For insurers, managing policy lapses or surrenders are part of business. But despite recent figures reflecting a nine percent decrease in surrenders last year from 2016, it will remain a concern for companies trying to compete amidst ever-tightening budgets. Kelly Preston, data analytics manager at SilverBridge, discusses how business intelligence (BI) can help mitigate some of these risks.
Strategies such as educating customers on making payments on time, setting up debit orders or other automatic billing modes, and continued communication (using email, SMS, and the like) have become standard practice. However, in an age driven by data and the insights derived from it, there are more effective ways to reduce lapses.
“Given the wealth of data at the disposal of an insurer, it makes sense to leverage it for more than developing tailored solutions or upselling and cross-selling. The importance of BI in insurance is nothing new. The industry is built on unlocking the value of the data available to an insurer. Yet, there needs to be better integration of BI across all facets of the business to ensure lapses and surrendered policies form part of its scope.”
Often, she believes, this analysis can empower the insurer to identify potential issues pro-actively.
“The elusive single view of a customer can greatly assist in the insurer understanding the dynamics of how a policy is structured and how a person manages their policy. Combining all the various input channels into a centralised view means the insurer can not only tweak a product according to customer needs but can also better manage premium collections.”
Whether it is policy lapses, surrenders, or even simply customer churn, insurers need to modernise their strategy to be more reflective of a data-driven environment.
“Drivers for demand in insurance are often based on the pricing of products as much as they are on the value proposition being offered. Customer loyalty has become an increasingly fickle part of the process with insurtech startups attracting more digital-centric customers. This means just because certain data approaches worked in the past they will not necessarily be effective in a modern, disruptive environment.”
At a bare minimum, insurers must assess how they capture and store data. Combining elements such as retention strategies, quote conversions and cancellations, decision-makers can respond quicker to changing market conditions and address customer concerns before a policy lapses or is surrendered.
“BI unlocks a treasure trove of opportunities for insurers to better understand their customers. This understanding will be one of the most important differentiators any organisation can hope for.”