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The secret to retaining insurance nomads
Ashutosh Uniyal Associate Vice President, Financial Services, ANZ | February 9, 2021
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Introduction

Customers are going digital in all aspects of their life, and insurance is no different. Rising cost-consciousness is a continuing trend, and the pandemic economy has only amplified it. Digital holds immense value for growth today. It also makes switching between providers and sellers easier. In insurance, retention has been reflected in the lapse rates, and the problem is not small enough to be ignored. If a customer is looking for lower premiums on their life/property insurance, they are probably already looking elsewhere before your company rolls out a renewal offer. Therefore, the advice of ‘offering the customer what they want’ is now an industry-agnostic proposition that always holds true, and is truer for the insurance industry today.

An enterprise-wide problem

In Australia, lapse rates in the insurance industry have historically correlated with unemployment rates. In May 2020, Australian unemployment rates were at a five-year high. Unemployment encourages policyholders to review their existing policies. The COVID-19 fuelled economic and personal uncertainty has lead customers to redefine their preferences. The increase in premiums for life cover with increasing age, coupled with a reduced need when older, is another factor that affects lapse rates in the life and annuity sector. In auto insurance, the window for targeting the right products is wider than in other segments, suggesting a heightened risk of losing existing customers.

While the customer retention rates in the global insurance industry average around 83%, top players outperform this figure by almost 10%, indicating that low performers hang much below average. In Australia, a survey of 120,000 general insurance policies showed that only 77% of policies were renewed with the same company without approaching other companies first, down by 2% from a similar 2013 survey. Moreover, a lack of clarity on the right products and offers to target existing customers cost opportunistic value to a company. The first step to retaining customers in this high-pressure environment is to recognize the gaps in the operational model of the enterprise.

Bridging the lapse

Dissatisfaction fuels abandonment. Research indicates that only 47% of insurance customers have a satisfactory experience in the interactions with their insurance provider. Customers deal with shuffling priorities and financial situations, which lead them to switch their insurance providers. While some might be simply looking for lower premiums, others might be looking for targeted value-add services on their plans. In this process, customers interact with you and other brands through multiple digital channels. Quantifying and integrating these interactions within a retention strategy requires reimagining the way agents see the customer, and how your enterprise extracts value from past interactions. Speed is the key here, which means that your agents must have access to the right information instantly.

Imagine a scenario where an existing customer holds multiple policies with you but has migrated to other providers in the past. The customer might be browsing your website for information on premiums, scrolling through pages on your app, and could even have called your contact center asking for eligibility for loyalty programs. How can your company empower that agent with the right offer that will help in retaining customers looking for lower premiums after receiving a pay cut?

Aggregating all these interactions with a comprehensive view of the customer enables the agent to take an empathy-based approach. With this view, we can review their life trajectory, their existing policies, satisfaction rate, income sources, information about their area of residence, and their vehicles, etc. Disparate data points such as these, collated into a singular view helps your agent target the right offer/product within a short time window.

Visualizing the use case

Smart CRM solutions such as Microsoft PowerInsurance leverage your customers’ past interactions with your company through all channels. It aggregates customer data from within your enterprise and sources beyond the enterprise – like government data for ID verification and tax details, bank account information, credit-rating agencies, IoT sensors, and much more. The customer data is embedded within a UI designed for augmenting operational workflows based on real-world use cases.

An agent empowered with PowerInsurance CRM solution can leverage a 360-degree view and create a customer retention strategy. Consider a situation where your organization targets dissatisfied customers with a 10% premium discount or loyalty rewards for staying with your company. Based on the satisfaction score in the customer view and the offers she/he is eligible for, your agent simply communicates it to the customer while authorizing the offer with a single click.

With PowerInsurance, retention can be that easy and elegant. Throw Microsoft Azure AI into the mix, and such offers can be assessed in (almost) real-time and agents can be informed of future offers that are likely to succeed in retaining clients. Moreover, based on the client’s specific demographics, AI can design a cost-effective offer tailored to that person, maximizing chances of success. Beyond customer success, inbuilt measures for fulfilling compliance requirements can help enterprises steer clear of financial mines in an industry with increasing regulatory focus.

Conclusion

Customer retention in insurance industry has been a historical problem in Australia. Moreover, insurance providers often misjudge loyalty based on the inertia of dissatisfied customers. Implementing Microsoft PowerInsurance with capable technology partners can bring exponential value and scalability to your enterprise. Leveraging years of expertise, PowerInsurance empowers your organization with an enterprise-wide scalable, integrated CRM solutions framework. AI-driven targeted offers, make retaining customers as easy as the click of a button. As the pandemic widens its scope, retaining customers will be key to staying afloat amidst rising pressure, while bringing scalability and growth. Therefore, insurance providers must implement smart CRM solutions to keep up with the customers’ changing needs and priorities to retain the business they bring for their enterprise.

Insurance providers must implement smart CRM solutions to keep up with customers’ changing needs and priorities to retain the business they bring for their enterprise.

References:

  1. https://powerobjects.com/thanks/the-insurance-industrys-plan-for-recovery-from-covid-19/
  2. https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/financial%20services/latest%20thinking/insurance/winning_share_and_customer_loyalty_in_auto_insurance.ashx
  3. https://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2014/jul/Life-Insurance-Customer-Retention.pdf
  4. https://www.pwc.com.au/insurance/pwc-insurance-snapshot-april-2020.pdf
  5. https://www.actuaries.digital/2015/04/16/customer-retention/
  6. http://www.roymorgan.com/findings/7783-most-general-insurance-policies-still-renewed-automatically-201811012259#:~:text=The%20most%20loyal%20customers%2C%20based,%25)%20and%20Youi%20(70.3%25).
  7. https://www.i-scoop.eu/digital-transformation/insurance-industry/changing-customer-expectations-regarding-insurance-providers-gen-y-effect/
  8. https://www.propertycasualty360.com/2019/08/28/how-insurance-agencies-can-boost-customer-retention-by-95/?slreturn=20200819042318
  9. https://www.the-digital-insurer.com/how-connected-insurers-are-improving-customer-retention-ibm-report-by-minas-koulisianis/