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CUSTOMER RETENTION by Domini Stuart
Hanging on to a good thing Comparing and switching insurance providers has never been easier for customers, so how are insurers responding to the retention challenge?
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or many insurance policyholders, when it comes to engaging with their insurer, no news is good news. However, an annual renewal email — and price increase — is hardly a great foundation on which to build a long-term relationship with a business. There are good reasons for insurers to focus on keeping their existing customers happy. Acquiring new ones is expensive — estimated at five times the cost of retention. Plus, customers who stay loyal because they’re pleased with the way they’re treated can be the best ambassadors for a brand. However, research by United States company Invesp found that just 18 per cent of businesses prioritise customer retention, compared with the 44 per cent that put acquisition first. This could be a hangover from the time when customers were more inclined to stay with one provider for a lifetime. Back then, with retention pretty much in the bag, it made sense to concentrate on writing new cover. Building loyalty can be hard work and, because it takes time to see results, acquiring new customers is a much faster and more visible way to boost revenue. Now, the internet and social media have made it easy for customers to compare features, prices and quality of service, and buying insurance has become a far more active process. Changing providers is as easy as a few taps on a screen, so it’s up to insurers to convince their customers they’ve made the right choice. Yet, there are still many policyholders who don’t hear from their providers from one renewal to the next.
JOURNAL // ISSUE 02 2022 // ANZIIF.COM
IN SHORT › Today’s insurance
consumers have the power to compare policy features, prices and service, and to switch providers quickly and easily.
› Insurers need to work
harder to retain customers — and good communication is key.
› Technology provides
new opportunities for more frequent communication, but it’s important to remember that many customers still prefer personal contact, particularly when they’re looking for advice.
The what, when and where
More frequent communications is an obvious place to start a retention strategy, but there are provisos. ‘Insurance is still a lower-touch connection,’ says Richard Park, general manager of marketing, portfolio and pricing at AA Insurance. ‘Today’s consumers are overloaded with information on multiple fronts, so your messages need to be relevant. We found that clear, succinct and pertinent communications are more likely to be read — and they also make it easier for customers to make informed decisions about their insurance.’ To put this into practice, AA Insurance launched a range of educational videos on social media to help its customers better understand their cover. It also began working with WriteMark, an accreditation awarded to documents and websites that achieve a high standard of plain language. ‘We’ve achieved WriteMark accreditation on several policy documents and we plan to upgrade all of our policy documents to WriteMark Plus,’ says Park. ‘This shows that, as well as meeting a set of established plain-language criteria, you’ve tested the content on policyholders.’ Christian Bieck, global insurance leader for the IBM Institute for Business Value, believes that insurance policies are often too complex and verbose for the average consumer to comprehend. ‘As a result, consumer trust in the industry is strained, and understandably so,’ he said at a round table event hosted by Reuters Events and IBM. ‘Why trust something that you don’t understand?’
Digital with a touch of the personal
Meanwhile, the latest Accenture Global Financial Services Consumer Study found that, while the appeal of digital channels and services is higher among younger demographic segments, desire and preference for digital among older consumers is growing. For example, 71 per cent of older consumers say they would like the internet chat/video insurance claim process to replace the traditional in-office claim process — up 3 per cent from two years ago.
