How often do you communicate with your insurance customers? Only once a year to send out policy renewal notices is not enough. Insurance customer retention requires effort. To boost loyalty, you need year-round communication.
Insurance Customers Value Communication
Research from Smart Communications found that 81% of consumers think communications are important to their overall experience with a company. Plus, more than half of consumers say they’re likely to leave a company if the communications don’t meet their expectations.
Your policyholders are paying premiums; they expect something in return. Of course, if they have to file a claim, they’ll receive any payout you owe them according to the terms of the insurance policy. But what if they don’t file a claim? You can say they’re gaining peace of mind, but they might feel like they’re not gaining anything. Good communication can provide added value.
Help Policyholders Avoid Claims
Avoiding claims is in everyone’s best interest. If you can help your policyholders avoid claims, you boost your bottom line and they avoid loss and disruption.
Insurance companies are in an excellent position to provide risk management support. Your data shows what claims are likely – you can share this information with your customers along with useful tips about how to avoid claims. For example, as temperatures drop, insurance companies can provide tips and safety reminders about driving on black ice or preventing frozen pipes.
Insurance companies also tend to know about emerging risks and legislative changes that could impact customers. Your customers may be unaware of these issues or know that something has changed but be confused about the details. For example, if a new type of cyberattack is shutting down businesses, you can release information about how to avoid the threat.
Insurance companies can send mass communications that apply to large segments of their policyholders, but they can also create more personalized communications, focused on the risks certain policyholders face. This can be a great way to demonstrate that you’re looking out for your customers.
Imagine you receive an alert from your insurer telling you that temperatures in your area are going to drop that night along with tips about how to keep your pipes from freezing. You follow the tips and don’t have any problems. A couple of days later, you hear that your neighbor wasn’t so lucky – his pipes burst and his house suffered water damage as a result. You’re grateful your insurer helped you avoid that situation and keep an eye out for more tips.
Differentiate Yourself from Your Competitors
Many insurance shoppers are motivated by price, even though this might not always be in their best interest. People always like to save a buck or two, but if it means they don’t receive the customer support they need when there’s a problem, the cost savings might not be worth it.
Even if you don’t always offer the best price on the market, you need to show that you offer great value. Customer service is the obvious way to do this – and good customer service often comes down to good communication.
Think About It from the Insurance Customer’s Perspective
To understand why year-round communication is important, think about insurance communication and purchasing decisions from the point of view of your insurance customers.
A young woman – we’ll call her Ann – needs auto insurance. She purchases a policy from the same insurance company her family uses. Every month, she uses automated payments to pay her premium. She’s a good driver and never files a claim. Other than an automated email to confirm her payments, she never hears a peep from her insurer. After eleven months, she realizes it’s almost time to renew her policy, but she’s not sure she wants to continue with the same company. She feels that she’s not gaining anything from the arrangement. If she can save some money with someone else, she sees no reason to stay. She requests some quotes and ends up switching.
Imagine what might have happened if Ann’s insurance company had better communication. In this version, every month the insurer sends Ann tips on how to avoid crashes, road rage, animal collisions, weather hazards, and other threats on the road. Since Ann cares about safety, she reads these messages and believes they help her stay safe. Then, when inflation skyrockets and gas prices go through the roof, the insurer sends her tips on how to save money on gas. Some of the advice she already knew, but other tips are new, and she appreciates the help. When her policy is up for renewal, she decides to stay with the insurer because she feels the company is looking out for her. Ann’s insurer also sends her a notice about another insurance product that might help her, and she adds that coverage to her insurance package. Instead of losing a customer, the insurance company has sold another product.
Although this example relates to personal auto insurance, it applies to all types of personal and commercial coverage. Your policyholders probably won’t be inclined to stay with you or purchase additional coverage types from you if they feel that they’re being left to fend for themselves.
Insurers Are Dropping the Ball
Modern technology makes it easier than ever for insurance companies to engage with their policyholders, but many insurers are dropping the ball. According to SwissRe, a LIMRA survey from May 2020 found that 62% of customers had not had any contact with their property insurance company since the onset of the COVID-19 pandemic. Think about that: months into a pandemic that caused major disruption for nearly everyone and the majority of insurance customers hadn’t heard anything from their property insurers. This was an opportunity for insurers to show they were there for their customers – and most of them failed.
Good Communication Is Necessary Outside of Claims
Insurance companies give a lot of attention to the importance of communication during a claim – and for good reason. The claims process is stressful for claimants; if the insurer doesn’t keep the lines of communication open, claimants can feel abandoned. To boost customer satisfaction – and reduce the likelihood of post-claim policyholder churn – insurers need to offer automated updates, convenient communication channels, and 24/7 claims status information.
You can also apply many of these best practices to policyholder communication outside of claims. Policyholders still want to access their policy information and receive assistance with any questions or problems they have. They want support managing their risks and to feel that the insurance company is there to help them. If you ignore these policyholders, you risk losing some of your best customers.
Think about it – if you paid for a service and never heard from the service provider, would you remain a loyal customer? Your policyholders might stay insured because they know they need coverage, but that doesn’t mean they’ll stay insured with you.
Boost Policyholder Satisfaction with VCA Claims Software
At VCA, we recognize the value of good communication and are always looking for ways to make policyholder communication easier for our clients. Ask us about our all-new Solution Suite for carriers, which includes InsuredConnect, an innovative policyholder app designed to simplify and accelerate the claims journey. Request a demo.