4 Insurance Brokerage Stocks to Watch Amid Increased Digitalization

The Zacks Insurance Brokerage industry is expected to benefit from better pricing, prudent underwriting, rising demand for insurance products and global expansion, which, in turn, have been driving revenues. The fast-paced consolidations in this traditionally fragmented industry are expected to benefit Brown and Brown, Inc. BRO, Marsh & McLennan Companies, Inc. MMC, Arthur J. Gallagher & Co. AJG and Willis Towers Watson Public Limited Company WTW.

Increased digitization should help the industry improve its basis points, scale and efficiencies.

About the Insurance Brokerage Industry

The Zacks Brokerage Insurance industry comprises companies primarily offering insurance and reinsurance products and services. Insurance brokers serve as intermediaries between clients and insurance providers, act on behalf of their clients and offer advice, keeping in mind clients' interests, against brokerage fees. Their business is directly linked to clients’ level of business activity. Some of these companies also provide risk management, third-party administration and managed healthcare services. Per a report by Mordor Intelligence, the global insurance brokerage market size is currently $328.47 billion in 2025 and is anticipated to reach $480.66 billion by 2030, witnessing a 9.47% CAGR during this period. Accelerated digitalization should help in the smooth functioning of the industry.

3 Trends Shaping the Future of the Insurance Brokerage Industry

Increased Demand for Products to Drive Revenues: The operational results of the industry players are dependent on clients’ level of business activity, which depends on the extent of economic activity in the industries and markets they serve. Thus, the growth of insurance brokers depends on the demand for insurance products, driven by increased awareness. Keeping this in mind, industry players are expanding globally, cross-selling products, improving pricing, tightening underwriting standards and designing products that are more appealing to customers and match their risk appetite. Better pricing ensures higher commissions for the industry players.

An increase in the aging population is driving the demand for retirement benefit products, while the rising population of baby boomers and millennials, along with increasing awareness, are boosting demand for medical insurance, life insurance, accidental insurance and other forms of insurance. Per a report by Mordor Intelligence, the growing demand and awareness for insurance policies among people boost the growth of the insurance brokerage market. Per the report, the increased demand reflects increased awareness among customers and the importance of insurance policies.

Mergers and Acquisitions: The insurance brokerage industry is witnessing fast-paced consolidation. Per a report by Mordor Intelligence, the insurance brokerage market is driven by persistently growing mergers and acquisitions. The industry has been traditionally fragmented, with a number of small players. One of the factors driving mergers and acquisitions is that companies need to specialize in their businesses. Some other factors driving mergers and acquisitions include the interest of private equity firms in this sector, growing competition and slow organic growth. 

Increased Adoption of Technology: Insurance brokers are adopting digital tools for improved policy management, claims processing, and better customer interactions. Insurance companies are teaming up with insurtech firms to accelerate the integration of innovative technologies like artificial intelligence (AI), machine learning, blockchain, and IoT. The increased use of data analytics and AI integration enables brokers to offer personalized services, boost operational efficiency, improve risk assessment, and streamline operations.

Accelerated digitization, robotic process automation, cognitive intelligence and blockchain should help insurers curb operational costs and aid margin expansion. This digital shift is expected to drive premium growth and boost efficiency. Per the Deloitte FSI Predictions article, insurers are likely to generate around $4.7 billion in annual global premiums from AI-related insurance by 2032, yielding a CAGR of nearly 80%. However, expenses associated with such investments increase costs and, in turn, the expense ratio. 

Zacks Industry Rank Indicates Bleak Prospects

The Zacks Insurance - Brokerage industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #160, which places it in the bottom 35% of more than 245 Zacks industries.

The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, reflects dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have been losing confidence in this group’s earnings growth potential. The industry’s earnings estimate has declined 16.3% for 2025 in a year.

Before we present a few securities and exchange stocks worth considering for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Underperforms Sector and S&P 500

The Insurance Brokerage industry has underperformed its sector and the Zacks S&P 500 Composite over the past year. The stocks in this industry have lost 17.6% in a year against the Finance sector’s growth of 18.8% and the Zacks S&P 500 composite’s appreciation of 19.9% over the same period. 

One Year Price Performance 

Current Valuation

On the basis of a trailing 12-month price-to-book (P/B), commonly used for valuing insurance stocks, the industry is currently trading at 4.28X compared with the Zacks S&P 500 Composite’s 8.47X and the sector’s 4.28X.

Over the past five years, the industry has traded as high as 8.38X, as low as 4.17X and at the median of 7.09X.

Trailing 12-Month Price-to-Book (P/B) Ratio

Trailing 12-Month Price-to-Book (P/B) Ratio

4 Insurance Brokerage Stocks in Focus

We are presenting four stocks currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brown & Brown: BRO, with a market capitalization of $31.45 billion and headquartered in Daytona Beach, FL, markets and sells insurance products and services primarily in the United States, as well as in London, Bermuda and the Cayman Islands. New businesses, better customer retention, premium rate increases across the majority of business lines, strategic acquisitions and a strong financial position should continue to drive growth for this insurer.

Earnings of Brown & Brown have grown 21.5% in the past five years, better than the industry average of 15.2%. The expected long-term earnings growth rate is 10.6%. The Zacks Consensus Estimate for 2025 and 2026 earnings indicates a 7.5% and 16.4% year-over-year increase, respectively. BRO has a solid track record of beating earnings estimates in three of the last four quarters and missed in one, the average being 5.64%. The stock has lost 7.6% over the past year.

Price and Consensus: BRO

 

Marsh & McLennan Companies: New York-based Marsh & McLennan, with a market capitalization of $100.02 billion, provides advice and solutions to clients in the areas of risk, strategy and people worldwide. This insurance broker is well-positioned to grow on significant investments and acquisitions made within its operating units, product launches, enhanced digital capabilities and new businesses. 

Earnings of Marsh & McLennan have grown 13.4% in the past five years. The expected long-term earnings growth rate is 8.3%. The Zacks Consensus Estimate for 2025 and 2026 earnings indicates an 8.8% and 8.2% year-over-year increase, respectively. The consensus estimate for 2026 earnings has moved 0.2% north in the past 30 days. This insurance broker delivered a trailing four-quarter earnings surprise of 2.92%, on average. The stock has lost 12.3% over the past year.

Price and Consensus: MMC

Price and Consensus: WTW

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Brown & Brown, Inc. (BRO): Free Stock Analysis Report
 
Marsh & McLennan Companies, Inc. (MMC): Free Stock Analysis Report
 
Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report
 
Willis Towers Watson Public Limited Company (WTW): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research