In the ever-competitive landscape of the insurance industry, success for insurers hinges on surpassing competitors in one or more of four crucial categories: price, product, service, and distribution. While each of these categories are essential in their own right, let’s dive into just one: service.
Consider that the most visible format of service which insurers provide involves the claims handling process. How can insurers balance efforts between serving the neediest clients and cultivating long-lasting relationships with claim-free customers? Let’s get into it.
The Pareto Principle and Insurance Clients
The age-old Pareto Rule, also known as the 80/20 rule, suggests that 80% of outcomes come from 20% of causes. For insurers, that means that top, low-risk customers are driving the most revenue towards the bottom line and providing profitable premium.
Conversely, it also means that significant resources are allocated to address the needs of low-profit, high-claim clients. This disproportionate allocation of resources leads to inadvertently neglecting the most profitable clients who have had no reason to make a claim. And while clients with meaningful claims undoubtedly require attention, the question arises: Are insurance carriers spending enough time and resources on their more profitable accounts—those without claims?
Silent Clients are the Most Valuable Clients
Relative to other offerings, insurance is unique because the happiest customers have no reason to use the product. These claim-free clients represent an essential part of an insurer’s business. However, if the customer service strategy relies solely on responding to catastrophes or natural disasters to showcase its strengths, how can an insurer communicate its excellent service attributes to these most desirable clients? Moreover, how can insurers increase the retention and renewal rates of these clients who have had no claims?
The situation becomes even more complex for carriers who work through MGAs, retail partners, and wholesale brokers. While the primary focus for these distribution partners is market access, insurers benefit from the wholesaler’s volume. However, the level of contact between the carrier and the policyholder, especially when covered by a distribution p
artner, is often insufficient. This lack of direct contact leaves many clients feeling that they are just “on highly rated, great paper” without a deeper connection to their insurer partner.
Rethinking Service Strategies
Most CEOs acknowledge that claims handling requires a significant allocation of resources. However, few focus on proactive loss awareness and risk education with the goal of reducing unnecessary claims and boosting relationships with customers across the board. Sharing insights into factors that contribute to losses with insureds is an action that goes beyond underwriting risk selection. Providing clients with information on how to make their businesses safer and avoid potential risks can be equally valuable.
If you’re ready to rethink your service strategy, where should you start? In today’s data-driven world, insurers have access to a wealth of data. The foundation of that dataset should be an insurer’s own customer and claims data. But it shouldn’t stop there. Data partners can provide additional assets, such as loss data mined from publicly available records, including jury verdicts and regulatory filings from peer companies to augment an insurer’s own dataset. In combination these datasets can help insurers tell their clients, “For policyholders who look like you, here’s what went wrong; don’t let this happen to you.” It’s the first step insurers can take to proactively engage clients and help mitigate unnecessary risk.
And while data is the first step, technology is the second. Of course, insurers need to avoid simply throwing more personnel or technology at the problem. More isn’t always better. Instead, think about the solutions that will make personalized interactions, whether through email or sharing relevant content, easier to manage for your risk prevention teams. Proactive service is incredibly effective and can be achieved through low-touch, self-serve, high-push methods which are surprisingly effective and don’t require a hefty investment in technology or personnel.
The Zywave Approach
At Zywave, we help insurers bridge the gap between claims handling and proactive service with the goal of retaining and engaging clients. Our white-labeled approach combines industry-leading content on topics including safety, HR, benefits, compliance, an integrated learning management system, and a client portal that can be custom-branded to the individual insurer.
This approach helps insurers boost client retention; our experience shows a direct correlation between off-cycle client touchpoints and higher renewal rates. The utilization patterns of these pre-claim interactions can also help across the entire organization by informing risk selection, product development, and claims handling, leading to an improved loss ratio.
The Bottom Line
Teaching your best clients to appreciate how you help them de-risk their businesses is smart business. By allocating resources to engage and educate claim-free clients and reduce claims from the most high-needs clients, insurers can enhance their service strategies, improve retention rates, and ultimately create stronger, more profitable relationships. Balancing attention between high-claim and low-claim clients is the key to sustainable success in the ever-evolving insurance industry.
To learn more about how Zywave can help you enhance your current service strategy, email [email protected].
