It's not an overstatement to say that growth is the key to survival as the insurance landscape becomes increasingly competitive. Legacy carriers are not just competing against the carriers across town; they're facing threats from all sides, including tech-savvy, digital-native MGAs and highly responsive insurtechs. It hardly seems like a fair fight. Insurance companies are quickly realizing that legacy systems are holding them back from achieving their growth goals and making strategic investments in new technology. The question is, are they making the right investments to drive a holistic growth strategy?

Embracing evolution while keeping customers

Rather than fearing change, small and medium-sized insurance companies have a unique opportunity to reinvent themselves as digitally savvy, customer-focused organizations by focusing on customer engagement and retention. Most growth strategies emphasize the importance of new customer acquisition and adding new risk products. Insurers leverage modern technology to provide a speedy response, onboard customers quickly, and accelerate the underwriting and claims management processes to differentiate from competitors. These are all smart decisions. However, ignoring the value of retention as a vital part of your growth strategy would be a mistake. First of all, new customer acquisition is expensive. According to the Independent Insurance Agents of Dallas, the insurance industry has the highest customer acquisition costs of any industry. Further, it costs an average of seven to nine times more for an insurance agency to acquire a new customer than to retain one. Secondly, it's much more cost-effective to retain the customers you already have and focus on upselling new risk products and services that fit their needs. To do this, carriers must provide a seamless customer experience that images with them across multiple channels. To better understand the connection between customer experience and retention, we conducted a study of data from 250,000 P&C customers of 21 US carriers. The records were analyzed by an independent data scientist specializing in insurance data analysis. What we found was that high-quality, feature-rich customer portals and proactive customer outreach can dramatically impact customer retention and premium renewal.

The power of omnichannel

One of the study's most significant findings is that utilizing multiple self-service channels significantly increases customer retention. For example, customers using an insurance portal are 12% less likely to cancel their policies compared to those who do not engage with a portal. Those who use multiple channels, such as phone, email, and SMS, are 21% less likely to cancel their policies, and those who repeatedly use multiple channels show a 25% higher retention rate. Customers who use advanced features like policy document retrieval and ID card access exhibit even higher retention rates. Repeated interaction with the portal solidifies customer trust and commitment. So, what does this mean for carriers who want to keep their customers as part of a larger growth strategy? The slideshow above illustrates 10 best practices for retention using customer engagement strategies. A true omnichannel experience drives customer engagement. It increases customer satisfaction, retention, and lifetime value. But often, the term 'omnichannel' is misunderstood and underutilized. A robust omnichannel means more than just giving the customer many ways to communicate with insurers. Consumers don't want more channels to communicate with; they want specific channels that suit their unique needs. When executed well, an omnichannel experience means the different tools an insurer has and gives to its customers are all interconnected. It means that when customers interact over the phone or on the web, they enjoy the same, consistent experience. The personality of the insurer shines through each real-time interaction when an insurer follows an omnichannel philosophy. All of this adds up to a stronger relationship with your customers, who, in turn, will reward you with their loyalty. While growth may be the name of the game, customer retention is crucial to getting there.

Steve Johnson