Everyone knows that data and analytics are king in the insurance industry when it comes to evaluating everything from risk profiles and customer churn to marketing tactics and new product rollouts. But just as important as those metrics is how insurers measure agents’ job performance.
Easily accessible key performance indicators (KPIs) like policies sold or renewed are helpful, but they don’t paint the whole picture of how well an agent is doing. Even more important, those data points don’t effectively illustrate an organization’s top performers who should be rewarded, leaving them at risk of being poached by other companies.
To help insurance companies gain a holistic view of their agents, here are the top five insurance KPIs to use to track their performance.
Top KPIs for Insurance Agents
1. Written Premium
Defined by Investopedia as “the total amount that customers are required to pay for insurance coverage on policies issued by a company during a specific period of time,” written premium rates are arguably the most important insurance KPI for agents. This is because written premiums are typically an insurer’s greatest source of revenue and are measured either as a gross or net number.
For example, if an agent signs 50 new policy contracts that cost $200 each during a single quarter, the total written premiums for that period would be $10,000. These numbers are good indicators of agents’ selling ability and shows how much they are contributing to the bottom line.
2. Quote-to-Bind Rate
Quote-to-bind rate is a great tool to determine how effective an insurance agent is at closing deals. This KPI measures how many policies are signed compared to how many quotes an agent gives. For instance, if an agent gives 115 quotes in a quarter, and signs 45 of them to policies, their quote-to-bind percentage would be 39%. To boost this figure, some insurers incentivize agents to increase their quote-to-bind rate from one quarter to the next.
3. Loss Ratio
Having a high loss ratio typically correlates with financial troubles for those in the property and casualty vertical. This makes measuring this insurance KPI critical for evaluating both agent and company performance.
Loss ratio measures the losses an insurer incurs due to paid claims as a percentage of premiums earned. This KPI is one half of an insurer’s combined ratio, which is used to measure total expenditures related to overall operating costs. For example, if an insurer pays $50 in claims for every $200 collected for premiums, its loss ratio would be 25%.
4. Growth Rate
As the name implies, growth rate measures how much an insurance company’s sales have increased or decreased during a set period of time. While there are numerous factors that go into the growth rate — many outside of agents’ control — this figure is still helpful in gauging individual agent performance.
This is because growth rate helps indicate an organization’s pace of market expansion. Typically, sales will increase as insurers roll out new products and enter new markets if agents are successful in their roles. As such, growth rate is an essential insurance agent KPI.
5. Renewal Rate
Measuring this KPI for insurance agents takes time, as it reflects the percentage of policies that are renewed versus the total number of policies an agent has sold in that period. This KPI is a good indicator of how well an agent does in terms of customer service and ensuring customer satisfaction. It also indicates not only agent performance, but can also shed light on what types of policies customers are more likely to renew. If there’s a certain policy type that is consistently renewed by customers, insurers might consider marketing this policy more, or even slightly raising rates.
Tracking these agent KPIs starts with good data, and that means having a high quality analytics solution. With a centralized insurance data analytics solution, carriers can collect, organize, and leverage data more quickly and effectively than with disparate systems. In short — an insurance KPI is only as good as the data used to inform it.