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Four strategies for increasing commercial customer retention

Retention is as important to profitability as growth and margins. Yet few carriers have a specific retention strategy.


Insurance carriers are strategizing how to spark growth and increase overall profitability in the face of new competition as well as ongoing board pressure to improve margins. A distant consideration for management is customer retention.

But paying inadequate attention to retaining current customers is a costly mistake. On a $1 billion book of business, every percentage point of retained business amounts to $10 million of revenues annually. Most commercial carriers’ retention rates lag the best-in-class carriers by 4-6 percentage points, and the highest retention rates peak in the mid- to upper-80s.

Besides leaving a lot of money on the table, carriers that do not focus on customer retention are also out of alignment with customer-centric independent agents, whose priorities (as we know from our agent research) are service and retention. As a result, at renewal time, these agents are more likely to shop around for another carrier.

Accenture believes commercial carriers should define and execute a four-part strategic approach to both induce customers to renew their coverages and incentivize independent agents to remain loyal.

  1. Distribution management
    While all independent agents look for carriers that are easy to work with, an insurer’s retention strategy will not necessarily be identical for all agents. That’s because there are at least four distinct agency segments, based on their behavior and operational priorities. Carriers need to analyze their agent and retention data to identify the segments their agents fall into, and then develop individual retention strategies for each of these groups.

  2. Customer stickiness
    Insurers that provide superior customer service make it difficult for agents to transition customers to other carriers. But insurers typically have difficulty differentiating themselves based on product features and claim service alone. To increase customer stickiness, they should consider other strategies, such as:
    • Using analytics to compare their value-added services with those of competitors.
    • Taking advantage of digital technologies to offer core or complementary services to customers.
    • Forming alliances with outside vendors to provide complementary services to customers.
    • Offering different billing structures that better meet customers’ needs.
  3. The renewal experience
    Carriers create additional work for agents when, rather than issue automated renewal notices, they fully rewrite policies to identify changes in customers’ risk profiles. Agents often take advantage of the disruption to shop the business around to other carriers. With advanced analytics, carriers should be able to flow-renew more of their business without significantly impacting their risks. In a full renewal, they can explore new sources of external data to gather the necessary insight into the customer’s risk with minimal inconvenience to the agent and the customer. And finally, insurers should include a value proposition with their renewal quote, to highlight their value-added services and make it easier for agents to remain with their incumbent carriers.

  4. M&A responses
    The best retention strategies can be undone when agencies are purchased, which occurs frequently. To improve the likelihood of retaining their business as it transitions to new agents and brokers, insurers can:
    • Implement a high-touch communication plan to introduce themselves and their value propositions to the acquiring agency.
    • Adopt a white-glove onboarding process for new agents.
    • Develop specialized plans that incentivize new agents to place renewing business with the insurer for the first year.