Reducing Churn and Increasing Renewals with Proactive Conversational AI

The UK’s tough economic climate is making it difficult for insurance companies to renew policies. Consumers are cutting back on discretionary spending, and insurance is often one of the first things to go. Research shows that many UK consumers have already reduced or plan to reduce their insurance coverage, with life insurance being the most affected.

Insurance organisations are well aware of the challenges of renewing policies. Most insurance companies, large and small, have invested in people, processes, and technology to improve CX. This includes:

• Removing jargon and technical language
• Focusing on relevant communications
• Streamlining processes with automation
• Using data to improve understanding of customers and their needs
• Developing omnichannel capabilities to communicate with customers about their policies and claims.

The scale of the problem is clear: many customers will be asked to pay much more than they expect for their insurance renewals. Some customers will not be able to afford to renew their policies at all.

Room to manoeuvre on Renewal Pricing is Tightening

Insurance leaders say they have less and less room to negotiate on renewal offers to customers. This is due to a number of factors, including:

• Claims inflation: Supply chain disruption, increased costs (such as energy prices), and record-high inflation are all driving up the cost of insurance coverage for customers.
• The January 2022 General Insurance Pricing Practices (GIPP) directive: Home and motor insurance customers who received a price cut in 2022 because they had been overpaying (under GIPP) are likely to see their premiums increase in 2023.

Regardless of the type of insurance, today’s operational realities mean that renewal prices are going to be higher, and probably shockingly so from the customer’s point of view.

And Then There’s the Consumer Duty

The FCA’s new Consumer Duty sets higher standards for the way financial firms treat their customers. Firms must now consider the needs, characteristics, and objectives of their customers, including vulnerable customers, at every stage of the customer journey, including when the customer says goodbye.

In a recent Dear CEO Letter, the FCA also made it clear that firms are expected to provide “appropriate support” to customers in financial difficulty, including “working with customers to avoid the need to cancel necessary cover.”

In other words, insurance companies cannot simply ignore customers who cannot afford to renew their policies. They must work with these customers to try to find a solution, such as reducing coverage, setting up a payment plan, or offering other forms of assistance.

“I don’t want to have to just watch my renewals drop through the floor!”

While the claims experience is the most important moment for an insurance customer, the renewal is the real test of how successful an insurance company has been in building customer loyalty. Renewal rates are seen as a powerful indicator of trust and brand engagement, and they show how well a company’s products and services meet customer expectations.

Of course, renewals are also critical for the bottom line. Insurance is consistently in the top three most expensive sectors for customer acquisition, with the cost of acquiring a new customer being seven to nine times higher than the cost of selling to an existing customer. Retaining customers is a core competency for any business, but it is especially important for insurance companies that are aiming for profitable growth.

Specific Issues in the Renewals Journey

Insurance leaders are concerned about:

• Predicting higher renewal quotes: Insurance companies can predict which customers will receive unexpectedly high renewal quotes, but they struggle with when and how to communicate this fairly.
• Handling customer support impact: Higher renewal quotes will lead to more customer inquiries, so companies need to find proactive ways to manage the influx of calls.
• Engaging non-calling customers: Many customers choose not to renew their policies without contacting customer service. Insurance companies want to find ways to engage these customers proactively.
• Balancing ease of cancellation: The Consumer Duty requires companies to make it easy for customers to cancel their policies, but insurance companies also need to prevent customers from cancelling necessary coverage.

So, What?

The current economic climate is challenging for insurance companies, and it is unclear how the market will develop in the coming months. The problem is not knowing this or modelling it, but rather whether insurance companies have more options to use CX expertise, data, and insights proactively and impactfully with customers using tools, technologies, and services.

We believe the answer is yes.

What Next?

Insurance companies need to be proactive with customers to ensure successful renewals. This doesn’t just mean sending an email or text message to remind customers to renew. Companies that get proactive customer care right view it as an opportunity to engage customers in a conversation that guides and supports them to the right outcome for both the customer and the business.

To achieve this, companies need specialist proactive conversational AI customer care technology. Solutions such as ContactEngine are powered by conversational AI, enabling companies to engage entire customer bases in digital text and voice based proactive conversations. Unlike notifications, these conversations actively seek an in-channel response and keep the customer engaged in a personalised conversation until the objective of that conversation is fulfilled.

With its configurable conversational journey design and ability to transact in-channel, ContactEngine keeps over 90% of proactive conversations fully automated without the need for a human agent to get involved. Every conversation is secure and fully auditable, making it simple for companies to evidence proactive customer care and reap its benefits.

How Does it Work?

This video shows how ContactEngine can be used to automate the renewal process for pet insurance. ContactEngine can be used to automate the renewal process for many different types of insurance.

Want to increase your renewals and have more meaningful conversations with your customers? Contact Business Systems: