Guides / Insurance

Insurance book of business valuation: a complete guide

Canadian life insurance blocks are priced on renewal or commission income, not on assets. The published index runs 3x to 5x annual renewal commissions by in-force premium, larger practices trade on EBITDA, and the single biggest surprise for buyers is that the carrier may keep paying the originating advisor.

Key takeaways

• The published Canadian index prices individual life blocks at 3x renewal commissions below C$500k of in-force premium, 4x from C$500k to C$999k, and 5x at C$1M or more.
• The same index puts blocks producing C$45,000 or more of annual renewal commissions at 4.5x.
• Practitioners working in the market describe 3x as the everyday number and call 5x of renewals "truly exceptional", so treat the top tier as a ceiling, not an expectation.
• Larger practices are valued on earnings instead: 4x to 8x EBITDA, typically 6x to 8x, and group benefits books run 6x to 12x EBITDA by revenue band.
• One Canadian planner reported blocks bought for as little as 1x to 1.25x annual revenue at the bottom of the market, which is the honest floor of the range.
• Renewal commissions on transferred policies are not reliably assignable: the carrier may keep paying the originating advisor after the file moves, and that risk belongs in the price.

An individual life insurance book in Canada is priced on the commission income it produces, and the only published Canadian grid puts that at 3x to 5x annual renewal commissions, scaled by in-force premium: 3x below C$500,000 of in-force premium, 4x from C$500,000 to C$999,000, and 5x at C$1,000,000 or more, per the Insurance Journal Business Value Index. Larger practices get valued on earnings instead, at 4x to 8x EBITDA and typically 6x to 8x, per HUB Financial in Insurance Journal.

None of those numbers is a percentage of assets, and that is the first thing to get right. An insurance block has no assets under administration to price against. What a buyer is acquiring is a stream of renewal or service commissions plus the right to service and re-solicit the underlying households. Carrying an investment-book revenue multiple across to insurance revenue is the most common valuation error in this asset class, and it runs in the expensive direction for a buyer.

The second thing to get right is evidence quality. The tiered grid below is a trade-publication index built from practitioner input, not a transaction database. Canada has no transaction database: Investment Executive states plainly that there is no database or organized practice exchange in Canada in which past transactions can be used as references for valuation. That is true of insurance blocks more than of anything else, and it means every figure here should be read as a calibration grid rather than a quote.

Why insurance books are valued on renewal income, not on AUM

Insurance revenue arrives in two economically different forms. First-year commission is a large, one-time payment tied to a sale that has already happened, and it does not recur for the buyer. Renewal or service commission is the recurring layer, and it is the only part a buyer can underwrite. That is why the published Canadian grid keys off renewal commissions and in-force premium rather than any measure of accumulated value.

The gap between headline revenue and recurring revenue in insurance blocks is wide. A practice producing C$100,000 of total revenue may hold only about C$10,000 of recurring income, and buyers of insurance practices generally want to see C$500,000 or more of total revenue before they engage at all, according to Insurance Portal. An advisor who quotes gross production and expects an investment-style multiple on it is quoting the wrong denominator.

The comparison with investment books is instructive rather than transferable. In the Canadian data reported by FP Transitions, recurring revenue averaged 2.31x and non-recurring revenue averaged 1.08x, roughly 2.1x as much value per dollar of recurring income, per Advisor.ca. Insurance blocks sit disproportionately in the non-recurring column, which is a large part of why they clear at lower effective multiples of total production even when the renewal multiple looks high.

The published Canadian tiers

The Insurance Journal Business Value Index is the closest thing Canada has to a published pricing standard for life blocks. It expresses value two ways, by in-force premium and by annual renewal commissions.

Read the grid as a size premium, because that is what it is. The block that clears 5x is not better underwritten than the block that clears 3x; it is bigger, and size is what attracts more than one bidder. Note also that the index is a class B artefact under the evidence hierarchy used in our methodology: a range published by market participants with no stated sample of closed deals behind it.

The competing practitioner views, which are opinion and not data

Two experienced practitioners describe a narrower and lower market than the index. On the general-practitioner side, the working number is 3x annual renewals, stretching to 3x or 4x for good blocks, and the same practitioner records an MGA offering only C$1,000 for a clientele segment that carried no renewals at all, with the flat warning that if someone insists on a fixed multiple you should start shopping around for a better deal, per Alain Vezina in Insurance Portal.

From the MGA side the language is stronger: if an advisor pays five times the renewals for an insurance portfolio, that would be truly exceptional, according to Insurance Portal. Both statements are practitioner judgement with no dataset behind them, so label them that way. But they are consistent with each other and they come from people who see offers, and the practical implication is that the 5x tier in the published index should be treated as a ceiling for an unusually large, unusually clean block rather than as a reasonable planning assumption.

Larger practices are priced on earnings

Above a certain size the renewal multiple stops being the operative metric and the buyer starts underwriting a business rather than a block. Large individual life practices are valued at 4x to 8x EBITDA, typically 6x to 8x, per HUB Financial in Insurance Journal. The shift in denominator matters for the seller: EBITDA rewards an owner who has staff, systems and delegated service capacity, and it punishes an owner whose personal production is the entire enterprise. Two practices with identical renewal income can price very differently once the buyer normalises for the compensation the owner has been taking out.

Valuing an MGA itself is a different exercise again, historically based on assets under administration and net service fee revenue, with private equity buyers targeting 18% to 20% IRR and very little public transaction information available, per Advisor.ca. Canadian MGA acquisitions are announced without terms, so there is no evidenced MGA multiple to publish.

Group benefits is a separate index with separate tiers

Group benefits blocks are not priced like life blocks. They are recurring by construction, they renew annually with an employer rather than an individual, and the published Canadian index for them runs on EBITDA at materially higher tiers, per the Insurance Journal group index.

A competing index published by First Group and Benefits puts blocks with premium at or above C$5M at 4x to 8x EBITDA and smaller blocks at 1x to 3x renewal commissions, per Insurance Portal. Two published indices disagreeing by a factor of two at the same size band is a reasonable summary of how settled group pricing is.

Group is also the one place in Canadian practice valuation where a driver effect size is published rather than asserted. On Pierre Piche's scale a 20-year client is worth 3x to 3.5x renewal commissions while a one-year client is worth 1x, and the convention is that at a 2x-renewals price the large account is expected to stay two years, so the multiple and the retention period are the same number, per Insurance Portal.

The floor of the market: 1x to 1.25x annual revenue

Published indices describe the market a seller hopes for. The floor is worth stating too. A Canadian CFP has described an advisor he knows who purchased insurance books of business for as little as 1 or 1.25 times annual revenue, per Advisor.ca. That is a second-hand report of completed purchases with no named buyer, no client count and no size disclosed, so it carries low confidence and it is excluded from every headline statistic we publish.

It is still instructive. Blocks bought at 1x annual revenue and blocks priced at 5x renewals are the same asset class, and the distance between them is almost entirely persistency, size and whether more than one buyer showed up. A seller who takes the first offer from their own MGA is bidding against nobody.

Persistency is the dominant driver

Every multiple above is a function of how much of the income survives the transfer. The best available anchor is that Succession Resource Group's 2024 closed deals used an average target retention rate of 88.00% of annual gross revenue measured one year after closing, across 176 transactions, per SRG. That is US data on predominantly investment practices and should be read as a cross-check, not a Canadian norm, but it establishes the order of magnitude that buyers actually contract for.

On the Canadian side, one buyer who acquired a book carrying both investment accounts and life and living-benefits coverage retained 95% of clients, per Globe Advisor. Insurance-specific transitions are widely described as working better with one to three years of joint work between seller and buyer, and blocks are commonly valued on three or five years of commissions, per Insurance Portal. Lapse behaviour, premium mode, policy age and whether the policies are still needed by the household do more to the realised price than the choice between the 4x and 4.5x tier.

