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Leaning on technology to increase client retention in the insurance industry

July 15, 2024

If you want to rebalance your sales focus to enhance new sales and retain existing clients, leaning on a blend of technology solutions that offer a more personalized customer experience to drive loyalty is a strategic approach. Increasing client retention by just 5% can lead to a 25%-95% increase in profit.1 This article explains the tools available to you.

What is retention in the insurance industry, and why is it important?

Retention measures how many clients your agency maintains from one renewal period to the next. Your agency’s retention rate is important because the higher the number, the higher the agency’s valuation and profit margin.

The average client retention rate for the insurance industry is 84%.2 To see how you stack up, take the number of clients you had at the end of a renewal period and subtract the number of clients you acquired during that time frame. Next, divide this number by the number of clients you had at the start of the renewal period. To convert that final number to a percentage, multiply it by 100.

Industry research found that winning a new insurance customer costs around five times the amount it takes to retain an existing one.3 Preventing customer churn to protect profit starts with attracting the right type of customer for your business appetite and ends with creating a positive experience throughout the insurance policy life cycle. When an agency focuses on delivering value, its clients are likelier to share their experience with others and resist being lured away by the competition—driving quality referrals at no additional marketing spend.

Client retention technology

Streamline processes with insurance quoting tools

Quoting platforms are valuable retention tools because they can add to or enhance your digital quote-to-bind experience. With quoting platform technology, a client can begin the quote process online or fill out online forms that enable you to quickly and efficiently pull rates behind the scenes and offer the most appropriate coverage options.

Quoting tools may also provide prospects with various coverage and insurer options, the hallmark of doing business with an independent agent. Nationwide-appointed agents can leverage Nationwide Express and PolicyCenter with ClearQuote® to streamline the quoting, binding and underwriting processes.

Interested in learning more about quoting platforms?
Read: Quoting innovations that assist agency growth

Use predictive analytics tools to manage client risk

Data science is an emerging technology, giving rise to various predictive analytics solutions that harness data to make more informed business decisions. For example, the insurance industry is using data from agent interactions, customer interactions, smart homes, large data sets, loss information and telematics to ultimately help clients secure the best coverage at the best price and better manage their risk.

As insurers adopt predictive analytics for managing customer relationships, claims and underwriting practices, the trickle-down to clients drives ease, speed and efficiency in doing business with you. It also directly supports building long-term relationships through cost-saving product offerings like telematics and excellent customer service.

Interested in learning more about predictive analytics?
Read: Predictive analytics in insurance: 5 uses and benefits

Promote telematics solutions

Telematics technology has come a long way in recent years. It allows agents to improve the customer experience by giving clients greater control over their auto insurance expenses and options for minimizing premium pricing.

Nationwide’s research found that consumers are interested in learning more about telematics offerings, yet a minority of insurance agents provide telematics solutions to their clients. Thus, offering innovative, predictive analytics solutions sets you apart from the competition and enables your insureds the opportunity for cost savings, improving overall client value. Nationwide is committed to helping policyholders manage risk on the road by offering telematic solutions for personal lines and commercial accounts.

Interested in learning more about telematics?
Read: The advantages of using telematics with personal lines clients

Embrace agency management system automations

Making retention a part of your agency’s core sales strategy is easier to implement and support with insurance agency management system (AMS) automations.

By automating client communications through your AMS that are tailored to your prospecting, renewal, upsell and cross-sell opportunities, you can digitally connect with clients in consistent, meaningful ways that drive action and add value during their relationship with you. After the initial setup of campaign communications and cadence, you can actively reach clients in a personalized way with passive management behind the scenes.

Providing communication drips throughout the renewal period that add value by offering information and access to resources and your expertise keeps you top of mind with your clients as someone looking out for their best interests. Even if no action is taken by a client, the simple act of reaching out goes a long way when weighing renewal decisions.

Automating client communications is also valuable because it optimizes agency efficiency, giving agency staff more time to focus on retention-building activities rather than mundane, non-value-adding tasks.

Interested in learning more about AMS software?
Read: Insurance AMS software explained

Invest in insurance renewal process technology

Renewal automation software digitizes the actions and communications that lead up to renewing a policy, including automated renewal messaging.

Automating renewal messaging campaigns offers clients convenience. For example, it can provide access to links to embedded forms on your website that they can easily fill out with up-to-date information related to their policy renewal needs. Automation enables a smooth, streamlined re-enrollment process with features that extend convenience and time savings to your insureds.

Communicating renewal activities at specific milestones during the renewal period can allow agents to reduce the friction that may lead to a client switching providers during the process for both personal and commercial accounts.

Interested in learning more about renewal automation software?
Read: How to Automate Insurance Renewals

Connect with clients through digital marketing

Today’s insurance buyers are hyperconnected, and there are numerous, digitally driven ways agents can build relationships with current and prospective clients. The following are just a few strategies to consider:

  • Leverage social media—Using Facebook, LinkedIn, X and similar social media platforms, insurance professionals can share insightful content to connect with prospects and current clients. Examples could include insurance buying tips, industry news or in-depth articles on current events. Social media is also another potential channel customers can use to reach out to you, so it’s important to remain engaged and answer any messages you receive through these accounts promptly.
  • Email marketing—When it comes to maintaining regular contact with your clients, email marketing can be a powerful tool. Specifically, curating and maintaining an email marketing list of current and prospective clients allows you to share targeted content quickly. For example, by using email marketing, insurance agents can address individual client needs, share policy updates, or highlight special offers.
  • Content marketing—Content marketing involves creating and sharing valuable content via your website, social media or a similar digital channel that addresses your clients’ concerns and interests. This could include creating blog posts, articles, videos and infographics about various insurance topics. Content marketing is critical, as providing insightful resources helps clients make informed decisions, which, in turn, builds trust and encourages them to stay with your agency.

Interested in learning more about digital marketing?
Read: Marketing content that makes your agency shine

Enhance the digital customer experience with AI

The insurance market is competitive, and agencies need to adapt to trending technology for sustained success. One new tool insurance agents can leverage to improve customer retention and provide continued, exceptional service is AI. While the application of AI-powered tools is seemingly limitless, there are a number of specific ways AI can enhance insurance workflows and improve the overall customer experience.

For example, AI-powered chatbots give your customers 24/7 access to assistance, ensuring they receive timely responses to any questions they may have. This is especially important in insurance, as a claim can happen at any time, and having easy access to help can improve a customer’s overall sentiment toward a brand. Further, utilizing chatbots to answer customer questions frees up resources for your support team, allowing them to focus on more complex concerns.

Additionally, AI tools can help insurance agents streamline routine tasks. For instance, AI can help automate certain claims processes or other account management workflows. Further, AI tools can be used to analyze customer service data to identify trends and provide tailored advice.

Interested in learning more about implementing AI-powered tools?
Read: Actionable AI: A guide for insurance agents

Make client retention a priority

Strong relationships have staying power. Using insurance technology to underpin your agency’s sales strategy can be invaluable in retaining clients, staying competitive and protecting the bottom line. Taking into account clients’ shifting expectations, Nationwide offers the expertise and tools to devise strategies that help you meet your unique sales and retention goals.