KKR-backed consortium moves on Steadfast, Australasia's largest broker, at $5.5bn

Insurance broking has been the most consistently expensive thing in financial services for a decade, and the mechanism is simple enough to state in one sentence: brokers earn recurring commission on renewals they do not have to underwrite. No claims risk, no capital charge, retention in the nineties.

That is why the segment refuses to reprice with the rest of financial services. When rates move, a lender's book reprices and its multiple moves with credit expectations. A broker's commission moves with premium, and premium tends to move up. Buyers pay for that asymmetry.

The consolidation logic compounds it. A large broker buying a small one gets carrier leverage the small one never had, so the same book earns more the day after closing. That is a real synergy rather than a cost story, and it is why small brokerages persistently sell above what their standalone earnings justify.

If you own a distribution business in any regulated market — insurance, benefits, freight, energy — the transferable lesson is to separate the part of your revenue that renews from the part you re-win every year. Buyers price the two completely differently, and most owners present them as one number.