Life insurance has largely remained untouched by consolidation, but that’s starting to change.nathaphat/iStockPhoto / Getty Images
Consolidation has reshaped insurance distribution in Canada for more than a decade. Property and casualty (P&C) brokerages moved first, followed by group benefits, as scaled platforms such as Navacord Inc. and Westland Insurance Group Ltd., backed by private equity, executed aggressive roll-up strategies.
Life insurance has remained largely untouched, but that’s starting to change. The same forces that drove consolidation in P&C are now emerging. However, the market remains fragmented and structurally underdeveloped, creating friction and a compelling opportunity for those prepared to invest.
Why life insurance has lagged
At first glance, life insurance appears well-suited for consolidation. The market is large and fragmented, with roughly 115,000 registered life and health agents and thousands of independent practices across Canada.
However, structure matters more than size.
Unlike P&C or group benefits insurance, life insurance has historically been built around individual producers. Advisors own the client relationship, operate independently and are compensated primarily through large first-year commissions, with limited recurring income.
This structure creates three challenges:
- revenue is transactional rather than recurring, making cash flow less predictable and harder to value;
- businesses are founder-dependent, with client relationships tied to a single advisor, limiting transferability and increasing succession risk;
- and there’s little incentive to invest in infrastructure, as near-term production is prioritized over developing scalable systems.
These factors have made consolidating life insurance distribution difficult. Buyers seek stable, transferable earnings, which the traditional model doesn’t provide.
However, firms are now moving away from solo producers toward more institutional structures. Teams are forming, areas of specialization are emerging, and life insurance is increasingly being integrated into broader financial, tax and estate planning.
Firms are also expanding into adjacent services such as wealth and group benefits, creating more diversified and recurring revenue streams.
This shift is now showing up in transactions. In March, 2025, MNP LLP acquired Toronto-based Sterling Park Financial Group Inc., integrating its insurance specialists into MNP’s national platform to deliver a more co-ordinated offering across tax, estate, family office and insurance.
The role of carriers
Insurance carriers have already played a role at the top end of the market, in the managing general agency space, with Great-West Lifeco Inc.’s purchase of Financial Horizons Group and iA Financial Corp. Inc.’s acquisition of PPI Management Inc. That activity is now cascading further down the distribution chain.
In the past five years, carriers have invested heavily in digital underwriting and submission, raising expectations for speed, consistency and client experience. That favours firms that can operate on integrated platforms rather than individual advisors working independently.
At the same time, carriers are adjusting compensation to favour a broader mix of solutions across protection, risk, health and group benefits. Distribution is moving away from single-product sales toward more comprehensive coverage, often requiring specialist teams.
The implication is clear. The traditional solo producer model, built on one-time commissions and a narrow product focus, is becoming less aligned with how carriers want to distribute. And as distribution becomes more digital, diversified and planning-led, it becomes easier to scale and institutionalize.
Moving away from eat-what-you-kill compensation
Many advisors still operate with fragmented systems and limited visibility across carriers and client policies, making it difficult to manage relationships or demonstrate retention. Scalable platforms will require integrated data, digital underwriting and client-facing tools.
The advisory model must also evolve. Delivering across protection, risk and planning requires specialized expertise and a team-based approach rather than a single generalist.
Compensation is the final piece. The current model rewards short-term production over long-term client management. Building enterprise value will require more balanced structures, including shared economics and, in some cases, salaried components.
Moving away from an “eat-what-you-kill” model is not easy, but it is necessary.
Shifting valuations
Historically, life insurance practices were valued largely on multiples of renewal commissions. As consolidation accelerates, buyers are placing greater emphasis on client quality and ongoing cash flow from both renewals and future production.
At the same time, options to monetize or exit a practice are expanding, while increasing client complexity is creating an incentive to partner and operate in teams.
Advisors who invest in that model will have more strategic options and command greater value. Those who don’t risk being left behind, competing against firms with stronger capabilities and more stable economics.
P&C demonstrated what happens when a fragmented industry becomes scalable. Life insurance is now approaching that same inflection point.
Joe Millott is a partner at Fort Capital Partners, an independent investment bank that specializes in wealth and asset management mergers and acquisitions, with offices in Vancouver, Calgary and Toronto.