Collaborate Across Functions to Acquire with Retention in Mind

Executive Summary
There are many factors that impact insurance carrier profitability to one degree or another. However, what most carriers have in common is that they are increasingly challenged to find and keep the right customers for their business — an endeavor supported by both the marketing and underwriting/product management functions. In today’s highly competitive environment, the ability to target and attract prospects with the longest potential future relationship — or to acquire with retention in mind— is a critical undertaking if carriers are to remain profitable. To better understand the drivers behind acquiring with retention in mind, and the relationship between these two business functions in terms of delivering on this effort, LexisNexis® Risk Solutions conducted a study of the top 50 U.S. auto, home and life carriers. The findings point to numerous opportunities for marketing and underwriting/product management to more closely collaborate to improve business results, increase profitability and improve customer experience.

Introduction
Billions of dollars are invested annually in consumer-facing marketing activity. Yet identifying, attracting and converting policyholders who not only align with a carrier’s risk profile but who also remain within the book of business long enough to recoup acquisition costs can often be challenging. There is no doubt that acquiring with retention in mind makes the most business sense. In late 2016, LexisNexis® Risk Solutions administered a nationwide survey of 155 decision-makers within the top 50 U.S. auto, home and life insurance carriers. Conducted anonymously and using a mix of online and telephone interviews, the study addressed:

• Marketing functions with responsibility for at least two of the following: designing or executing customer communication or marketing programs, audience identification and segmentation, cross-sell and/or upsell activities, and/or customer retention activities.
• Underwriting/product management functions with responsibility for at least two of the following: product development and enhancement, rate setting, profit and loss, DOI negotiation, and/or risk acceptability, risk appetite and/or segmentation.

Key Findings
Qualitative feedback collected throughout the study highlighted the importance of robust acquisition and retention strategies that adopt a longer-term view. Better qualified prospects identified at the point of marketing are more likely to match a carrier’s risk profile, more likely to purchase a policy and less likely to lapse. However, acquiring with retention in mind requires carriers to break down silos that may exist between marketers and underwriters/product managers. The good news is, the study indicated there is both opportunity and mutual motivation for improved collaboration between the marketing and the underwriting/ product management functions in order to improve acquisition and retention outcomes. A more collaborative and aligned approach between these business functions is a strong predictor of increased retention rates and profitable outcomes. Not only that, from a policyholder perspective, acquiring with retention in mind delivers on the promise of an improved customer experience — which could have a positive impact on customer loyalty and retention.

A Deeper Look
The study covered a variety of topics, ranging from how the two functions measure performance to strategy development and execution to leveraging data and analytics for better business outcomes. It revealed commonalities and differences, both of which point to increased opportunities for collaboration.