Insurance Company Client Retention - how to retain clients and advisers

Some time ago the McKinsley Quarterly published work on limiting customer churn in insurance. Whilst the report looked at various types of insurance contracts across general and personal risk the learnings can and should be applied to the life market in Australia if not globally.

One of the interesting findings was that some companies suffered high departure rates despite reducing prices, highlighting that price and customer price sensitivity may not in fact be a pre-determining factor to a resultant high lapse rate.

First and foremost, customers of insurers have relatively low barriers to an exit. Secondly price is but one of several factors that sees a client depart.

McKinsey identified several factors within the insurers control that impacted on retention rates:

- Lack of service differential for clients with a high policy spend
- No service differential between older and younger clients with older clients less likely to stray
- Discounts to long term customers (who are less likely to leave) and thus a lack of focus on clients at threat
- misunderstanding the profitability of the client base in regard to the application of retention activity in that there is not adequate focus on the clients worth keeping
- Engagement of the adviser force
- Poor claims experience
- Poor service experiences

None of the above factors are adviser driven. They are all associated with the client experience and the service encounter. And most importantly the client for an insurer is not only the end policy holder but the adviser distribution force.

So what's important to advisers when it comes to insurance providers?

PCE are told by advisers:

- passing back of policy benefits to all policy holders
- consistent pricing
- underwriting relationships which encompasses the ease of collaboration and contact with underwriters
- fast efficient administration
- claims service and payment protocols
- value adds and true business development
- price

In short it's about being able to speak with your insurance provider representatives when you need to and long term sustainable relationships built on efficient service and empathetic claims delivery.

Are there instances where a shift from one insurer to another is adviser driven for the sole purpose of generating a commission payment to the adviser? Sure, and no set of protocols around restrictions to an advisers business model be it legislated or otherwise will stop those instances.

But would a risk adviser need to shift business from an organisation that provided solutions designed around a focus on a positive client and adviser experience in line with the areas discussed above? Never say never, but mostly likely the answer would be no.