Understanding Persistency in Insurance: How to Calculate and Track It

Persistency is a critical performance metric in the insurance industry that measures how many placed policies continue to generate premium payments to the carrier over time. This session, led by Andy Albright of National Agents Alliance, breaks down the concept of persistency from the ground up. You will learn why persistency calculations begin with placed business rather than submitted business, how the free-look period factors in, and why measuring a single month of business requires tracking premiums for at least 13 months. The session also explains why evaluating a full 12-month block of business extends the measurement window to 25 months. By the end, you will have a clear, practical framework for calculating both single-month and annual persistency rates.

Learning objectives

• Distinguish between submitted business and placed business and explain why persistency calculations start with placed policies
• Define the free-look period and describe its role in determining whether a policy counts as placed
• Calculate 4-month persistency by comparing the number of policies that received all four premium payments against the total placed policies
• Explain why tracking a single month of placed business requires a 13-month observation window
• Determine the total time required to measure persistency across a full 12-month block of business

Key takeaways

• Persistency measures how many placed policies continue paying premiums to the carrier, not how many policies were submitted
• A policy is considered placed only after it has been issued and survived the free-look period, typically at least 30 days on the books
• 4-month persistency is calculated by dividing the number of policies that received premiums in all four months by the total number of placed policies — for example, 7 out of 10 equals 70%
• Measuring persistency for a single month of business requires waiting 13 months to confirm whether each policy continued generating premium
• Evaluating persistency across a full 12-month block of business requires a 25-month window, because the last month placed must still be tracked for an additional 13 months