Insurance Agency Key Performance Indicators

KPI’s are Key Performance Indicators, and are used by organizations to evaluate performance. They are quantifiable measurements that can help rapidly determine historic, current and future performance, predicated upon the type of KPIs used and the platform selected to use them. For example insurance agency KPIs might include the number of net new clients, net losses, renewal growth, producer quotations, average book of business by producer, agency revenue, and revenue by employee. For the purposes of this article, however, we’ll focus on KPIs for insurance agency producers though these KPI’s will also be a key subset for agency executives and owners.

Key Performance Indicators should reflect the agency’s goals, and it’s very important to select KPIs which help rapidly indicate the tactical and strategic success of your sales efforts. For example, Producer KPI’s are noted below and might be very similar to the KPIs for many industry sales executives:

  • New Commission Revenue
  • Renewal Commission
  • Ratio of Net New Commissions to Renewal Commissions
  • Average Book of Business by Producer
  • Revenues by Lines of Coverage
  • Total New Quotes
  • Close Ratio (Ratio of Quotes to Closes)
  • Closes by Lead Source
  • YTD Revenue Growth (and year over year)
  • Revenue by Employee

These Key Performance Indicators help measure your business, and offer indicators of past performance and future success. Year over year revenues compare current performance to past performance, while Web meetings and proposals are forward looking, an indicator of what your future business might look like. If your new prospect meetings have dropped by 20% over the last quarter from the prior quarter, you can be fairly certain that you will experience a drop in new business. However, if you experienced the same type of drop compared to a year earlier, you have a better indication that you are on track for comparable year over year sales.

KPIs can vary by agency, but if they are to be truly valuable to your agency, you must consistently and accurately define and measure them. KPIs should incorporate goals or targets to track and measure performance. For example, our company goal is to close 50% of our proposals and 25% of our web meeting prospects. We measure this goal against our KPIs for this category to track our progress. Your agency might have a goal to maintain a $1 Million book of business for each veteran producer. You might have a different goal for new producers. These goals should tie into your overall KPI tracking, offering rapid insights into the health of your agency, with strong indications of future performance. These KPIs can then be measured year over year – offering accurate historical insights into your performance in mission critical areas. Larger agencies should consider using KPI rollups, where the sales, marketing, accounting and service KPIs are tracked departmentally, with a few mission critical KPIs from each department rolling up to an executive list. This can be done manually or using an automated system.

What type of systems can be used for KPIs? Your agency can use anything from simple Excel spreadsheets, to CRM, to Agency Management Systems to sophisticated KPI dashboards. Selected Web metrics gleaned from Google Analytics or other web monitoring tools may also be used. KPI’s should be kept to a modest number for optimum effect. For example, tracking 10 KPI’s monthly is reasonable, but tracking 50 would result in information overload. This is analogous to the dashboard of your car. Your measurements might include speed, fuel level, RPMs, odometer, engine temperature and oil level. That’s a total of six KPI’s which can be tracked while driving. Some cars offer more sophisticated KPI’s including, average miles per gallon, current MPG, tripometer, and distance to empty. These additional KPI’s may not be displayed constantly, as they may not be deemed critical to your driving. Think of your insurance agency KPI’s in the same way, closely monitoring only those which are critical to your success.

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