Time to Break Out the Charm
April 23rd, 2009 by Jeb Foster
As you probably know, people are on the move these days. They’re not leaving town, they’re leaving insurers.
A sour economy and rising premiums have consumers hunting for cheaper insurance. Today’s Insurance Journal reports on a new J.D. Power study showing that 30 percent of households making under $50,000 shopped for insurance in the last year. Of those, 45 percent ended up switching carriers.
The study, formally known as the “J.D. Power and Associates 2009 Personal Insurance Retention Special Report,” shows that wealthier households have been relatively less footloose. Of those earning more than $100,000 per year, 26 percent shopped for lower rates, with 31 percent eventually switching.
There’s generation component as well: generations X and Y are the flightiest groups, renewing at rates of 88 percent and 80 percent, respectively. On the other extreme, 93 percent of Pre-Boomers, those born before 1946, have been renewed with their insurers in the past year.
Retention is essential because it costs significantly more to acquire a new customer than it does to retain an existing one. What’s more, according to the J.D. Power study, many insurers do not make a profit from individual policyholders until their third or fourth year.
The data reveal that people with multiple policies with the same insurer are less likely to switch. State Farm, for example, was able to retain 97 percent of its customers who had bundled auto and homeowners policies, but they could only hold on to 88 percent of their customers who had only an auto policy.
So dust off the old charm and start cross-selling!
Tags: customer retention
