What is persistency in insurance?
Persistency is the share of policies still in force after a given period — usually measured at 13 months, and by premium rather than by policy count. It is the clearest measure of whether business you wrote was real, and carriers, uplines and buyers all watch it.
Persistency is the number that decides whether written premium meant anything. A producer with high production and poor persistency is selling policies that do not stay, which costs the carrier money, costs the agency chargebacks, and eventually costs the producer their contract.
Measure it by premium, not by count. Losing ten $30-a-month policies and losing one $300-a-month policy are the same number of lapses and very different events.
It is also the biggest single driver of what an agency is worth. Book retention above 90% earns a premium valuation multiple; below 80% compresses it, because a buyer is purchasing future renewals and lapses are the risk they are pricing.
| Producer A written premium | $400,000 |
|---|---|
| Producer A 13-month persistency | 92% |
| Producer B written premium | $400,000 |
| Producer B 13-month persistency | 68% |
| Difference in retained premium | $96,000 |
Before counting chargebacks, which fall entirely on producer B.
Longer read: /blog/how-much-is-an-insurance-agency-worth