How Active Risk Management Can Prevent Insurance Customer Churn

Having more knowledge about your current book of business helps you provide a superior customer experience while managing your business risk.

(Image credit: Adobe Stock.) 

Insurance companies spend billions of dollars every year to bring in new business, which means your customers may be prompted to review their coverage options at any given time. An active risk management program can help inform your customer engagement and retention strategies so you can act before your policyholders switch or an unidentified change in risk can negatively impact the customer or your business.

Speed: Act faster on customer insights

A successful active risk management program will continuously analyze your book of business and proactively alert you to specific events, so that you can act fast to reach out to your customer at the point of need.

Precision: Increase your relevance

As things change in your policyholders’ households, so do their needs and expectations of you. With insight into the types of changes your customers are facing, you can offer an exceptional service experience because you are better prepared for a relevant conversation with your policyholders when they’re ready to talk about it.

When fast is too fast

You must act fast, but you must also balance that with knowing when it might be too fast.  For instance, you may know when a policyholder becomes engaged. On the surface, it would seem best to reach out as soon as you’re aware of the engagement. But that may not be the best time. Our analysis shows that acting on the leading indicator of getting engaged introduces noise – you end up reaching out to lots of engaged couples before they are really ready to talk about insurance.

Your profitability suffers as you burn up time and resources trying to converse with your policyholder when he isn’t yet ready for that conversation. Secondly, your customer relationship may suffer from the repeated calls and pressure. And thirdly, your agency engagement suffers:  Agents lose interest quickly when they do not promptly realize a benefit from their activities.

You need to act fast when your policyholder is ready for the conversation.  That is balancing speed and precision in a way that improves your customer’s experience as well as your profitability.

Know your goals

Your business priorities will guide you to the types of events that your program monitors.  For example, if profitability is a number one goal, you would likely want to be aware of a new youthful driver in the home.  If your goal is to increase retention, you would want to know which policyholders are considering changing their coverage.

With an active risk management program that continuously analyzes your book of business, automatic alerts can be scheduled for specific events that best meet your priorities. The relevant and timely insight allows you take on the role of an advisor by engaging your customers in a relevant conversation based on their changing needs at a time when they are most likely to be ready to talk.

Active risk management: A competitive advantage

Having more knowledge about your current book of business helps you provide a superior customer experience while managing your business risk. The speed and precision you gain with an active risk management program drives competitive advantage.

 

Vic Bayus // Victor Bayus is Vice President, Product Management Insurance, for the risk solutions business of LexisNexis. He joined the organization in 2010 and is responsible for managing existing products and developing new data solutions for the insurance industry. Prior to joining LexisNexis, Bayus spent 11 years at S1 Corporation in product management where he was responsible for launching and growing insurance and financial services software solutions. Bayus also spent more than six years in consulting roles with firms such as McCall Consulting Group and Accenture.

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