One of the biggest challenges facing today’s life insurance industry is that due to a high burnout rate, a staggering 90% of young agents are leaving the business for other ventures and professions within the first year (source: Investopedia). This creates a huge impact on insurance companies, leaving them with about 30%-40% of their book of business unserviced, or what is commonly referred to as “orphaned policies.”
An orphaned policyholder is far less likely to renew or expand their coverage when they have been abandoned by their agent and no longer have a personal connection to the insurance company. With a serviced policy being 2X more profitable, imagine the additional premium potential hidden within the book!
There is therefore a desperate need to fill this increasingly growing gaping hole by converting orphan policies into revenue opportunities.
Provide a better service
From a customer service perspective, it has become increasingly beneficial for insurance companies to provide better services to their orphan policies. Personalization of products together with a more personable, friendlier approach from the insurance agents increases loyalty and customer satisfaction. While previously customers were just interested in the policy itself, nowadays they are in search of a good customer experience where they feel valued and cared for. It is, therefore, crucial for insurance companies to move with the times and embrace a more welcoming customer service approach.
Identify policyholders who are likely to lapse
Customers with orphaned policies are often not even aware that they have been abandoned by their agent and are not being adequately served. At the same time, they are in a prime position to receive advice and re-engage with their insurers since many of these orphaned policyholders experience life changes that may require expanded insurance coverage or investment products offered by the carrier.
Finding these policies and ensuring that they don’t lapse is vital to an insurer’s financial health. To prevent potentially disastrous relationships, insurers must have the tools to catch policyholders who are likely to lapse. Once identified, they can reach out to them to provide better service, create loyalty, and renew and upsell policies.
Enter predictive analytics and AI-based solutions
Insurers can identify and prioritize orphaned policyholders using predictive analytics and AI-based solutions to analyze the data in real-time. Once accurately identified and analyzed to predict customer behavior, insurers can match them to the appropriate advisors based on their segments and attributes.
These technological capabilities can predict these customers’ purchasing potential based on internally and externally sourced public data. This helps life insurance companies better cater to their customers’ needs, which leads to increased customer satisfaction and can ultimately lead to more profitable sales. Real-time analysis can be provided to enable life insurance operations to reach out to orphaned policyholders, delivering a tailored product experience at the right time to the right person for the right reasons.
Once insurers re-establish these relationships with the customers, they can be more profitable policyholders, rather than non-paying lapsers, and ensure premiums stay on the books.
Properly handling orphan policyholders has been an issue in the insurance world for decades. Leading technological tools can help solve this age-old problem and make both the insurance companies and the customers happy and satisfied – a win-win for everyone!