Page 98 - The UnCaptive Agent

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description of how you will sell them in the first place.
Or, you can develop separate documents for these things.
However you go about it, before thinking about how
you’re going to get clients, I think it’s worthwhile to
build a strategy for keeping them after you get them.
One of the mistakes that I see repeatedly with small
and relatively new insurance agency owners is that they
are focused on selling new business and give very little
thought to keeping the business they’ve already got on
the books.
If you’re growing your commissions by twenty per-
cent a year and you have eighty percent retention of
your current book, you’re going to go exactly nowhere.
The only way to grow your agency over time is to
keep the clients that you have and add to them every
year. According to the “2018 Agency Universe Study”
conducted by the Independent Insurance Agents and
Brokers Association, the average agency retention among
small agencies (which they define as those with less than
$150,000 of annual revenue) is eighty-five percent. We
see more typical rates of retention in the first few years
of an agency’s life of seventy-five to eighty percent due
to a lack of understanding of its importance by founders.
In comparison, the largest agencies in the survey enjoy
a retention rate of about ninety percent. By increasing
the rate of retention from eighty-five to ninety percent,
a $150,000 agency can grow to a $244,000 agency over
ten years without increasing its current rate of produc-
tion of new business.
It’s interesting to note that according to a J.D. Power
Study, agencies with a higher Client Satisfaction Index
average 95.5 percent retention, whereas agencies with
a low Client Satisfaction Index have about eighty-two
percent retention. High client satisfaction is a function
of service and communication. For every $100,000