the past five years.
- The expected long-term earnings growth rate is 10.7%.
