The insurance industry is in the midst of a quiet crisis: according to PropertyCasualty360, customers are jumping ship at alarming rates. In auto insurance, it’s like a revolving door with 30-40% of policyholders switching providers every year, chasing lower premiums. Homeowners insurance isn’t far behind, with nearly 20% annual churn as homeowners grapple with fluctuating property values and coverage concerns. This constant churn isn’t just disruptive, it’s downright expensive.
Insurers have been pouring resources into attracting new customers, but everyone knows that it’s far less risky and expensive to retain a good performing existing customer than to acquire a new one. The ‘new business’ market is filled with customers that other carriers have cancelled while carriers spend lavishly to find and win new customers. The fact that most carriers spend a fortune acquiring less well understood (and therefore more risky) new customers while neglecting to retain existing customers that they understand far better, is an admission of ignorance and financial malpractice.
The Need for Smarter Underwriting Throughout the Policy Lifecycle
The key to combating churn lies in smarter underwriting. It’s about more than just saying “yes” or “no” to an applicant. It’s about using every piece of information and behavior to detect and weed out bad risks up front and throughout the life of the policy. While detecting and investing in relationships with high-quality customers. That’s where VeracityIDTMcomes in. It gives insurers the tools to detect and act on risk indicators at both application and renewal, reducing the risk of onboarding high-risk customers and proactively addressing potential issues before they lead to churn.
VeracityID: The Underwriting Game-Changer
- At Application With idFusionTM, carrier business teams can detect dozens of excess risk indicators and behaviors during the origination process, spotting red flags and providing a more accurate risk assessment. It then enables immediate targeted intervention to either eliminate the excess risk or decline the business.
- At Endorsement Policyholder endorsement behavior is a critical indicator of changes in policy risk levels. idFusionTM lets non-IT staff target specific endorsement behaviors for further scrutiny, enabling instant intervention and requests for explanation and documentation. This discourages risky policyholder behavior.
- At Renewal: idFusionTM ability to continuously monitor a wide range of customer behaviors and data lets carriers find both changes in risk and allows low risk customers to be identified for special treatment at renewal.
Smarter Underwriting = Happier Customers, Healthier Profits
By finding and rejecting bad risks, insurers can reduce churn and protect their bottom line. But it’s not just about saying “no.” It’s also about saying “yes” to the right customers and then working to keep them happy. With VeracityID, insurers can build stronger relationships with their high-quality customers, increasing customer lifetime value and boosting profitability.
The insurance industry is at a turning point. The high churn rates in auto and home insurance are a clear sign that the old ways of doing business aren’t working. It’s time to shift the focus from relentless acquisition to intelligent retention. With VeracityID, insurers have the power to make that shift, creating a more sustainable and profitable future.
