Retention Rate
Also known as: Account Retention · Persistency
Retention rate is the percentage of accounts (or premium) that renew with the agency from one year to the next, with industry-typical retention for P&C agencies in the 85–90% range.
What is retention rate?
Retention is the single most important book-quality metric. It tells a buyer how sticky your relationships are and how much of the book they can expect to keep.
Retention can be measured by account count, premium volume, or commission revenue — the three rarely match exactly because larger accounts often retain better than smaller ones. Industry-typical retention is 85–90% on a premium-weighted basis. Below 80% is a red flag indicating service issues, carrier instability, or rate-shopping clients. 90–95% is above-average. 95%+ is best-in-class and rewarded with multiple-band premium.
In the MyAgencyValue tool, retention is captured as a bucket because exact retention numbers are often noisy at small scale. The bucket determines whether you're penalized, neutral, or rewarded in both Tier 1 and Tier 2.
Why it matters in agency valuation
Retention drives valuation in two ways. First, it directly adjusts the multiple — sub-85% takes a quarter-turn off, 95%+ adds a quarter-turn. Second, it drives book-roll probability: high retention means the buyer will keep most of what they bought; low retention means they'll keep less. Both effects compound.
Example
Common questions
How do I measure retention if I don't track it formally?
Pull a list of all accounts as of a date 12 months ago, then check how many are still on the books today (or were renewed and replaced with an equivalent line). Premium-weighted retention is preferred — sum the retained premium and divide by the prior-year premium. Many AMS systems can produce this report directly.
Related terms
Book roll is the process by which an acquired book of business transfers from the seller's agency to the buyer's agency post-close, and book-roll probability estimates how much of the book actually retains through that transition.
Account concentration measures the share of revenue tied to the agency's largest accounts — high concentration creates outsized risk if a single client churns post-close.
A quality band is the up-or-down adjustment applied to a base multiple based on book quality factors — typically capped at ±1.5x of EBITDA multiple, distributed across 7–8 individual factors.
Last reviewed: April 24, 2026
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