What Financial KPI's Should Insurance Agencies Track

When we do a valuation, we look at the agency’s information in order to determine a ton of metrics.  We’re looking at retention rate by revenue, by policy, and by premium. Most agencies, if we asked, can't give those metrics to us. Some aren't sure their agency management system could produce an accurate number even if they tried.

That matters because retention is one of a handful of numbers that make independent insurance agencies valuable. It's also why we keep KPI lists that we look at on a monthly basis short for our fractional CFO clients. If you're setting your insurance agency KPIs for next year, you're better off tracking four or five numbers you trust than twenty you don't.

Start with fewer insurance agency KPIs than you think you need

The dashboard we build for every CFO client comes back to three questions. Is the agency growing? Is it profitable? Can it keep doing both? That means watching your growth rate (broken into retention and new business), your EBITDA, and your revenue per employee, each against your budget and against agencies your size, the benchmark.

We've covered EBITDA and revenue per employee in their own articles, so this one focuses on growth and retention. Those are the two we most often see calculated wrong.

Before you add anything else to the list, run it through the test Carey Wallace, founder of AgencyFocus, uses on her own numbers:

"If I look at a metric and I don't have any action, or it doesn't cause me to do anything, then it's really just clutter or noise."

If you're checking a number that isn't tied to a goal, either put a goal around it or stop looking at it. The best rule of thumb is have four to five KPIs for your agency, and one to three for any one person on your team.

How to calculate your organic growth rate

Most owners calculate growth off total revenue. The problem is that total revenue includes things that were never going to renew, so the number doesn't compare to anything.

Take three things out first:

• Acquired revenue, from both the current and prior period. It still helps your agency, but it isn't organic growth
• Revenue that doesn't renew, like bonds and life commissions. If you ended 2024 at $1 million and 10% of that was bonds, only $900,000 was ever available to renew.
• Contingencies. They move too much from year to year to tell you anything about growth.

From there, subtract last year's renewable commission and fee revenue from this year's, and divide by last year's.

Here's how much of a difference it makes. In an illustrative example Carey walked through, an agency's renewable revenue grew 13.6% one year and 11.8% the next, an average of 12.7%. Off total revenue, the same agency looked like it grew 19.7% and 12.6%, an average of 16.2%. If you're comparing yourself to benchmarks with the second set of numbers, you're comparing apples to oranges.

How to calculate your retention rate (and the problem behind it)

Retention is current period revenue, minus the new business you wrote in that period, divided by prior period revenue. Run it the same way for policy count and premium.

"About one in 20 agencies can tell me their retention rate for revenue, policy, and premium, because they're calculating it themselves," Carey says.

The math isn't the hard part, getting accurate numbers is. When a policy downloads into your management system, it comes in as “new” even if the policy was previously written with another carrier. If it's really a rewrite of an account you already had and nobody changes it, your new business looks higher than it is, your lost business looks higher than it is, and your retention is off. That got worse during the hard market, when agencies were remarketing a lot of business. Every policy should be coded new, renewed, or rewritten, and rewrites count toward retention.

All three versions of retention matter because a buyer will ask about all three. If your revenue grew double digits, did your policy count grow too, or was it all rate?

For context, as of January 2026, revenue retention averaged around 92% before the hard market. Some agencies were over 100% during it. Most are back in the mid-90s, with some coastal agencies in the 80s as rates come down.

Add leading indicators for producers and CSRs

New business, retention, and centers of influence are all fair numbers to hold a producer to. They're also all after the fact.

"If you just wait to see what your new business number is at the end of the month, it's done," Carey says.

Leading indicators give you time to step in. For producers, that's calls, appointments, proposals sent, and close ratio. If someone on a validation schedule is getting the appointments but not converting, you know where to help them. For CSRs, it might be how many monoline accounts they've contacted, cross-sell opportunities identified, or referrals passed to producers, all working toward a goal like moving average policies per customer from 1.8 to 2.5.

Make sure whatever's on someone's dashboard lines up with how they're paid. If their bonus is tied to a number that isn't on the dashboard, they'll ignore the dashboard.

"If I look at a metric and I don't have any action, or it doesn't cause me to do anything, then it's really just clutter or noise."  Carey Wallace

What to do about it

Recalculate your growth rate. Use only renewable commission and fee revenue for your last two full years, with acquisitions taken out. Compare it to the growth number you've been using.

Check your coding. Pull last quarter's new business report and look for policies that were actually rewrites. If you find more than a few, your retention has been understated.

Cut your dashboard down. Pick four or five agency KPIs for next year, and one to three for each person, with at least one leading indicator for every producer.

Build a budget and review it monthly. Carey's view is that a budget lets you make decisions faster. If you're ahead of plan by spring, you can hire in spring instead of waiting until year-end to find out whether you can afford it.

Where this leaves you

Most of the owners we work with aren't short on data. They're short on a few numbers they trust and a habit of looking at them every month. Get growth and retention calculated correctly, and the rest of your decisions get easier. If you want help setting up those KPIs and someone to review them with you each month, talk to us about fractional CFO support.