Policy Retention Rate
Percentage of policies renewing at their anniversary date
What is Policy Retention Rate?
Policy retention rate is the percentage of insurance policies due for renewal that are renewed. It shows how well an insurer keeps its customers.
Retaining customers is far cheaper than finding new ones, so retention is a key driver of insurance profitability.
How this KPI is measured
- Function
- Customer Success & Service
- Sub-function
- Policy Retention
- Industry
- Insurance
- Type
- Lagging
- Impact
- Revenue
- Unit
- %
- Measurement frequency
- Monthly / Quarterly
- Formula
- (Policies renewed / Total policies due for renewal) × 100
How to calculate it
Divide policies renewed by total policies due for renewal, and multiply by 100.
For example, if 8,400 of 10,000 policies due were renewed, retention is 84%.
Split by product, channel and customer tenure, and check what happens to price at renewal, since price rises affect retention.
Where it is used
Protecting the book
Track how much is kept.
Testing renewal pricing
See the effect of price changes.
Improving customer experience
Focus on service and claims.
How to improve it
Tips and common mistakes
- Follow regulatory rules on fair pricing at renewal.
- Compare retention with lapse rate for a full view.
- Look at retention by tenure.
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