What Is Retention Rate in Insurance?
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Retention rate is the share of your customers who renew instead of leaving.
What it is
Retention rate = policies renewed ÷ policies due to renew × 100.
You can measure it by customer or by policy, for the whole agency, one product line or one producer. Leave new business out: retention measures the customers you already had staying, not growth.
Insurance retention rate, by product and producer
Insurance retention rate is the share of policies due to renew that did renew, and it is most useful split by product line and by producer, because one weak line can hide inside a healthy total. Example: an office retains 92% of auto policies but 80% of home policies; the overall number looks fine while home needs attention. Compare each line with your own last year first.
A worked example
Example. 1,200 policies came up for renewal this year. 1,100 renewed, 80 cancelled and the carrier chose not to renew 20. Retention is 1,100 ÷ 1,200 = 91.7%.
Why it matters as much as new business
Every customer who stays renews without a new sale. Every one who leaves has to be replaced before the book can grow.
Example. Two agencies each have 1,000 policies and write 300 new ones a year. The one keeping 90% ends the year with 900 + 300 = 1,200. The one keeping 75% ends it with 750 + 300 = 1,050. The same selling, 150 policies apart after one year, and the gap grows every year after.
What pulls it down
- A customer with only one policy, who has less reason to stay than one with several.
- A big renewal increase the customer hears about first from the bill.
- No contact between renewals.
- A producer leaving, when nobody takes over their customers.
How Producify works it out
On the Book page in Producify, Customer retention is the change in households this year.
Policy retention is the change in policies in force.
Both come from the numbers you type each month: the latest month entered minus last December's figure. Each is a count, such as +12 households, not a percent. See Read the Book page.
Frequently Asked Questions
What's the difference between retention rate and renewal rate?
They are often used for the same number. Where they differ, retention also counts a customer who replaced a policy with another one at your agency.
How do I measure retention if I'm a new agency?
Wait for your first full year of renewals. Before that, no customer has had a chance to renew.
Does retention include policies cancelled mid-year?
Measured at renewal, it does not. Track mid-term cancellations as their own number, or count every policy that left during the year.
See whether your customers stay
Producify's Book page shows your households and policies in force for the latest month entered, with the change month over month and year to date.