AGENCY TECHNOLOGY to shy away even further from reaching out to customers . Respondents said their exchanges were mostly limited to transactional matters like renewals notices ( 79 %); policy updates ( 67 %); and terms and conditions amendments ( 37 %), leading to disinterest and disengagement from consumers .
Irregular communication with their insurance professional makes most insureds apathetic about spending more money or purchasing another policy . While we are still analyzing the data to confirm the root cause , early results support that the less an insured interacts with their insurance professional or company , the exponentially less likely account rounding successfully during renewals will be .
Account rounding during renewals is an uphill battle . Especially if there is an exposure change that increases the final price of the policy renewal , insureds are likely to defer new purchases . This makes it difficult to multi-line existing accounts , while at the same time increasing the likelihood that the insured will churn .
HOW TO BETTER ACCOUNT ROUND
Insurance professionals need to address purchasing apathy by focusing on digitization efforts on tools that allow proactive and on-demand communication . While insurance agents tend to have high satisfaction scores for insured communication , many lack tools to digitally engage policyholders . In 2020 , 44 % of US insurance agents flagged digital tools as the most significant resource to invest in , along with digital portals to proactively engage policyholders and convey important news .
During the renewals period itself , insurance professionals should double-down on reducing churn , rather than viewing this periodic interaction as a sales opportunity . Increasing customer retention rates by 5 % increases profits by 25 % to 95 %, according to research done by Frederick Reichheld of Bain & Company . Renewals are challenging enough , especially in the current climate of rising premiums and carriers changing their risk appetite . Based on preliminary results , account rounding is on average most effective 120 days before or after the renewal period . As such , insurance professionals should schedule a follow-up during this window and have any additional policy conversations during this time .
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it is clear that the insurance industry has a billion-dollar communication and account rounding problem .”
When a prospect or insured has an immediate insurance need , such as adding a new vehicle , new family member , etc ., the optimal time to approach them about covering the risk is as soon as possible . Based on the data we reviewed , following up sooner for new risk equates to a high likelihood of making the sale . Interestingly , this window may also present a foothold for competitors to take business , but more research is required to confirm this .
For insurance sales , a constant challenge has been , and remains , how do we know what we do not know ? This challenge equally applies to timing account rounding as it does learning about new needs , and estimating churn risk approaching renewals . Please note that the preliminary results above are averages , with significant deviation when broken down into age , geographic area , and exposure sub-groups . So while for an average insured , following up within 120 before or after the renewal period is optimal for account rounding , for some , it may be 7 or 140 days .
Digitization , and more specifically digital
NOVEMBER / DECEMBER 2023
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