Glossary
Retention rate
Retention rate is the share of business an insurance agency keeps at renewal, usually measured over a year. Agencies track it three ways: policy retention (policies kept), client retention (accounts or households kept), and premium retention (renewal premium kept). The three can tell very different stories about the same book.
Why it matters
Renewals are the economics of an independent agency. Recurring commission on the existing book funds payroll and operations, and agency valuations are built on that recurring revenue. A book that keeps more of its accounts each year grows even when new business is flat, because every retained account compounds.
Retention is also the honest scoreboard for service. Clients rarely announce they are unhappy. They just fail to renew.
How to read the numbers
Premium retention can top 100% in a hard market: rate increases inflate renewal premium even while policies walk out the door. That is why premium retention alone can hide attrition. Policy or client retention tells you whether people are actually staying.
Measure more than one, and segment by line of business and by producer. A strong blended number can hide a leak in one line or one book.
Common questions
What is a good retention rate for an insurance agency?
There is no single standard, and the answer depends on which retention you measure and the mix of the book. The useful comparison is your own trend: year over year, by line, and by producer. Rising premium retention with falling policy retention usually means rate is masking attrition.
How do you calculate retention rate?
Take the policies, clients, or premium on the books at the start of the period and measure the share still on the books at the end. Exclude new business written during the period, or it will flatter the number.
Related terms
Part of the Relay insurance operations glossary. Updated 2026-07-11. See how we source content.
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