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Leaning on technology to increase client retention in the insurance industry

April 19, 2023

While growth is important to an agency’s success, striking a balance between the amount of time and attention spent on writing new business and providing value to current clients protects an agency’s bottom line. How? Increasing client retention by just 5% can lead to a 25%-95% increase in profit.i

If you want to rebalance your sales focus to both 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. This article explains the tools available to you.

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

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

The average client retention rate for the insurance industry is 84%.ii 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 nine times the amount it takes to retain an existing one, with a client acquisition price tag estimated at up to $900 for independent insurance agents.iii 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 more likely to share their experience with others and resist being lured away by the competition—driving quality referrals at no additional marketing spend.

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 a host of 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 the use of 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: Insurance innovations using data to manage risks

Promote telematics solutions

Telematics technology has come a long way in recent years. It offers agents the opportunity to improve the customer experience by giving clients greater control over their auto insurance expenses and options for minimizing premium pricing. In fact, drivers can earn between 10% to 50% savings on their auto insurance by opting for telematics.iv

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 reenrollment 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: Navigating technology using renewal capabilities

Make client retention a priority

It’s clear that 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.