Merger and aquisition activity is swirling around insuranceagencies like never before through the first half of 2014,according to a report released Tuesday by OPTIS Partners, afinancial services firm focused on the insurance-distributionindustry.

In fact, the 165 deals announced so far this year rank asthe second-most active six month period that OPTIS has everrecorded, with the agency M&A market 40% ahead of 2013through the same time period.

And we're just getting started.

“We predict there will be robust M&A activity going forwardas more agencies owned by retiring Baby Boomers continue to go tomarket,” says Timothy J. Cunningham, OPTIS managing director, in astatement annoucing the report.

That's right, owners are retiring and it is time for the nextgeneration to move up in the industry.

According to OPTIS, private equity-backed firms have been themost active buyers in the space so far this year, accounting for 67total agency purchases. Privately-owned brokers accounted foranother 54 deals, followed by publicy-head brokers with 27 deals,banks with nine deals and insurance companies/other with eightdeals.

“It looks like the first half of 2014 is the start of aprolonged active period for agent-broker M&A transactions,”Cunningham says. “The agency-brokerage business is awash withBaby-Boomer principals. It's estimated that more than 30% of allthe equity in the system is owned by them. The industry has notadequately addressed perpetuation/succession planning. Without asound perpetuation plan in place, the only option for many of agingprincipals will be to sell to a third party—often PE-backed andpublic brokers—to capitalize the value of their agency.”

Clickhere to read the full report (pdf).