Customer Retention in Life and Annuity: Elusive Goal or Achievable Reality?

Published by: TowerGroup

Published: Jul. 7, 2008 - 10 Pages

Table of Contents

Report Coverage

Business Challenges in Customer Retention

Call Centers on the Retention Front Lines

Summary

Abstract

TowerGroup Take-Aways

• The three primary business challenges insurers face in retaining customers are defining the customer, profiling the customer to understand behavior and needs, and shifting the organizational mindset toward retention as a pervasive business process.
• Because of the increased commoditization of insurance investment products, insurers must differentiate themselves by improving business processes that leverage data and analytics to maximize and improve customer interactions.
• Customer retention is not the responsibility of the call center alone; retention initiatives must involve all aspects of the business, including actuarial, marketing, sales, and compliance.
• Integrating customer data, actuarial pricing assumptions, and activity-based costing will be essential in prioritizing retention efforts based on profitability.

Report Coverage

Because consolidation in the insurance industry has been rampant over the past decade, the competition to acquire and retain profitable customers is fierce. As providers of financial services around the globe seek to capture a portion of consumers' available retirement dollars, insurers not only compete against each other but now also face nontraditional competitors such as banks and asset managers for financial products and services. The costs to acquire customers are skyrocketing; therefore, developing and maintaining the existing customer base is key to insurers' long-term profitability. This TowerGroup Research Note examines what insurers can do to develop an effective strategy for customer retention so that they can improve their customer relationships and maximize the earnings potential of their existing customer base.

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