Life, Death, Lapses and Loyalty
Life insurance is different from most other products or services in that the purchaser is never going to “enjoy” its benefits. That’s because those benefits come with morbidity or mortality. Yet customer loyalty is important and insurers rely on longstanding relationships and high customer retention to recoup acquisition costs and to make a profit.
In our latest issue of Risk Insights, Adrian Mak, account executive in Gen Re’s Sydney office, discusses the experiences of a group of Australian and New Zealand life carriers and their customer retention strategies. He concludes by describing why loyal customers are a more important asset than “retained” customers: for a start they spend more and recommend the seller more often.
On the subject of mortality and profitability, ages of death appear to be going up fast. It’s important to be sure about mortality projections (for obvious reasons), and another article in Risk Insights examines how insurers make these projections. The piece, by Sara W. Goldberg, our senior product specialist in Germany, looks at how socio-economic and health variables can influence forecasts.
We don’t dodge the big questions at Gen Re and this edition of Risk Insights explores other, related challenges faced by life and health carriers. For example, Bernhard Wolters, who is from our Cologne office, discusses the pros and cons of commission-based versus fee-for-advice systems in the context of mis-selling.
Separately, Drew King and Andy Baillargeon investigate the growing med-supp business in the U.S., suggesting routes to a rate increase strategy - without driving up lapses.