Customers may be happy with your pricing and your claims processing. They may even recommend your company to others. But if you don’t engage them with sufficient frequency and relevance, they still may drop you for another carrier.
That’s the finding of Ernst & Young’s 2014 Americas Consumer Insurance Survey, entitled “Reimagining Customer Relationships.” The survey, which queried 24,000 respondents in 30 countries, notes that two in five customers have left their insurers within the past 18 months. Perhaps even more notably, just about the same percentage (38 percent) left their insurers even though they would be “very likely” to recommend that insurer to others.
The attrition rate is even higher for life insurance, with 44 percent of “very likely” recommenders terminating relationships with their carriers.
Those numbers indicate that Net Promoter Scores and other similar metrics may not be as useful as once thought when it comes to customer retention—and that insurers may have to take additional steps to fight attrition.
Of course, insurers face a number of issues when it comes to customer churn. In the digital economy, it’s easier than ever for customer to change carriers on the slightest whim. And insurers generally score lower with the buying public when it comes to trust (70 percent) than do other types of companies such as supermarkets (84 percent) and banks (82 percent).
But the Ernst & Young survey discovered another potential cause of church in the insurance industry: 44 percent of customers reported that they hadn’t had any interaction with their insurer during the previous 18 months.
This lack of contact can exacerbate churn in two ways. First, according to the report’s authors, insurance companies are “out of sight and out of mind.” This makes them inherently less loyal and more vulnerable to enticements from competitors.
Second, with such infrequent interactions, any touch-point—even a seemingly trivial one, such as a request for proof of insurance—can significantly impact a customer’s perception of an insurer.
And customers, it turns out, would actually like to hear from their insurance companies more. More than half of survey respondents (57 percent) said they would welcome semi-annual communications from their current carrier.
Customers also appear to want more relevant communications from their carriers. Only one in five expressed satisfaction with the communications they currently receive.
These findings have led Ernst & Young to offer insurers a variety of recommendations, including:
- Create more frequent, proactive and meaningful communications that align with changing customer needs
- Develop “triggers” that help differentiate inquiries requiring a “high-touch” approach, such as questions from those that can be handled via self-service channels.
- Treat customer inquiries as opportunities for retention, up-selling and/or a “positive moment of truth.”
“The steps insurers need to take to combat turnover are clear and achievable,” said Kaenan Hertz, U.S. Insurance Customer Leader at Ernst & Young. “In essence, insurers must take control of customer relationships and put their customers at the heart of their operations.”
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