The persistency ratio is a measure used mainly in life insurance to show how many policies stay in force over time. It is calculated by dividing the number of policies, or the amount of premium, still being paid at a given point by the number or amount originally issued in the same group. It is usually reported for policies reaching their 13th month and again at later anniversaries.
High persistency matters because the cost of selling a life policy, chiefly commission and insurance underwriting, is paid up front and recovered from premiums over several years. A policy that lapses early is usually loss-making for the insurer and poor value for the customer. Low persistency can indicate mis-selling or unaffordable products, so regulators in several markets require it to be published. It also appears in policy administration reporting. Its complement is the lapse rate.