Running an insurance brokerage isn’t just about selling policies – it’s about retention, client satisfaction, and ensuring a steady stream of revenue. While many brokers focus purely on new business acquisition, the most successful firms track a range of Key Performance Indicators (KPIs) to maintain efficiency, profitability, and long-term growth.

Monitoring the right KPIs helps identify weaknesses before they become major issues. It also ensures that brokers aren’t just bringing in clients but keeping them engaged and maximizing revenue per account. Let’s break down the essential KPIs every insurance brokerage should track.

Client Retention Rate – The Health of Your Book

Signing new clients is important, but keeping them is where the real value lies. The longer a client stays, the more profitable they become over time, reducing the pressure to constantly acquire new business.

• Client Retention Rate = [(Total Clients at End of Period – New Clients Acquired) / Total Clients at Start of Period] x 100
  A high retention rate (above 85%) indicates strong client relationships, while a declining rate suggests issues with service, pricing, or competition.

Policy Renewal Rate – Predictable Revenue Matters

Not all clients leave entirely – some simply fail to renew specific policies. This metric ensures that existing accounts continue generating revenue.

• Policy Renewal Rate = (Number of Policies Renewed / Number of Policies Up for Renewal) x 100
  If renewals drop, it could signal pricing concerns, better offers from competitors, or weak follow-up strategies.

Revenue Per Client – Maximizing Value

Not all clients contribute equally to revenue. Some bring in multiple policies, while others stay at the minimum coverage level.

• Average Revenue Per Client (ARPC) = Total Revenue / Total Clients
  Increasing this metric indicates effective cross-selling and upselling strategies. If it’s stagnating, it may be time to introduce additional policy offerings or review client engagement strategies.

Close Ratio – Measuring Sales Efficiency

It’s one thing to generate leads, but how many actually convert into paying clients? Tracking the close ratio ensures that marketing and sales efforts are driving real results.

• Close Ratio = (Number of Policies Sold / Number of Leads or Quotes Given) x 100
  A low close ratio suggests inefficiencies in the sales process, poor lead quality, or pricing that doesn’t match market expectations.

Cost Per Acquisition – Controlling Growth Costs

Bringing in new clients is necessary, but at what cost? If acquisition expenses outweigh client lifetime value, the brokerage is operating unsustainably.

• Cost Per Acquisition (CPA) = Total Marketing & Sales Costs / Number of New Clients Acquired
  A rising CPA signals inefficiencies in advertising spend, underperforming sales teams, or a need to refine targeting strategies.

Commission Rate – Balancing Profitability

In an insurance brokerage, commission structures vary by policy type, provider, and sales approach. Keeping track of average commission rates ensures profitability isn’t being squeezed.

• Average Commission Rate = (Total Commission Earned / Total Premiums Sold) x 100
  If commission rates start dropping, it could indicate unfavorable carrier agreements or an over-reliance on lower-margin policies.

Claims Ratio – Evaluating Policy Profitability

Insurance providers look at claims ratios to assess the profitability of brokered policies. If a brokerage consistently brings in high-risk clients with frequent claims, insurers may offer lower commissions or reconsider partnerships.

• Claims Ratio = (Total Claims Paid / Total Premiums Written) x 100
  While this is more relevant to insurers, a brokerage should monitor it to ensure it’s attracting the right type of clients.

Revenue Growth Rate – Measuring Business Expansion

A brokerage should aim for consistent growth, but tracking revenue alone isn’t enough – it’s the rate of growth that matters.

• Revenue Growth Rate = [(Current Period Revenue – Previous Period Revenue) / Previous Period Revenue] x 100
  If growth is slowing, it may be time to invest in marketing, expand product offerings, or focus on retention strategies.

New vs. Existing Business Revenue Split – Finding the Right Balance

Healthy brokerages maintain a strong mix of new and existing business revenue. Relying too much on new clients can lead to instability, while over-dependence on renewals limits expansion.

• New Business Revenue % = (New Client Revenue / Total Revenue) x 100
• Existing Business Revenue % = (Renewal Revenue / Total Revenue) x 100
  Ideally, new business should drive at least 20-30% of revenue, ensuring long-term growth without neglecting the existing client base.

Policy Cross-Sell Rate – Unlocking Additional Revenue

Clients with multiple policies are more likely to stay and generate higher lifetime value. A strong cross-sell strategy ensures that clients get comprehensive coverage while improving brokerage revenue.

• Cross-Sell Rate = (Clients with Multiple Policies / Total Clients) x 100
  If this number is low, brokers may need to improve how they educate clients on complementary coverage options.