An area that most successful agencies track is retention. We always hear agency owners and partners talking about new business, but what about the retention rate? The retention rate is just as important as the rate of new business for the agency. For just a moment, let’s stop and think about this: if our retention rate is 80%, that means we lose 20% of our business a year. In five years we will end up having to rewrite our entire book of business! Imagine the time and effort your staff will spend writing new business to keep up with the business going out the door. Now you can understand why keeping track of your retention is important to your agency’s success.
Luckily, with the arrival of technology and new agency management systems, keeping track of your retention rate is becoming easier to accomplish. Some management systems give you the ability to quickly run a report to find this information, but most systems require a little more effort. Make sure your agency has a plan to track retention by Line of Business, Carrier, and Producer. Keeping track of this information will help your agency to see trends, thus allowing you to make changes to improve retention for the future.
Even if you are not using an agency management system, you can still track your retention. Tracking your Policies In Force (PIF) by carrier is one easy way. Most carriers track this information and it is reported on your agency report. This does not track individual clients, but gives an overall look at the number of policies your agency has in force at a given moment. If you start to see a drop in PIFs for a certain carrier, you should investigate to find out why. On the flipside, if that PIF count increases, it might be a great time to ask why the agency is writing more business with that carrier.
If your retention for a given carrier on a given line of business is low, you need to determine the reason. It could be a rate increase by that carrier, a claims issue, or it could be customer service. Once the reason is determined, set a plan in place to stop the downward trend. Be sure to discuss this with your staff since they usually will know the reasons and may have good suggestions for improvements. It’s also a good idea to keep your staff informed to help the agency to focus on resolving why customers are cancelling and make adjustments to improve the retention of your business.
Part 2 of this blog will come next month… stay tuned! In the mean time, let us know ways YOUR agency is going to increase your retention rate.