In our post G-Day world, one positive outcome is that retention should improve because customers will find it harder to replace protection plans taken out in the last couple of years with something cheaper.
But we should not rest on our laurels. Customers in our financial climate are trying to reduce monthly expenditure; if they can’t remember the reason for taking out cover, and don’t see any immediate benefit, these plans will be at risk.
Providers have focussed heavily on new business and it is now time for investment in existing business. Intermediaries need to know quickly if a premium is missed so that they can take action. Some providers have good electronic warning systems but others still rely on snail-mail.
And when customers want to re-instate policies, some processes are so cumbersome that bizarrely, I i’s easier to set up a new policy.
Providers must also get better at informing intermediaries when contact details change so we can keep touch with customers. Intermediaries tell providers about new contact details, but unfortunately providers are poor at returning the favour.
Prevention is of course better than cure; we need to ensure customers are not tempted to cancel in the first place.
Intermediaries and providers must maintain contact with customers to ensure they value the cover they have.
One proposal is to introduce an annual statement. Put simply the provider would summarise what cover the customer has, what the policy does and could also highlight where there might be gaps in coverage.
Intermediaries could send this to the customers themselves or if sent direct, customers will be encouraged to contact their intermediary with questions.
As long as intermediaries are involved and can determine the method of communication, it would be a positive move and one backed up by a study conducted in September 2012 by The Syndicate (a research partnership between Protection Review and Hannover Re) as 80 per cent of its 3,000 consumer respondents supported an annual statement.
Ancillary benefits are another means to improve retention.
Let’s face it, with protection, customers are paying for something they hope never to have to use. However, if there are features that can be utilised without having to claim, customers will see more value in their cover.
PruProtect’s Vitality programme leads the way in this respect, offering a huge range of benefits including discounted health screenings and free cinema tickets, and it is the only company to reduce premiums in return for loyalty.
The Syndicate’s research found up to 75 per cent of policy holders would be less likely to cancel if loyalty was rewarded so it makes sense for more providers to do this.
LV= is another to offer benefits through discounts on its general insurance products and a multi-advice helpline that policyholders can use at anytime.
Across the board there should be more such offerings and what is available should be much better promoted.
Reducing the infamous protection gap should not just be about attracting new customers. We need to make sure we keep the customers we already have.
Emma Thomson is life office relationship director at Lifesearch