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The insurance industry is particularly challenged by customer churn. Traditional insurers must compete with disruptive new players offering innovative business models and rock-bottom premiums. To stay relevant in this tough market, insurers understand the need to work harder than ever to retain their customers. And the best place to start is with customer service.
A comprehensive survey was conducted to learn more about the drivers of customer churn due to insurance companies’ level of customer service, to discover when consumers are most likely to churn, and to gauge consumer sentiment about ways to improve customer loyalty.
The data shows that 39% of Americans who canceled a contract with a company in the previous 24 months cited customer service as the primary reason for cancellation. And 11% of them canceled insurance policies.
Churn is triggered by high customer effort: Customers canceled their contracts because companies wasted their time (31% waited too long to have their issue resolved), or because they had to call more than once (52%); other customers churned due to untrained or incompetent agents (29% thought the reps were rude or had a negative approach) or because of inferior self-service options (14%).
Need for improved customer retention strategies: While 50% of customers actively searched for an alternative insurer, an equal number churned passively, either because they were disengaged with the insurer’s services or because they heard about or were offered a better deal from a competitor.
Reactive retention strategies are ineffective: Despite the fact that 54% of the insurance companies tried to retain their customers after they canceled their contracts – usually by offering a discount or an apology – their efforts were largely unsuccessful.
Proactive efforts are key: Among those who churned following a negative service experience, 53% would have changed their mind if they had been offered a better service plan, and 38% would have stayed if they had believed that the insurer’s service would improve in the future.
Fallout from word of mouth: 68% of customers admitted sharing their disappointment about an insurance company’s level of service with others. 64% discussed the company negatively with friends, family or colleagues, 13% shared it on their social media channels, 18% posted on the company’s official social media channel or website, 13% shared it in an online forum, and 8% even discussed it with the media.
For full access to the 2019 Customer Churn in the Insurance Industry Survey Results, which includes deep dives into the data and eye-opening quotes directly from customers, download the comprehensive report now.