For 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. 

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.

Premium

You need to login to access this

Login

What are CIP Points? About ANZIIF Membership