Auto Policy Renewal Rates

[Agent12345]

Hey everyone,

I posted this on the main board and just saw this P&C specific forum. I figured I would get better responses here.

I was curious to know what rate everyones auto policies are renewing at. I had read an article that projected 90% for the industry but through conversation with other people they believe it is significantly less. Where does everyone stand?

Thanks in advance.

 

[plewi003]

Are you referring to Retention Ratio? Preferred should be 87-90% nonstandard 60-65%.

 

[nyc2phi]

Hey everyone, I posted this on the main board and just saw this P&C specific forum. I figured I would get better responses here. I was curious to know what rate everyones auto policies are renewing at. I had read an article that projected 90% for the industry but through conversation with other people they believe it is significantly less. Where does everyone stand? Thanks in advance.

Yeah not sure what you are asking here either. It's either retention or % increase?

 

[djs]

Also, if you've been growing recently, your retention ratios will suffer a bit due to new clients. A stable book of business will generally have a much better retention ratio (but its not growing).

Dan

 

[Agent12345]

Sorry about the confusion. I am indeed talking about retention ratio.

Thanks again for the help.

 

[BlockO]

Are you referring to Retention Ratio? Preferred should be 87-90% nonstandard 60-65%.

I think the numbers you posted are in the ballpark, but a bit low on the non-standard side. especially for those who need state filings (SR22, SR50, FR44 etc.). Having your license suspended again seems to be a great motivational tool for keeping your policy active!

this brought up a question I've been meaning to ask: do 30 day policies affect retention ratio's?

once I'm familiar enough with a customer to know that they have a history of lapses due to non-payment, or if they say to me "I need proof of insurance to give to my employer" ..... I automatically steer them towards the non-standard 30 day policy.

this strategy has certainly helped me avoid chargebacks. but I'm not sure how it affects my retention rate, if at all.

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Also, if you've been growing recently, your retention ratios will suffer a bit due to new clients. A stable book of business will generally have a much better retention ratio (but its not growing).

Dan

very good point. I wonder if the carriers realize that?

 

[insurance1822]

I've seen long term Allstate agencies retain at 92%. I believe 90% is probably an accurate retention % for preferred business. If you're investing into retention (pre renewal phone calls, policy reviews, thank you calls, birthday cards etc) I think you should be able to achieve around 94-95%.

I don't know about non-standard retention rates BUT Blocko does so I'd listen to him.

 

[plewi003]

Nonstandard people continue to lapse their policy regardless of Fr44 and Sr22 status. You just need to have a good late pay follow up system in place. Our company average is 57% however my agency is at 65. It can be lucrative but labor intensive as well. You also don't want your book to be primarily non-standard either.

 

[insurance1822]

Nonstandard people continue to lapse their policy regardless of Fr44 and Sr22 status. You just need to have a good late pay follow up system in place. Our company average is 57% however my agency is at 65. It can be lucrative but labor intensive as well. You also don't want your book to be primarily non-standard either.

Block has mentioned it can be lucrative...can you elaborate? Our nonstandards pay less commission & it's typically (at least for me..) smaller premiums then preferred packages (who pay more.) With that poor retention rate how are you guys making solid money on non standard business? Is there that much new walk in business? Are you charging policy fees? Is there profit sharing better?

In my estimation the only way to outearn that poor retention is to have so much new business coming in that it works itself out. Maybe mining the bum book for preferred packages down the road? ENLIGHTEN ME

 

[plewi003]

Getting 14% new and renewal. Even though the retention is bad, about 40% of those clients will come back in to write a new policy in a few months. You can use it as a gateway to preferred by reviewing the renewal and re quoting to see if they qualify. Then you can multi-line as well. We write about 20-25 non-standard policies a month. Most are referrals, walk-ins.