By Stuart Rose, Global Insurance Marketing Director, SAS
Cary, N.C. (Oct. 15, 2013) – Buying a home, getting married, having children, even changing jobs are all potential triggers for purchasing life insurance. Today people are changing jobs more frequently, homeownership is at near record levels and yet according to a study by LIMRA, 56% of U.S households do not have an individual policy, a 50-year high.
So why is it that so many people do not have life insurance protection?
One argument is that life insurance is a discretionary product; it is “sold, not bought.” To overcome this argument, life insurance companies need to implement data analysis to build a deeper understanding of how to target customers and prospects at specific life stages. By using analytics, insurers can increase conversion rates by predicting whether a customer is more likely to buy product A or B based on particular life events.
Acquiring customers is only part of the challenge. Retaining customers is essential for life insurance companies to remain profitable. Policies that are cancelled or lapsed within the first twenty-four months are often unprofitable since significant acquisition costs have yet to be recovered.
Another way to reduce lapse is to deepen the relationship with existing customers by selling them new products. Cross-selling expands the relationship and helps reduce attrition. Analytics play an important role in cross-selling campaigns by determining the next-best products for existing customers based on the typical buying patterns of customers with similar demographic characteristics.
For example, an Asian life insurance company implemented analytics to achieve remarkable improvements in retention and cross-selling. In the first quarter after implementing SAS, sales to existing customers jumped to more than 20 percent of total revenue. Read more about the Max New York Life success story here.
As insurers emerge from the recession and soft market, customer analytics is a key technology that enables life and annuity carriers to gain insight into their customer base to successfully grow their business.
About the Author
Stuart Rose is global insurance marketing director at Cary, N.C.-based SAS. Rose, a 25-year veteran of the insurance industry, began his career as an actuary. He has worked for a global insurance carrier in both its life and property divisions and has worked for several software vendors, where he was responsible for marketing, product management, and application development.
Stuart is co-author of the book Executive Guide to Solvency II and frequently speaks at insurance conferences.
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions, SAS helps customers at more than 60,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world The Power to Know®.