The transfer problem that can quietly wipe out the economics

This is the single most expensive surprise in an insurance book purchase, and it is not a pricing question. On transferred policies the carrier may keep paying renewal revenue to the originating advisor even after the servicing file moves. As Elke Rubach put it after acquiring a 650-client book, you can transfer the file, but in some cases you are not going to get paid, so you need to be aware of that, per Globe Advisor.

Sit with the consequence. A buyer can pay 4x renewals for a block, take on the service obligation, the compliance file and the client expectations, and receive none of the renewal stream that justified the price. There is no generic fix, because the commission-assignment rules are set by each carrier and each MGA contract, not by the purchase agreement between the two advisors. What a buyer can do is ask for a policy-level list showing which carriers will redirect renewals and which will not, price the non-assignable portion separately or at zero, and hold back a portion of the price until the redirection is confirmed in the buyer's own commission statements. Getting your MGA and each carrier to confirm in writing before closing is cheaper than litigating it afterwards.

Rubach also negotiated a clawback under which the retiring advisor repaid the amount allocated to any client who left within the first year, per Globe Advisor. That structure is doing the same job from the other direction: it moves persistency risk back to the person who created the persistency.

Putting a number on your own block

A defensible sequence: separate first-year from renewal commissions, confirm which renewals will actually redirect on transfer, apply the published grid tier that matches your in-force premium, adjust down for concentration, lapse-prone product mix and an immediate exit, adjust up for size, tenure and a genuine joint-work period, and then treat the result as a range rather than a price. If your practice is large enough to have staff and delegated service, run the EBITDA view alongside it and see which denominator flatters the truth less.

Where the block sits inside a mixed practice, the insurance and investment components should be valued on their own terms and then added, never blended into a single multiple. Our free valuation estimate produces a range on that basis, and the methodology page shows exactly which evidence class each input comes from. For the investment side of a mixed book, the companion guide on what multiple advisor books sell for covers the recurring-revenue ranges in detail. None of this is tax, legal or accounting advice, and the transfer and commission-assignment questions in particular need your own MGA, carrier and lawyer before you sign.

Common questions

What multiple do insurance books of business sell for in Canada?

The only published Canadian grid, the Insurance Journal Business Value Index, prices individual life blocks at 3x annual renewal commissions under C$500k of in-force premium, 4x between C$500k and C$999k, and 5x at C$1M or more, with a 4.5x tier for blocks generating C$45,000 or more of annual renewal commissions. Practitioners quoted in the trade press describe 3x as the working number and 5x as exceptional. It is an index built from practitioner input, not a database of closed transactions, so treat it as a starting grid rather than a price.

Can I value an insurance book as a percentage of assets like an investment book?

No. An insurance block does not have assets under administration to price against. Its economic value is the renewal or service commission stream the policies produce, adjusted for persistency, and applying an investment-book revenue multiple to insurance revenue will materially overstate the price. The two revenue streams differ in how reliably they transfer to a buyer, which is exactly what the multiple is meant to capture.

Why does insurance revenue trade below investment revenue?

Mainly because it is less reliably assignable. On transferred policies the carrier may continue paying renewals to the originating advisor even after the servicing file changes hands, so the buyer can end up owning the service obligation without the income. Insurance revenue is also lumpier, with a large share of first-year commission that does not recur, and buyers discount for that.

What is a fair price for a small block of life policies?

Small blocks are hard to place. Buyers of insurance practices generally look for C$500,000 or more of total revenue, and a C$100,000 revenue practice may carry only about C$10,000 of genuinely recurring income. At that size expect the low end of the published grid or below it, and be prepared for the possibility that a block carrying no renewals is worth very little to anyone.