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Insurance Retention Series #2: How to Measure Customer Retention in an Agency

Retention is one of the most important metrics you should be measuring in your agency. However, it’s particularly tricky to get down to a number upon which you can rely. Understanding who is staying and who is leaving your agency can be a powerful and eye-opening opportunity for your entire team to embrace. Most agencies don’t take the time to work through the reporting to get it to be dependable and accurate. In this blog, we want to walk you through how to become a master of tracking your retention. 

But First, a Warning…

By having the honor of traveling to agencies across the US and Canada, we get to hear a lot of statements about agency performance. In particular, I always like to know how folks answer,  “How is your agency’s retention?” The most common response I get to hear is “good.” Well, the challenge is that “good” is not a number. I also hear, “We only lose someone when they move or pass away.” Unfortunately, this makes me think that you may have no idea or that your agency isn’t growing or selling outside of the comfort zone of friends and family.

Also, if you’re using your carrier reports, it can be a good indicator, but not necessarily an accurate benchmark. The carriers are simply showing you their book of business. When you remarket someone and/or move them, this is not reflected. In addition, you would have to merge up all that data across all companies to really get a feel for what is on point. 

How to Calculate Retention

The official way we like to calculate retention is the following:

(Total Policies/Premium/Revenue Up for Renewal that Month – Cancellations) / (Total Policies/Premium/Revenue Up for Renewal that Month)

For example:

100 Policies up for renewal

10 Policies cancelled

(100-10)/100 = 90%

The reason we use this method is that it allows you to see retention rates each month and act quickly. Some formulas calculate a rolling 12 months. While this helps with reinstatements and policies that can take longer to cancel in your system, our opinion is that you need to know quickly when dips in retention happen. 

We always export this information into .CSV files and then use calculations in Excel to drill down into the data. Retention reporting is included in our Agency Assessment and AppX Retention programs. So if you’re struggling, have no fear…we’re equipped to help! We also have monthly retainers that include this type of data processing. 

What Measuring Stick to Use 


The ultimate guide to everything in your agency should be revenue. However, some agencies don’t track commissions well in their system or they are a bit shy about sharing those numbers with the team. Regardless of your comfort level, you should still have your “eye on the prize” for these numbers. We always recommend looking at the following:

  • Policy
  • Premium
  • Revenue 

When you run the numbers these three ways, they can each tell a different story. For example, your revenue retention may look great, but your premium might not if you lose a big commercial lines account with low commission. 

It’s also critical that you organize your management system to have the correct team members assigned to each account. When you clean up the assignments, you can drill down pretty easily to see the metrics for each individual. 

Cleaning Up Your Data

The biggest struggle we see agencies facing in running these numbers is that they are generally wrong – but for the right reasons. Your team has to clean up certain areas that can impact your data integrity (and, by the way, they should clean them up). Mainly, this is a problem on the cancellation report. 

  • Rewrites: The old company downloads a cancellation, but the agency keeps the client with a new market. You need to work with your management system on how to clean this up effectively. We have it mastered for all major agency management systems. The team needs to do this, because it’s impacting your reports, but also because the new carrier downloads a new business policy. If you pay a different commission for new vs. renewal, you’re overpaying producers. 
  • Cancellation Dates & Expiration Dates: The best practice is to update the expiration date to the last date of the policy. The carrier generally does not update the expiration date. This means your team can truly see when the policy expired, not the date it was set to expire. 
  • Commercial Lines Manual Entry: For some agencies, they wait until they have documentation from the carrier to cancel a policy. Depending on the carrier, this can take weeks. When you know it’s cancelled, process it and leave an open task to follow up to make sure you get the paperwork.

Your Team & Data

For many agencies, sharing metrics has not been a standard process. I beg you to change your mindset on this. The beginning is difficult, because your team doesn’t really know what they are looking at. Then people can get uncomfortable with accountability and shy away from stepping on the scale of improvement. You have to look at sharing the numbers as a process, and it may take 6 months for the team to understand and buy-in – and that’s ok. But if you get a little push back in the beginning, keep going!


Kelly Donahue Piro

Kelly Donahue-Piro is a game changer in the insurance industry. As the Founder and President of Agency Performance Partners and Co-Founder of the sister marketing company, Agency Appeal, she’s an in-demand speaker at regional and national insurance conferences and a social media and digital marketing trailblazer. READ MORE