Nearly half of agencies lose 15-20% of policy renewals each year
Agents are losing about $43 million in premiums each year from canceled policies, according to Vertafore.
The use of predictive analytics isn’t new to the insurance industry’s bigger players, but for independent agencies, the utilization of this data science is limited.
Researchers at Vertafore sought to address this, developing a new analytics tool that launched in August. Vertafore’s RiskMatch Retention Prediction analytics tool sources aggregated data from 3,700 agencies. Its purpose, Vertafore says, is “to help agencies modernize with analytics that support data-driven business decisions and increase profitability.”
Vertafore analysts used this tool to source new research on independent agency retention and published their findings in a new whitepaper.
Researchers found that nearly 48% of independent insurance agencies are losing between 15–20% of their policy renewals every year.
In order to combat that drop-off, Vertafore believes agencies need to strengthen their analytics strategies by using descriptive, diagnostic and predictive analytics together “to glean actionable insights to increase customer retention.”
The report and its research found a significant revenue gap between losses from non-renewals and gains from new business each year. According to Vertafore, if it were not for the expansion of existing customers into new insurance product lines or increased coverages, the typical agency would not see annual growth.
The whitepaper gets more specific on policy retention, categorizing the proportion of policies most and least at-risk of non-renewal. See Figure 4 below.
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