What Is Cost Per Policy (CPP) in Insurance?

Cost per policy is the single most useful number for evaluating a lead provider. It tells you — in one figure — how much each bound policy cost you in lead spend.

In this guide:

• The short definition
• The formula
• Healthy benchmarks
• Why it's better than cost per lead

What is cost per policy?

The total lead spend divided by the number of policies bound from that spend.

Formula: CPL ÷ (quote rate × close rate)

Or simpler: total lead spend ÷ policies bound

Example. Leads cost $12 each. Quote rate is 50%. Close rate is 25%.

CPP = $12 ÷ (0.50 × 0.25) = $96 per bound policy

Every bound policy cost you $96 in lead spend.

Why is CPP better than CPL?

CPL only tells you what a lead costs. CPP tells you what a customer costs.

CPL of $10 sounds great — until you realize your quote rate on that provider is 15% and your close rate is 10%. That's a CPP of $667 per policy. Disaster.

Another provider at $20/lead with a 50% quote rate and 30% close rate = $133/policy. Cheaper CPL doesn't mean cheaper customers.

Healthy CPP benchmarks

CPP should be under 25% of the first-year commission you earn on that policy.

Example. Average auto policy: $1,200 × 12% commission = $144 first-year commission. Healthy CPP on auto leads: under $36.

Frequently Asked Questions

How do I lower my CPP?

Three levers: (1) improve your quote rate with tighter lead filters and faster response time, (2) improve your close rate through coaching, (3) negotiate lower CPL with the provider.

Does CPP include service cost?

No — CPP is pure lead spend per policy. Service cost is a separate number for the full ROI calculation.

What's a realistic CPP for auto vs. home vs. life?

Auto: $30–$80. Home: $40–$100. Life: $80–$200 (much longer sales cycle). Commercial: varies wildly.

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Last updated: 2026-04-18