Which ratio indicates an agency's ability to retain clients at renewal?

The retention ratio is a critical metric for evaluating an agency's ability to keep its clients over time, particularly at renewal periods. This ratio measures the percentage of clients that renew their policies or contracts with the agency compared to the total number of clients eligible for renewal. A high retention ratio signifies that clients are satisfied with the agency's services and are choosing to remain with them, which is fundamental for long-term success.

Additionally, the retention ratio can provide insights into client loyalty and the effectiveness of client relationship management efforts. When an agency effectively retains clients, it often leads to increased revenue stability and growth, as the costs associated with acquiring new clients are typically higher than those of retaining existing ones. This makes the retention ratio a vital tool for assessing the overall health and performance of an agency within the insurance industry.

In contrast, while metrics like profit ratio, growth ratio, and market share are important for evaluating an agency's financial health and market position, they do not specifically measure client retention. The profit ratio focuses on profitability, the growth ratio examines an agency's expansion over time, and market share assesses the agency's position relative to competitors—not the specific aspect of retaining clients.