Free calculator for insurance agency owners
How many policies in force does an insurance agency need to break even?
An agency's costs are mostly people and office, and they stay put as policies come and go. Each policy in force pays a commission. Break-even is the number of policies that covers the agency.
Break-even point
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policies in force a month to cover every cost
Profit at today's level
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per month, before owner pay
Cushion above break-even
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how many you could lose and still cover costs
The starting numbers are an example for an insurance agency. Replace them with yours.
The worked example
Each policy brings in $95 a month and costs $25 to serve. That leaves $70 toward fixed costs of $40,000 a month. Divide one by the other and you need 572 policies in force to break even. Every policy past that adds $70 to profit.
Ways to lower break-even in an insurance agency
- Raise retention. Keeping a policy costs far less than writing a new one.
- Round out accounts with more lines per client.
- Move small personal lines to a service center or online service.
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