3 tips carriers should know when it comes to customer retention

Customers will always be the lifeblood of the insurance industry, and so carriers must find new and innovative ways to keep them around for the long haul.

Carriers have addressed customer retention in a number of ways. For example, some leverage third-party data to supplement in-house information and use that data to aid in targeting and segmentation. (Photo: iStock)

Today’s insurance marketplace is highly competitive. With a number of companies to choose from, consumers are not tethered to any one company these days. While this is great for policyholders, carriers of all sizes are sure to feel the effects of a lost customer in their bottom line.

LexisNexis Risk Solutions, a subsidiary of RELX Group, has released a new report, Acquire with Retention in Mind, filled with insights to help carriers identify ways to maintain policyholder retention rates.

It’s much more profitable to retain and defend existing clients than acquiring new ones. In fact, LexisNexis Risk Solutions noted that research suggests that it can take as many as seven new policies to cover the value of one tenured policy.

Attracting clientele is one thing, but keeping them around for the long haul is a whole new ballgame. With this in mind, here are three tips carriers can use going forward when it comes to customer retention.

Related: Insurance marketing: It’s not about piling up strangers’ email addresses

Identity verification matters

More complete and accurate identities are indicative of higher-scoring prospects who are more likely to convert and remain with the company as long-term policyholders.

Identity verification confirms the following criteria:

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Advanced analytical models are highly predictive

Advanced analytical models that predict risk and the likelihood of attrition have proven to be highly effective in terms of identifying prospects who are more likely to to be retained beyond the first renewal period.

According to LexisNexis proprietary data, policies identified as high risk were three times more likely to lapse than low risk policies. (Photo: Courtesy of LexisNexis Risk Solutions)

Insurance-specific analytic models are proprietary models based on demographic data such as gender, home ownership, length of residence and the number of moves in recent years, combined with financial data such as wealth, income, bankruptcy and number of open trades.

Related: 5 things insurance agents can do to hedge against digital disruption

Know your prospect in real time

After identifying a high-scoring lead, agents and brokers can prioritize and route the lead accordingly. Duplicate and fraudulent leads, along with existing customers, are filtered out in the process. The result is a higher degree of customer satisfaction, which can translate into long-term customer retention.

Carriers have addressed customer retention in a number of ways. For example, some leverage third-party data to supplement in-house information and use that data to aid in targeting and segmentation. But third-party data may not be insurance specific, and so it lacks the necessary relevance and detail that insurance carriers need to really gain an edge on the competition.

Today’s insurance marketplace relies on data like never before, and so the right data and robust analytics can make the difference. Customers will always be the lifeblood of the insurance industry, and so carriers must find new and innovative ways to keep them around for the long haul.

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