Across all industries, it’s always less expensive for businesses to retain existing customers than to acquire new ones. For property and casualty (P&C) insurers specifically, customer loyalty is a critical metric that drives better retention, revenue growth, and profitability.
The strategies P&C insurers use to engage and build trusting relationships with policyholders today look different from those a few decades ago. As consumer preferences have shifted and technology has advanced, insurers have had to adapt their tactics to remain relevant in the increasingly competitive insurance industry.
Below, we’ll explore how strategies for customer loyalty in P&C insurance have evolved over time, including the trends and strategies insurers are using now to retain and engage policyholders.
Traditional Methods of Maintaining Customer Loyalty
Insurers have used some long-standing tactics to build and maintain policyholder loyalty over the years. Like any other industry, the cornerstone of customer loyalty is high-quality customer service. Insurers should provide quick and knowledgeable responses to any questions or inquiries, a smooth and fair claims process, and clear communications to keep policyholders informed on their coverage.
Another strategy has been the use of loyalty programs for long-standing policyholders or bundled discounts for those with multiple policies from the same insurer. These tactics reward policyholders for their loyalty and provide incentives for continued business.
Changes in Customer Expectations Over Time
While the above customer service principles still remain relevant today, consumer preferences and expectations have evolved, impacting how insurers foster loyalty and retention.
One large shift is the policyholder expectation for more personalized experiences and tailored policies. Insurance customers don’t want the same one-size-fits-all policy and premiums that all other customers are offered. So, even if an insurer’s team is empathetic and highly responsive, this may not be enough to encourage retention and policy renewals among modern consumers.
Impact of Technological Advancements on Customer Loyalty
Digitization has had a significant impact on the insurance space, including how insurers approach customer loyalty. Notably, Bain & Company explains that online tools offering price transparency have made it much easier for policyholders to switch providers, leading to a growth in defect rates.
Their data shows that 6% of P&C insurance customers in the United States switched providers in 2016, compared to 10% in 2022. A similar pattern is observed across all major markets, including the U.K., Canada, Australia, and others.
In the modern insurance landscape, policyholders expect more from their insurers, and technology is making it easier for them to switch to another provider if and when they desire.
Current Trends in Customer Loyalty in P&C Insurance
A few notable trends for P&C insurance customer loyalty have emerged in response to changing consumer expectations and ongoing digital transformation across the industry.
Taking action on these trends can help insurers stand out from competitors and prevent current customers from switching to another provider they think would better meet their expectations.
These trends include:
- Digital capabilities: Insurance customers want to use digital channels to make payments, submit claims, and renew or cancel their policies. This gives insurers more touchpoints with their customers and more opportunities to deliver a high-quality policyholder experience through faster and more personalized service.
- Fair pricing: Insurers can leverage policyholder data to offer premiums that reflect each individual’s risk profile. This tailoring and fairness can help to enhance customer trust and build loyalty.
- Omnichannel experiences: Offering seamless support across various channels, including email, phone, and social media, allows policyholders to communicate with their insurers over their preferred channel. This convenience and flexibility improves policyholder satisfaction.
Challenges in Maintaining Customer Loyalty
One of the most significant challenges insurers face when building customer loyalty is the infrequency of interactions with policyholders. In a typical scenario, existing policyholders contact their insurer when it’s time to renew their policy, make no claims during the term, and don’t interact again until the next expiration date.
While the low frequency of communications means no claims were submitted, it also provides little opportunity for insurers to impress customers with outstanding service. At the same time, when a policyholder does need to reach out to file a claim, the circumstances are often stressful and have an automatic negative association for customers. As a result, P&C insurers may struggle to build a positive rapport.
Effective Tactics for Enhancing Customer Loyalty
Improving customer loyalty in P&C insurance requires a comprehensive strategy built around policyholders’ expectations and current market trends.
Insurers can use the following tactics to effectively deliver the convenient, digital-forward experience that modern policyholders expect, which in turn builds stronger loyalty and retention.
Offering Personalized Policyholder Experiences
A large majority of policyholders want insurers to offer personalized policies, quotes, and offers based on their data and analytics. Whether receiving personal communications or tailored premiums, personalization helps policyholders feel understood and creates more trust with their insurers.
Accenture reports that insurers who offer personalized products and experiences see an 81% increase in retention – this reflects a meaningful bump in policyholder engagement and satisfaction.
Using a Core System with Seamless Integrations
Insurers focused on enhancing the policyholder experience should invest in insurance technology solutions that offer pre-built integrations and APIs. These platforms are an important asset, as they allow insurers to integrate their core system with other platforms they might depend on.
The seamless data sharing between each platform enables quicker, more efficient service.
Leveraging Low-Code Tools
Systems with low-code development capabilities can quickly create and deploy new insurance products and services with minimal intervention from IT.
This agility and flexibility helps insurers quickly respond to market changes and policyholder demands to maintain a competitive edge.
Deliver a High-Quality Customer Experience with Insuresoft
With Insuresoft, P&C insurers get intelligent mission-critical technology to support valuable, long-lasting relationships with policyholders. Our agile and scalable Diamond Platform allows insurers to customize the system to their unique needs, supporting innovation and differentiation that drive policyholder experience, satisfaction, and loyalty.
Insuresoft’s Diamond Platform is an all-in-one system for managing policy, claims, and billing. It helps insurers find their edge without losing focus on critical processes.
Contact us today to see how Insuresoft can elevate your brand and help you compete and win in today’s complex digital world.
