AGENCY OPERATIONS
How to Calculate It Retention Rate = ( Renewed Policies ÷ Total Policies Up for Renewal ) × 100
If retention rates are lower than expected , it may be time to reevaluate customer engagement strategies or customer service quality .
2 . EXPENSE RATIO
The expense ratio is the percentage of premium revenue that goes toward covering your agency ’ s expenses , such as salaries , marketing , and overhead costs .
Why It ’ s Important A high expense ratio can indicate inefficiencies in your operational structure , while a low ratio reflects smart budgeting and resource management .
How to Calculate It Expense Ratio = ( Total Agency Operating Expenses ÷ Written Premium ) × 100
Reducing unnecessary expenses while maintaining the quality of service is key to improving this metric .
3 . LOSS RATIO
The loss ratio measures the relationship between claims paid out to policyholders and the premiums collected .
Why It ’ s Important A high loss ratio may suggest poor underwriting practices or a need for better risk assessment strategies . Conversely , a low loss ratio could indicate efficient risk management .
How to Calculate It Loss Ratio = ( Claims Paid ÷ Premiums Earned ) × 100 Keeping this metric balanced is essential for profitability .
4 . WRITTEN PREMIUM
Written premium refers to the total dollar value of all policies written ( or sold ) during a specific period .
Why It ’ s Important This is a core indicator of the agency ’ s growth and market share . Written premium reflects sales effectiveness and overall business momentum .
How to Calculate It Track written premium monthly , quarterly , and annually to spot trends and pinpoint which products or niches are performing well .
5 . POLICIES IN FORCE ( PIF )
Policies in force represent the total number of active policies at a given point in time .
Why It ’ s Important It provides a snapshot of your agency ’ s overall book of business . Changes in this metric are a leading indicator of future changes to financial results . This metric – when sourced from the carrier ( s ) – can be especially useful in projecting future agency financial results for carriers that include it as part of their profit share calculations .
How to Calculate It Aggregate your PIF total directly from your carrier reports . Regularly monitor this number and compare it with historical data to spot fluctuations or growth opportunities .
6 . GROWTH RATE
Growth rate measures how quickly your agency ’ s revenue is increasing over a specific period .
Why It ’ s Important A healthy growth rate indicates strong sales performance and market expansion , while stagnation could signal inefficiencies or overlooked opportunities .
How to Calculate It Growth Rate = [( Current Revenue - Previous Revenue ) ÷ Previous Revenue ] × 100
Identifying growth bottlenecks and trends is crucial for developing long-term strategies .
JANUARY / FEBRUARY 2025
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