The era of insurance brokerages buying agencies as quickly as possible and relying on rising premiums to support growth is fading, according to Sunstar Insurance Group CEO Adam Meyerowitz (pictured), as a softer commercial market and higher financing costs force consolidators to become more selective.
Meyerowitz said the brokerage operating environment has changed markedly since around mid-2024, challenging an acquisition strategy that became common when interest rates were low, capital was abundant and commercial insurance pricing was rising.
“When there was a capital environment where interest rates were really low, capital was readily available and a rising insurance market pricing environment, a lot of organizations had more of a velocity-driven acquisition strategy,” he told Insurance Business, noting that acquired agencies “would naturally grow.”
This model is becoming harder to sustain as brokerages lose some of the premium-driven revenue growth provided by the hard market.
“The operating environment has changed dramatically, probably since mid-2024, where that former model doesn’t help you build the type of platform you want to build and create the value you want,” Meyerowitz reflected. “If you buy so many agencies, it’s really difficult to integrate along the way.”
Sunstar has completed around 60 acquisitions during more than 13 years, according to Meyerowitz, a pace he contrasted with higher-volume consolidators. Every acquisition has been integrated into the broader business, including through a common agency management system, technology stack and data infrastructure.
The next phase involves deeper integration around industries and business lines, including property and casualty, employee benefits and private client.
Commercial pricing moderation adds another complication for brokerage growth strategies. During the harder phase of the market, higher client premiums could translate into increased commission revenue even without equivalent growth in account numbers.
Meyerowitz said softer conditions increase the pressure on brokers to generate growth through sales, capabilities and client retention instead. “When the market is softer and we’re not getting those natural tailwinds to our own financial performance, it puts a heightened intentionality around how you are driving growth and how you are driving sales,” he said.
It’s also changing what agencies may want from a potential buyer. Technology remains part of the equation, including access to AI tools, but Meyerowitz said conversations increasingly revolve around whether joining a larger platform can help agencies grow their books, improve placement and create career opportunities for employees.
Talent is simultaneously becoming one of the industry’s biggest constraints. Meyerowitz described the “war for talent” as one of the largest challenges crossing his desk, particularly as brokerages compete for producers and experienced insurance professionals. Sunstar is watching for producers who become dissatisfied after their firms are absorbed into larger organizations, alongside agency owners looking for a different type of partner.
“What we’re trying to accomplish is to build a forever company,” the CEO said. “As long as we keep our eye on that ball, the rest of the consolidation elements of our strategy fall into place.”
Sunstar expects its own acquisition strategy to accelerate, while maintaining its focus on integration and selective partnerships rather than transaction volume for its own sake. The brokerage is looking to continue expanding in the Southeast and Midwest while also entering the Mid-Atlantic, with commercial P&C, employee benefits, private client and alternative risk among its target areas.
Most recently, it marked its entry into Minnesota, with the acquisition of RJR Faribo Insurance Agency. Based in Eden Prairie and Faribault, RJR Faribo brings 22 employees and a long history of serving businesses and individuals throughout the state.
“There are a lot of interesting transactions going on, some of the largest deals that have ever taken place in our industry,” Meyerowitz said. “I think that bodes well for insurance distribution. It’s always been a healthy, vibrant, growing segment of the overall American economy.”
