Retention Rate
The percentage of policies or premium that renew with the agency from one term to the next.
What It Is
Retention rate measures the percentage of an agency's book of business that renews from one policy period to the next. It can be calculated by policy count, premium volume, or client count. Most agencies track retention by line of business and overall.
Industry benchmarks vary by line, but strong agencies target 90%+ retention for commercial lines and 85%+ for personal lines. Retention is the single most important metric for agency profitability because retaining an existing client costs a fraction of acquiring a new one.
Why It Matters for Brokers
Retention rate is the most reliable predictor of agency health and value. A 1% improvement in retention can equal 5-10% improvement in profitability because retained policies carry zero acquisition cost. High retention also signals strong service quality and competitive positioning, which strengthens carrier relationships and attracts better appointments.
Real-World Example
An agency discovers its commercial auto retention dropped from 88% to 79% over two renewal cycles. Investigation reveals the carrier implemented a 12% rate increase, and the agency did not proactively communicate alternatives to affected clients. Those clients shopped independently and left.
Common Mistakes
- 1Not tracking retention rates by line of business and carrier separately
- 2Waiting for clients to call at renewal instead of proactive outreach
- 3Not analyzing why lost accounts left to identify systemic issues
- 4Ignoring mid-term cancellations in retention calculations
How brokerageaudit.com Handles This
BrokerageAudit tracks retention rates in real-time across your entire book, flagging at-risk accounts based on renewal terms and rate changes.