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Every year, insurance agency owners sit down to plan for growth. Spreadsheets come out, revenue goals are set, and forecasts start to take shape.
Here is the truth: you cannot build a 2026 plan that works if your numbers do not make sense.
Many agencies are building their future on messy financials. Reports are not categorized correctly. Payroll hides true costs. Benchmarks are pulled from someone else’s presentation instead of their own data. When that happens, the plan becomes guesswork.
This guide will walk through how to make sense of your insurance agency's financials, how to read your P&L, and how to use industry benchmarks to build a data-driven plan for the year ahead.
1. Your P&L Should Tell a Story, Not Confuse You
Your profit and loss (P&L) statement is more than a report. It is the story of your agency’s performance.
Most agency owners did not build their careers in finance. They built them through relationships, sales, and service. But if your P&L is not structured properly, it can hide the information that matters most.
Start by reclassifying your financial statements to match industry benchmarks. Group your numbers into standard categories:
- Compensation (payroll, taxes, benefits, retirement)
- Selling expenses (marketing, travel, entertainment)
- Operating expenses (rent, utilities, IT, supplies)
When your P&L aligns with the benchmark format, you can make meaningful comparisons with similar agencies and see where you are strong, where you are overspending, and where improvement is needed.
2. People Are Your Biggest Expense and Your Biggest Opportunity
Payroll is usually the largest expense in an insurance agency, often accounting for more than half of total revenue.
If your compensation is well above the benchmark, that might mean the agency is overstaffed, producer pay is too high, or house accounts are not structured correctly. It could also mean you are investing in people ahead of growth. The key is understanding what drives the difference.
Compare your payroll percentage to growth rate and profitability to understand what is really happening. When these numbers are analyzed together, they reveal whether your team structure supports growth or limits it.
3. Benchmarks Only Help When You Use Them Together
Financial benchmarks are most powerful when viewed in context. Looking at one metric in isolation rarely gives the full picture.
Ask questions such as:
- If I am spending more on technology, is it improving efficiency and reducing payroll?
- If I am outsourcing accounting or IT, do I see that cost reflected in professional fees instead of W-2 payroll?
- If my marketing spend is low, am I still growing through referrals or retention rather than advertising?
Benchmarks should guide your thinking, not serve as rigid rules. The goal is to understand how your decisions connect and whether your resources are being used in ways that support your goals.
4. The Key Financial Metrics Every Agency Should Track
Once your data is clean and categorized, focus on a few essential metrics that show the health of your agency:
- Organic Growth Rate: Measure how much your core business is growing year over year, excluding acquisitions or one-time income.
- Retention Rate: Calculate retention by both revenue and policy count. Carrier reports often miss rewrites and moved accounts, so your internal process matters most.
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): The clearest measure of operating profitability and the foundation of your agency’s valuation.
- Revenue per Employee: Indicates efficiency and capacity. Agencies that use technology or virtual assistants well often see this number rise.
Each of these metrics highlights a different part of your business. Together, they create a full picture of performance and sustainability.
5. Building a 2026 Plan That Works
Once you have organized your P&L and reviewed your benchmarks, planning becomes far more strategic.
Start your 2026 plan by asking, “What do my numbers show I can sustain, and what needs to change to grow?”
That question forces a realistic look at where you are today before deciding where you want to go. It also helps you build a plan rooted in data instead of assumptions.
When you know your numbers, you can:
- Reallocate expenses with confidence
- Set achievable hiring or technology goals
- Adjust producer compensation intentionally
- Invest in areas that create measurable impact
6. The Payoff: Confidence in Every Decision
Understanding your financials is not just about accounting accuracy. It gives you control and confidence as a business owner.
You will make better decisions, negotiate from a stronger position, and lead with clarity. Clean financials also make your agency more valuable when planning an internal perpetuation, exploring an acquisition, or preparing for a future sale.
When your data is accurate, your direction is clear.
Ready to Take the Next Step?
We recently released an on-demand class:
Financial Game Plan for 2026: How to Read Your Insurance Agency Financials and Plan for Growth
You will learn how to:
- Organize your P&L into benchmark categories
- Compare your agency’s metrics to peers
- Calculate organic growth, retention, and EBITDA
- Build a realistic budget and financial roadmap
