AGENCY OPERATIONS
7 . QUOTE-TO-BIND RATIO
Quote-to-bind ratio tracks the percentage of quotes given that result in a bound policy .
Why It ’ s Important This is an essential sales efficiency metric . A lower ratio may signal issues with pricing , quoting accuracy , or target audience misalignment .
How to Calculate It Quote-to-Bind Ratio = ( Total Bound Policies ÷ Total Quotes Issued ) × 100
Improving this ratio may involve refining quoting procedures or tailoring offerings to better meet client needs .
8 . EBITDA ( EARNINGS BEFORE INTEREST , TAXES , DEPRECIATION , AND AMORTIZATION ) EBITDA measures an agency ’ s profitability by focusing on earnings before deducting financial and operational costs .
Why It ’ s Important This metric provides a clear picture of the agency ’ s financial health and operational efficiency , offering insights into profitability without being skewed by outside factors like taxes or interest payments .
How to Calculate It EBITDA = Revenue - Expenses ( excluding interest , tax , depreciation , and amortization )
High EBITDA indicates strong financial stability and competitive strength .
9 . SALES VELOCITY
Sales velocity measures how quickly a lead moves through the sales funnel to become a paying client .
Why It ’ s Important This KPI reveals the effectiveness of the agency ’ s sales process and helps indicate where potential bottlenecks lie . Faster sales velocity = happier customers and quicker revenue generation .
How to Calculate It Sales Velocity = Total Revenue Generated ÷ Length of Sales Cycle
Track this to identify opportunities to speed up the sales cycle without compromising quality .
OVERCOMING CHALLENGES IN KPI TRACKING
Independent insurance agencies face a unique set of challenges when it comes to KPI tracking . These include :
• Disconnected Sources of Data : Data from carriers , CRMs , and internal systems often remain siloed , making it difficult to generate comprehensive KPIs . » Carrier product data may also be “ locked ”, especially on loss ratios . We ’ ve developed ways to source , bridge , and populate a “ Data Lake ” with this data from 110 + carriers .
• Uniformity of Data : Agencies must deal with varying formats and metrics across different systems , making apples-to-apples comparisons challenging . » Consistent definitions of data are critical across the book of business , especially in cases like PIF . We can source agencies ’ PIF directly from 110 + carriers , and additional KPI metrics can be generated using PIF such as average policy size . This can provide additional insights into key drivers of financial results over time .
• Streamlined Reporting : Many agencies lack an efficient reporting solution that can consolidate and visualize data in real-time . » We combine Growth Rate , Loss Ratio and
Total Written Premium and provide reporting to compare to Profit Share agreements and forecast contingency success .
• Reporting also helps you understand the behaviors which influence your results , such as a low Quoteto-Bind ratio ( e . g ., misaligned appetites , changes in UW practices , delays in processing , etc .).
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12 KANSAS INSURANCE AGENT & BROKER