Insurance Agency Key Performance IndicatorsJacob
KPIs are key performance indicators, and organizations use them to assess performance. They are quantifiable measurements that can help quickly determine historical, current, and future performance, based on the type of KPIs used and the platform selected to use them. For example, insurance agency KPIs can include the number of new net clients, net losses, renewal growth, producer quotes, average business book per producer, agency revenue, and revenue per employee. For the purposes of this article, however, we will focus on KPIs for insurance agency producers, although these KPIs will also be a key subset for agency owners and executives.
Key performance indicators should reflect the agency’s objectives, and it is very important to select KPIs that help quickly indicate the tactical and strategic success of your sales efforts. For example, the producer’s KPIs are listed below and can be very similar to the KPIs of many industry sales executives:
- New commission income
- Renewal commission
- Ratio of new net commissions to renewal commissions
- Average business book by producer
- Income from coverage lines
- Total new quotes
- Closing ratio (ratio of quotes to closings)
- Closed by lead source
- Income growth to date (and year after year)
- Income per employee
These key performance indicators help measure your business and offer indicators of past performance and future success. Year-over-year revenue compares 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 declined by 20% in the last quarter from the previous quarter, you can be pretty sure you will experience a drop in new business. However, if you experienced the same type of decline compared to the previous year, you have a better indication that you are on track for comparable sales year after year.
KPIs can vary by agency, but if they are going to be truly valuable to your agency, you must define and measure them consistently and accurately. KPIs must incorporate goals or objectives to track and measure performance. For example, our company’s 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 may have a goal of maintaining a $ 1 million business book for each veteran producer. You may have a different goal for new producers. These goals should be tied to your overall KPI tracking, providing quick insight into the status of your agency, with strong indications of future performance. These KPIs can be measured year after year, providing accurate historical information about their performance in mission critical areas. Larger agencies should consider using KPI rollups, where sales, marketing, accounting, and service KPIs are tracked departmentally, with a few mission-critical KPIs for each department accumulated on an executive list. This can be done manually or using an automated system.
What kind of systems can be used for KPIs? Your agency can use anything from simple Excel spreadsheets, CRM, agency management systems to sophisticated KPI dashboards. Selected web metrics obtained from Google Analytics or other web monitoring tools can also be used. KPIs should be kept in a modest number for optimal effect. For example, tracking 10 KPIs per month is reasonable, but tracking 50 would create an information overload. This is analogous to the dash of your car. Your measurements can include speed, fuel level, RPM, odometer, engine temperature, and oil level. That’s a total of six KPIs that can be tracked while driving. Some cars offer more sophisticated KPIs that include, average miles per gallon, current MPG, tripometer, and vacuum distance. These additional KPIs may not be constantly displayed as they may not be considered critical to your driving. Think of your insurance agency’s KPIs the same way, closely monitoring only those that are critical to your success.