Commercial vs. Personal Lines: What Drives Insurance Agency Valuation?

When it comes to insurance agency valuation, many owners assume that the line of business (commercial vs. personal lines) is the biggest factor.

While it does play a role, it's far from the full story.

In reality, your agency’s growth rate, scale, and leadership strength often matter more. Two agencies may look nearly identical on paper, but subtle differences in these areas can dramatically shift how buyers perceive value. This post breaks down the key factors that drive value—and why, under the right conditions, a personal lines agency can outperform its commercial counterpart.

Why Commercial Lines Agencies Typically Garner Higher Multiples

Buyers in the insurance M&A space often favor agencies with a strong focus on commercial lines. Here's why:

• Perceived Resilience to Disruption: Commercial lines are seen as less vulnerable to digital disruption, whereas personal lines are increasingly targeted by direct-to-consumer platforms and insurtechs.

  
  

• Stronger Client Retention: Commercial clients tend to have longer policy lifecycles and more entrenched broker relationships, driving higher retention and recurring revenue.

  
  

• Margin Expansion Opportunities: Acquirers often believe commercial lines offer greater potential for improving operational efficiency and expanding profit margins post-acquisition.

  
  

As a result, commercial-focused agencies can attract higher valuations and more competitive buyer interest.

Why Personal Lines Agencies Can Still Outperform

That said, under the right conditions, a personal lines-heavy agency can outperform—and even out-value—its commercial counterpart.rt.

Here’s when personal lines shine:

• Faster Growth Rates: If a personal lines agency is growing faster than its peers, buyers take notice. Consistent, compounding growth can outweigh lower multiples.

  
  

• Greater Scale: A larger personal lines book provides stable, recurring revenue—an attractive trait for both strategic and financial buyers.

  
  

• Strong, Youthful Leadership: Agencies led by principals with a long runway ahead often receive stronger offers. Buyers value leadership continuity and succession planning—especially in personal lines, where relationships still drive retention.

In short, it’s not just about what you’re selling, it’s about who’s running it, how fast it’s growing, and where it’s going.

Why Line of Business Isn’t the Only Driver of Insurance Agency Valuation

The key takeaway? Your agency’s scale, growth trajectory, and leadership strength matter—regardless of whether you focus on commercial or personal lines.

Buyers look at the full picture:

• Is the agency positioned for continued growth?

• Is there a strong leadership bench in place?

• Is the value proposition differentiated and defensible?

• Is the book of business diversified and resilient?

While commercial lines may have a slight edge on average, well-run, future-focused personal lines agencies are just as capable of commanding premium valuations.

Preparing Your Agency for an Exit

If you're considering a sale—whether your agency is commercial, personal, or both, it’s critical to understand what truly drives value in the eyes of buyers.

At Legacy Advisors, we help agency owners evaluate their current position, enhance their value drivers, and run a competitive process tailored to their goals.

Let’s talk about how you can position your agency for the strongest outcome.

Legacy Advisors is the only M&A advisor dedicated solely to sell-side insurance deals.

With a team comprised of successful ex-agency owners and experienced private equity investors, Legacy Advisors was founded on the mission of helping agency owners make more confident decisions in their journey to a sale.

Most clients begin with an introductory call to ask general questions, discuss market trends, and learn more about our process. If it makes sense for both parties, we then offer business valuations at no charge.