I’ve been in insurance my entire career and during that time I have focused a lot of attention on process management, customer experience management and strategies for growing books of business. This has included advising insurers on how to retain profitable customers, and what they can do to make retention strategies a reality. However, based on what I’ve seen personally, a lot of insurers are not there yet.
As a case in point, I offer you my own experiences in both the life and property casualty sectors. As a statistically valid, random sample of one (myself), I’m not seeing a lot of improvement in how insurers are trying to salvage customers on the edge.
Spotting Red Flags
A couple of years ago I cashed out a low-face amount permanent life policy and purchased a 30-year level term policy with much higher limits from another carrier. Just this past month, I let two homeowners policies lapse, both with the same carrier, and moved them to another carrier (I had moved my auto and umbrella about 10 years ago).
In both cases, I had made calls to both insurers, which should have quickly sent up red flags. As an insurance professional, I know what the right next steps for the insurers should have been, but in both cases I was severely disappointed:
The Life Policy’s Red Flags:
- Red Flag 1: Purchased in my 20’s when I was single, the coverage was no longer adequate to cover my financial needs in my 40’s
- Red Flag 2: I called the insurer to ask what the cash value of the policy was
- Red Flag Number 3 on fire with rockets going off: I called and asked what the process was for cashing out a policy
- Forget the flags, everything’s toast: Last step, I called, surrendered the policy and cashed the policy out
What I expected - at a minimum:
- Being an orphan policyholder, I expected them to either assign me to a new agent who would call, or at least have a salvage team member call. I would have been very happy to buy a new policy with the same insurer. I wasn’t displeased with them at all, I just needed different coverage. I would have been happy to listen to their alternative suggestions.
What they did:
- A month after I surrendered the policy, had received and cashed my check, I received a postcard (not a letter, a postcard) from the insurer asking me, “Are you sure that surrendering your policy is the right choice for you? Feel free to call us at 888-867-5309 to discuss, ask for Jenny”. Really? I was so let down.
The Homeowner Policy - Retaining a Profitable Customer Doesn’t Have to be this Hard
I’ve had insurance with this insurer and this agent since I was 17 years old, starting with auto, and then over time I’ve added a condo, umbrella, and later a house. I’ve known this insurer and agent since I was 5 years old – I remember going to the agent’s office with my Dad when my Dad first placed his auto and homeowners with the insurer (do you think my remembering this visit is a foreshadowing of my future?). My dad’s policies are still in force. Do you think that with that type of generational loyalty we’re probably profitable customers for them?
- Red Flag #1: I moved the auto and umbrella to a different, new insurer about 10 years ago mostly because of price and the claims reputation of the new insurer. My old insurer/agent did nothing to try and win these policies back or keep me from moving my business.
- Red Flag #2: My old insurer put a 5% hurricane deductible on my policy without asking me. This bothered me. At first I did nothing, for a couple of years. Last summer, I called and asked them to remove the deductible but was told it was mandatory, they also didn’t do anything to try and make me feel better about the change or address the possible customer satisfaction issue.
- Red Flag #3: I didn’t pay my renewal premium.
- Game over, you don’t need a flag here: I let the renewal date pass on my old policies.
What I expected, at a minimum:
- Once my renewal premium didn’t come in, and my renewal date was fast approaching, I expected my agent of 33 years to give me a call – or at least hear from someone from his office. I also expected a call once the policy had lapsed. This insurer had gone from having four of my policies to zero.
What they did:
- Two weeks after my policies had non-renewed, I received a form letter that looked like it had been mimeographed in 1957 (for those of you under 40, mimeographing, was a chemical photocopy process that rendered lackluster images and a weird smell on the paper that prompted kids across the country to smell their homework assignments en-masse).
As an insurance professional, it really bothers me that both my former insurers completely missed the boat, losing my business. While I don’t hear much from my new insurers (not that I want to, I’m a pretty low-maintenance client), I wonder, how good are their retention processes? Comparing the retention process for insurers to other industries such as credit cards, telecom, and cable, as an industry, we’re not there yet.
For insurers, how close does my experience resemble the experience of your insureds? For everyone else, if you’ve moved insurers recently, what was your experience like? I’d love to hear about them.