How to calculate insurance book of business growth
An insurance book grows when new policies added exceed policies lost to attrition. A simple annual forecast applies retention to the starting book, then adds new policies. Repeating this calculation over several years shows whether the book is likely to expand or shrink under your assumptions.
Ending policies = Starting policies × Annual retention rate + New policies added
Annualized gross commission run rate = Ending policies × Average annual commissionable premium × Blended commission rate
Worked example: growing a 500-policy book
Suppose an agency starts with 500 active policies, retains 90% annually and adds 100 new policies in year one. The first year ends with an expected 450 retained policies plus 100 new policies, for 550 policy equivalents. At $1,800 average annual commissionable premium and a 12% blended gross commission rate, the ending book represents approximately $118,800 in annualized gross commission run rate. If new policy production increases 5% in year two, the model adds 105 new policies to the retained portion of the book.
Retention and production work together
Strong new business production does not guarantee a growing book if existing policies cancel or fail to renew. Likewise, a high retention rate can preserve commission revenue even during slower production periods. Model both assumptions to understand how much new business is required to offset expected attrition.
Book size is not the same as agency revenue
Policy count is a useful operational measure, but different policies have different premiums, commission rates and payment schedules. This tool uses one blended premium and commission rate to estimate an annualized gross commission run rate. That estimate is not a prediction of cash collected or profit after producer payouts and expenses.
What this forecast assumes
The model assumes the same retention rate each year and applies it to the book at the beginning of the year. New policies are added at year end, so they enter the retention calculation the following year. Average premium and commission rate stay constant. Policy equivalents can be fractional because the model represents expected values rather than actual issued policies.
Better visibility as you grow
More policies mean more commissions to track.
SplitVerde helps agencies compare expected commission payments with carrier statements, investigate discrepancies and organize producer splits and payout records.
See SplitVerde plans →Frequently asked questions
How do you calculate insurance book of business growth?
Start with the current number of active policies. Apply your assumed annual retention rate, then add projected new policies. Repeat each year, adjusting the number of new policies if production is expected to grow or decline.
What is the difference between retention and new business growth?
Retention is the share of existing policies that remain in the book. New business growth measures how policy additions change from one year to the next. Both influence the total book size.
Does the calculator show earned commission revenue?
No. It shows an annualized gross commission run rate based on the projected ending policy count, average annual commissionable premium and blended commission rate. It does not model the timing of actual earned or paid commissions.
Why does the forecast show fractional policies?
The forecast uses expected values. A projected 90.5 policies is a statistical estimate, not a literal half-policy. Actual counts will be whole numbers.
Can the book shrink even when I add new policies?
Yes. If attrition from the existing book exceeds the number of new policies added, the total policy count decreases.