Why insurers might consider moving past retention

In this article, we’ll take a look at how insurers can navigate these challenges through three key areas: the forces driving change, foundational pillars, and areas of opportunity.

5 forces driving change in loyalty strategies

1. Outdated relationship models: Traditional engagement methods are no longer effective in encouraging policy renewals.
2. Stagnant value propositions: Offers that lack innovation fail to attract, especially with changing demographics and behaviours.
3. Brand value challenges: Maintaining brand value is tough due to commoditisation and lack of differentiation.
4. Mediation challenges: Demanding clients, coordination issues with insurers, and tech-savvy competitors focused on customer experience.
5. Operational efficiency blocks: Missed opportunities to enhance efficiency through new technologies.

Given this, should insurers abandon their obsession with policyholder retention? What innovative strategies can they adopt to differentiate themselves and create value? What tools and methodologies can they use to generate ideas, validate hypotheses and launch solutions?

Love your audience; give them freedom

Traditional marketing wisdom tells us that acquiring new customers costs more than retaining existing ones. This has led the insurance sector to prioritise 'retention,' which later evolved into 'loyalty.' But the approach often remained the same, focusing on short-term gains rather than genuine customer care.

The key to long-term loyalty lies in offering services that truly meet policyholders' needs and allowing them the freedom to choose.

From relationship to inevitability

Shifting focus from retention to customer satisfaction can transform policyholders' perceptions. By understanding the environment, context, and actors involved, insurers can create a new relationship model where loyalty becomes a natural outcome.

5 pillars for a meaningful relationship model

1. Understanding the policyholder: Leveraging detailed data on risk assessment, habits, and behaviours to drive a customer-centric strategy.
2. Value proposition: Using data insights to personalise coverage and interactions, focusing on significant segments like the silver economy and immigrant populations.
3. Brand value: Companies need to move beyond commodification and, instead, seek positive impact to enhance the brand value.
4. Mediator experience: Strengthening collaboration to share market intelligence and pivot business models, delivering an authentic experience.
5. Use of technology: Integrating technologies like AI and IoT to transform interactions and elevate the policyholder experience.

5 opportunities to evolve towards the desired relationship model

With a new relationship model in mind, insurers can explore five opportunity spaces aligned with strategic pillars:

1. Navigating the data maze: Ethically accessing and maximising valuable policyholder information.
2. Redefining value proposition: Evolving services to cover emerging client and family configurations.
3. Turning brand values into brand value: Moving beyond goodwill expressions to rigorous brand value implementation.
4. Enhancing mediator experience: Improving mediator relationships to boost service quality and customer experience.
5. Leveraging technology for human connections: Using technology to enhance policyholder experiences and foster deeper client understanding.