Customer Retention Critical Amid Recession

Retaining existing customers has never been more important for insurance carriers in terms of long-term profitability, according to a new survey from J.D. Power and Associates. The 2009 Personal Insurance Retention Special Report finds that even though 90 percent of customers overall stayed with their insurer during the past 12 months, those households that are more impacted by the recession present a real challenge for insurance carriers. The report finds that in the past year, 30 percent of households with annual incomes below $50,000 shopped for a new insurance carrier and 45 percent of those customers eventually switched carriers. In contrast, only 26 percent of more affluent households (annual incomes of $100,000 or more) shopped for a new carrier, with only 31 percent of customers eventually switching. The survey also finds that there are significant variances in customer retention between different consumer demographic or attitudinal groups. For example, while retention rates average 91 percent among married customers, the average retention rate among divorced policyholders is 89 percent and among single policyholders 87 percent. J.D. Power and Associates notes that auto insurers need to tailor their products, services and retention tactics to specific attitudinal or demographic segments, rather than operating on a “one size fits all† mentality. The report also notes that retention rates are particularly high among customers who bundle multiple insurance products. Check out I.I.I. auto insurance information.  

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