Retention is the miraculous part of this business. Renewable income! Most would kill to be in an industry that provides this kind of luxury. However, if you don’t know your retention rate, you are throwing the best part of this business away.
Now, when I say “know your retention rate”, it isn’t the number your top carrier gave you. First of all, how is that calculated? Do you even know? Next, when too many account managers are busy remarketing, that retention rate doesn’t mean much. So, we have to know for ourselves. Almost no management systems can calculate retention with the push of a button. So that means we need to get our reporting hats and use our high school math skills.
Here is what we need to do. Run a report of all your renewals for the month. Now we should have the number of policies, premium and revenue. Then wait 28-31 days at the end of the month and run the cancellation report. This will also have the number of policies, premium and revenue that cancelled. Ok now we take these numbers and do some simple division. # of cancelled policies/# of possible renewals and TA-DA! You have a retention rate. Agency Performance Partners believes that it is critical for you to know not just premium and revenue but actual policies. This is what you can control. You can’t control commissions or premium. Those numbers are important but policy counts are in your court.
Now in order to make this work, your team needs to be coding rewrites in the system so you can easily filter them out. After the policy downloads, you have to go back and code the policy status to rewritten. Otherwise your cancellation numbers look pretty out of whack. Finally, you should know when you embark on this data adventure that there will be challenges. You will find sloppy and messy data. It’s a great opportunity to start focusing on data integrity and making sure your data is on point. Think of this as the starting blocks to getting accurate data in your agency. When you know your retention rate, you can do something with it. It’s one of the first places we start as insurance consultants. Need help, no worries we are your retention rate champions!
