The Insurance Annual Review Challange

11thDec. × ’08

I was recently asked if I had any statistics about insurance agencies that performed annual client reviews. I do (somewhere), but lost interest when I couldn’t turn up anything after ten minutes of folder foraging. But I did run across some stats from which you can reasonably extrapolate the kind of results your insurance agency might get if you performed annual reviews.

  • 83% consumers want an annual review – NAIC Survey
  • 90% want all their insurance in one place – Progressive Survey
  • 6.8 is the average number of insurance policies per household; most agencies average less than 2 (this includes life, health, disability, an agency should have an interest in these other products that are out there –

Selling other insurance products, such as life insurance, can actually improve the retention rate of other products the agency sells. A 1998 report… showed that the retention rate of automobile policies improved when the customer purchased more than insurance from the agency.

 

The retention level improved from 61 percent to 83 percent in policy year five when a customer purchased three or four products from the same agency. The rate improves from 44 percent to 75 percent in year 10 and from 35 percent to 71 percent in year 15.

Yet, the percentage of American households who own multiple lines of insurance from the same agency remains small. Only 6.9 percent of all households have purchased p-c and life insurance products from the same agency, LIMRA reported in that study. National Underwriter, 2003, Issue #2)

Of course, there are reviews and then there are reviews. The content and positioning of a review questionnaire should follow the objectives the agency has for the activity. I recall visiting a large agency service center a few years ago when they were sending out renewal questionnaires. At the time, the response rate was about 30% – respondents overwhelmingly asked to be re-quoted to see if the agency could get them a reduced premium. I’m sure someone around there has a bad taste about that still. There was a problem with the questions the agency used on the questionnaire. Customers seemed to think there were one of two outcomes: either the agency was going to sell them more stuff thereby increasing my costs, or they were going to make the agency re-quote my policy to reduce my costs.

Effective review formats consist of questions to turn up potential gaps that may not be addressed in standard policies. An online format can be sampled in an Annual Review Wizard from Confluency Solutions (request a review ) if you want to try it out). The Wizard asks what has changed and puts the agent in a position to follow up with suggestions to adjust insurance protection for those changes. This format is focused on creating opportunities to discuss other products and capture more policy relationships – a follow up is necessary in a process like this, and an agency needs to know it has capacity for the activity that will be generated. But a review can be an effective account development and retention tactic. You just have to have a little faith in my extrapolation…or maybe you have some results of your own you wouldn’t mind sharing?

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One Comment

  1. Kevin McDonald
    Posted January 20, 2009 at 8:04 am | Permalink

    Irrespective of the state of the economy, there are always big disparities in premiums between property and casualty insurers, even for identical coverage. Wide variation in price for similar products in service is a hallmark of an inefficient market (incomplete information for consumers, a high degree of regulation for providers, etc.). I’m not weighing in on the pros and cons of regulation, I’m just saying that’s a reason for big price differences – in any economy.

    The other side of the equation – what your blog might refer to as ‘full coverage’ is often overlooked. Coverage is easier to understand and comapare for personal auto insurance, but even there, decisions are made in the interests of saving money – up front premium – that can result in a much larger expense in the event of a big, uncovered claim. Ascertaining coverage needs and weighing options, especially for property and business insurance, is more complex and time consuming than most consumers are willing to undertake, hence the desire for reviews and the statistics quoted in the original post.