When monitoring the performance of an insurance agency, most turn to key performance indicators (KPIs) for data points and information that clearly identifies where they are doing well, and more importantly, what areas of the practice require more attention. 

In addition to using KPIs as an internal evaluation tool, KPIs are also often used by potential clients when deciding which insurance agency they are most likely to work with. 

Considering how important the information provided by KPIs is to your company, it’s essential for you to set time aside to evaluate the data provided by the most important KPIs for your insurance agency.

What determines if a KPI is important to an insurance agency?

Insurance agencies work in a world of data. With numbers literally right in front of your face all day, every day, determining which metrics are important enough to drive the future of your agency can seem like a daunting task – but it doesn’t have to be.

According to Clearpoint, a business strategy consulting company, an effective KPI should serve as a compass to your agency. In other words, it should show you and your team whether you’re on the path you need to take in order to meet your strategic goals.

To be effective, a KPI must be:

  • Well-defined and quantifiable
  • Communicated throughout your organization and departments
  • Crucial to achieving your goal
  • Applicable to your agency

There are hundreds, even thousands, of KPIs that could be monitored. Considering this, it’s important to consider the size of your agency, the products you offer, and the clients you seek.

While each agency will have its own unique set of KPIs, there are six essential key performance indicators every insurance agency must track, monitor, and analyze on a regular, and on-going basis.

Collecting essential KPI data

According to entrepreneur and insurance expert, Tony Caldwell, insurance agencies already have the data needed to effectively manage the growth, value, and profitability of their agency.  Caldwell’s essential data points include:

  • Financial information—including profit and loss sheets, balance sheets, and cash flow statements
  • Production reports—including information about insurance policies, including the numbers of policies written, premium numbers for the agency and for individual agents, and premium volumes by specific line of business
  • Agent information—including specific performance of each agent in terms of number of clients, number of policies per client, and the commission earned by each agent
  • Loss information—including trending and historical loss ratio by business as well as for each agent
  • New business—including new business generated annually and by each agent
  • Client retention data—this not only includes retention information relevant to your agents, but also provides information helping you to better analyze client satisfaction with your services

The top insurance agency KPI categories for bottom line growth


EBITA—short for Earnings Before Interest, Taxes, Depreciation, and Amortization—provides you with a snapshot of your bottom-line profit before any other assets, liabilities, or assumptions are factored in. EBITA gives you the KPI you need in order to measure your agency’s performance against agencies of similar size, regardless of how the agencies are structured.

Gross profit per agent

The most effective way to determine gross profit per agent is by determining the difference between the average revenue per person and the average compensation per person, a KPI often referred to as spread.

Spread, when measured against other agencies, allows you to measure productivity and profitability and provides key information needed to determine staffing, compensation levels, and future growth.

Liquidity ratios

A liquidity measures an organization’s ability to pay short-term debt obligations. Essential liquidity ratio KPIs are:

  • Debt trust ratio
    Debt trust ratio is the ratio between cash on hand and premiums due, excluding credit receivables. By law, all insurance agencies are required to have a debt trust ratio above 1; best practices recommend a debt trust ratio of 1.25 or more.
  • Quick ratio
    Quick ratio is the ratio between current assets and liabilities; like debt trust ratio, a ratio of 1.25 or more is recommended. 

Average policy size

Average policy size is an important KPI used to determine and evaluate a number of important factors ranging from recent marketing efforts to ongoing and future risk management. Most agencies determine average policy size by dividing total premiums by total number of policies. 

Sales velocity

Sales velocity is an important measure of new business growth. It is also an efficient snapshot of how proficient your agency, and each agent, is doing at procuring new business. 

Agent quote, quota, and retention rage

Successful insurance agencies monitor the performance of each of its agents to get a thorough understanding of each agent’s quote, quota, and retention rates. Each data point creates essential KPIs required to fuel future growth.

  • Quote rates show the number of quotes an agent has provided, this becomes a powerful KPI tool when compared against the number of leads they’ve been in contact with.
  • Quota rates takes quote rates one step further and shows which of your agents are meeting and exceeding their sales expectations and which agents are not. 
  • Agent retention rate, especially when kept in real time, provides useful information related to retention percentage by agent. Not only does this information provide data on how each agent is performing, it also highlights specific trends as it relates to employee performance in specific areas of your business.

All three of these KPIs reveal important trends in employee performance regarding you who is struggling to meet sales expectations, who performs well in specific subsets of the organization, and who is ready to move to the next level of expectation, opportunity, or responsibility.

Most profitable lead sources

At the end of the day, your agency depends on profit, and specifically long-term, bottom line sustained growth. In order to continue building on what your agency has already achieved, it’s essential you’re able to identify which lead sources convert and are profitable and which leads do not. 

Using the KPIs listed above to establish an on-going “state-of-the-state” dashboard, your agency will be able to better adjust your long-term forecasting and make more impactful strategic decisions, including better identifying profitable lead sources and sectors, where to invest your marketing focus, and what each of your agents need to focus on in order to achieve the long-term growth you desire.

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