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

Retained accounts support recurring revenue and make new business more valuable. Retention alone does not guarantee growth: premium changes, commission rates, lost accounts, and new production also affect the result. An owner needs to see both the retained base and what changed around it.

Use retention as a prompt for investigation. Some clients leave because of price or service; others close a business, move, or no longer need a policy. Record reasons consistently so the team can distinguish issues it can address from changes outside its control.

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.

A small example

If 100 policies are eligible to renew under your reporting rule and 90 renew, policy renewal retention is 90%. Ten new policies written in the same period do not change that retention figure. Report the new business separately.

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?

Define a consistent group and period first. For policy renewal retention, divide the number renewed by the number eligible to renew in that group, using a consistent rule for cancellations and exclusions. Do not add new business to the retained count. State a separate definition for client or premium retention.

Part of the Relay insurance operations glossary. Updated 2026-07-11. See how we source content.

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