For much of the past decade, property and casualty (P&C) insurance brokers benefited from one of the longest hard market cycles in recent history. Sustained commercial insurance rate increases across coverages provided a significant tailwind to organic growth, allowing brokers to generate meaningful revenue expansion without new business production. According to MarshBerry data, from 2022 through 2024, the average insurance broker (which includes both P&C and L&H firms) generated 9.4% annual organic revenue growth, with 7.5% attributable to rate increases and exposure growth, leaving just 1.9% in underlying ‘real’ organic growth.
That environment has now shifted. Following years of sustained commercial insurance premium increases, pricing conditions have softened materially, with outright rate declines emerging across several lines of coverage. Global commercial insurance rates declined ~6% in the second quarter of 2026, marking the eighth consecutive quarter of decreases. Property rates fell ~12%, although casualty remains an important exception.1 As these tailwinds fade, P&C brokers increasingly face the challenge of replacing rate-driven growth through new business production, improved client retention, and expanded advisory capabilities.
Meanwhile, life and health (L&H) distributors – including employee benefits (EB) brokers and health-focused specialty intermediaries – face a different environment as healthcare costs continue to rise. While higher healthcare costs do not translate as directly into revenue growth as premium increases do for P&C brokers, they create opportunities for L&H firms to strengthen client relationships, capture new business, and expand fee-based advisory services by helping employers and individuals navigate increasingly complex and costly healthcare decisions
As a result, these diverging market dynamics are reshaping the drivers of organic growth across insurance distribution, placing greater emphasis on differentiated capabilities, client retention, and the ability to deliver measurable value.
The organic growth gap is narrowing
Over the past five years, P&C brokers have, on average, generated stronger organic revenue growth than L&H distributors, in part reflecting differences in how rising insurance costs translate into brokerage revenue. Commercial insurance rate increases helped drive average annual organic growth ranging from 8% to 12% for P&C brokers from 2022 through 2025, while L&H distributors experienced more consistent growth averaging roughly 6% to 9% annually over the same period.
Importantly, this divergence is not attributable to a lack of inflation in healthcare costs. Mercer reported that average employer health benefit costs increased 6.0% in 2025 to $17,496 per employee and projects another 6.7% increase in 2026, pushing costs above $18,500. PwC also projects a 9.0% group medical cost trend in 2027, its highest in 17 years.
Rather, the difference largely reflects how distributors are compensated. Many EB firms operate on a Per Employee Per Month (PEPM) basis, where revenue is driven primarily by covered employee headcount and negotiated fees rather than insurance premiums, with compensation structures also varying by geography and market. Conversely, distributors compensated as a percentage of premium may benefit more directly from rising healthcare costs.
However, as commercial insurance pricing softens, the historical growth advantage enjoyed by P&C brokers is beginning to diminish. Meanwhile, rising healthcare costs continue to create opportunities for L&H distributors to expand advisory services, deepen client relationships, and capture new business, contributing to a narrowing organic growth gap between the two segments.
Rising healthcare costs drive demand for specialized advisory solutions
As healthcare costs continue to rise, employers and individuals are increasingly evaluating alternative strategies to manage their insurance expenditures. According to Business Group on Health’s 2026 Employer Health Care Strategy Survey, 51% of employers surveyed were either changing or conducting request for proposals (RFPs) for health and well-being vendors. This willingness to reconsider existing arrangements creates both opportunities and risks for L&H distributors as clients seek more effective solutions to manage healthcare costs.
For EB brokers, opportunities include helping employers evaluate alternative funding arrangements, such as self-funded and level-funded health plans and group medical captives, as well as pharmacy benefit strategies, provider networks, plan design, and vendor relationships. These dynamics also create opportunities for wholesale general agencies that provide retail brokers with access to specialized products, alternative funding solutions, and technical expertise. In the individual and voluntary benefits markets, affordability concerns and potential coverage gaps may similarly drive demand for supplemental health products, ancillary benefits, and alternative coverage options.
However, translating these opportunities into new business is not always straightforward. In the current environment, L&H distributors are achieving higher average sales velocity than P&C brokers (14.7% versus 13.3%), as they continue to capitalize on shifting market dynamics.
Notably, the gap between average and top-quartile performers is considerably wider for L&H firms (14.7% versus 28.9%) than for their P&C counterparts (13.3% versus 19.4%). This disparity partly reflects differing investment priorities, as some L&H firms have increasingly focused resources on consulting, technology, and client service to strengthen retention, potentially at the expense of investing in sales talent and new business development.
Changing growth dynamics could shift M&A attention
Historically, insurance brokerage M&A has been heavily concentrated in P&C, which accounted for approximately 65% of announced U.S. brokerage acquisitions in 2025, compared with 18% for EB and consulting firms. However, as the P&C pricing environment softens and organic growth becomes more challenging, buyers may increasingly look to L&H distributors for attractive growth opportunities. P&C-focused acquirers may also place greater emphasis on diversifying revenue streams through acquisitions in EB and other L&H segments, creating opportunities to cross-sell additional products and services across their existing client bases.
All transactions are announced deals involving public companies, Private Capital backed brokers, private companies, banks as well as others including Private Capital groups, underwriters, specialty lenders, etc. All targets are U.S. only. This data displays a snapshot at a particular point in time and has not necessarily been updated to reflect subsequent changes in prior years, if any. MarshBerry estimates that historically, a low percentage of transactions were publicly announced, but we believe that this has risen to over 50% today.
Conclusion
The changing market dynamics across P&C and L&H insurance distribution highlight an increasingly important distinction between market-driven growth and sustainable organic growth. For P&C brokers, softer pricing will place greater emphasis on new business production, client retention, and expanded capabilities. For L&H distributors, rising healthcare costs create opportunities for growth, but capitalizing on them will require investment in differentiated advisory and service capabilities while maintaining a focus on sales talent and new business development.
Across both segments, firms must be strategic about where they compete and how they deliver services, while carefully considering the impact of revenue leakage, fee compression, and pricing trends on their financial outlook. Firms that can balance disciplined new business production with scalable service delivery will be best positioned to generate sustainable growth, attract acquisition interest, and create long-term value. Conversely, those unable or unwilling to make the necessary investments may increasingly need to consider strategic alternatives, including divesting business lines they are not positioned to meaningfully scale.
