Metrics for Success: Fundamental KPIs Every Independent Insurance Agency Should Be Tracking in 2022

January 13, 2022

The dawn of a new year is a great time for independent insurance agencies to take stock of what efforts did or didn’t contribute to business growth in 2021 and then decide where and how to adjust. Careful monitoring of key performance indicators (KPIs) throughout the year is crucial to move your business from surviving to thriving in an industry undergoing transformational change on many fronts.

There are many kinds of KPIs; some focus on industry metrics, others are tied to financial or agent performance goals. While most are helpful, not every KPI can help with big-picture, year-over-year analysis. Each independent agency needs to decide for itself which KPIs best apply to the agency’s goals and track them accordingly. Below are some fundamental monthly KPIs to track and evaluate that can help measure meaningful growth from year to year.

Average new leads contacted
Knowing the ratio of new prospects that have received an initial contact by an agent compared to the number of prospects who respond or actively engage with the agent offers a window into the success rate of the agency and individual agents.

Bind rate
Measuring an agency’s bind rate shows quoted prospects that convert to bound policies. It also helps measure individual agent performance. In effect, independent insurance agents can learn how many leads convert to signed clients, allowing for better lead generation strategies and business development planning.

Average sale
This KPI is simple, yet sometimes overlooked. Knowing the average sales price, for the agency and/or per agent, allows independent insurance agencies to determine the cost per sale. Knowing this number helps agents plan better, set their marketing budgets, and determine what type of investment is necessary to grow the business.

Retention rate
Maintaining and cross-selling existing clients is typically an easier lift than finding and signing new clients. The retention rate will clarify the percentage of renewed business compared to new policies signed.

Cost per bind
Understanding the cost to bind an average policy helps independent agents better understand and plan for expenses. Knowing the cost per client can help agents control their expenses.

By tracking the proper KPIs for their agencies, independent insurance agents can better identify areas for improvement. For example, if your ratio of prospects contacted to contacts who engage shows engagement as low, it’s time to re-examine both the quality of those leads and from where they are coming. If an agent’s bind rate is low, that means there is a problem that prevents prospects from converting to signed clients. Average sales, retention and cost per bind KPIs not only help agencies control costs, but set goals and targets for pursuing the most profitable work.

It’s said that if you can’t measure it, you can’t improve it. Knowing what to measure can help you plan for a bright and prosperous new year and all the ones that follow.