Underwriting a profitable book of home insurance business does not stop with the issuance of a policy.  Rather it requires an ongoing program of careful monitoring and effective customer engagement.

We live in a dynamic world and because things change, the customer risk profile doesn’t remain the same. Life changes – buying or selling a home, the birth of a child or a new driver in the household – are all underlying reasons to re-evaluate risk and adjust associated premiums.

Certainly this adds value for the customer.  For example, the homeowner that built a new pool in the backyard doesn’t want to learn he or she has inadequate liability coverage as a result of a critical insurance event.

However, it’s also worth noting there are inherent benefits to carriers.  These include the following:

  • Uncover unrealized opportunities and help ward off avoidable losses
  • Identify the policies YOU want to renew
  • Arm your agents with information that strengthens customer relationships

In essence, active risk management is a platform to actively, efficiently and continuously assess your book of business for changes that may impact your business goals.  In addition, it allows carriers to use that knowledge and proactively engage customers rather than waiting for them to come to you.

4 Reasons to Care about Active Risk Management

Most carriers want to grow, but more importantly, carriers want to grow profitably.  Profitable growth begins by considering the carrier’s business goals in order to identify the changing household life events it wants to monitor.

In our conversations with dozens of insurance carriers around the country, we typically find carriers have four key objectives for an active risk management program:

  1. Customer retention. The market is more competitive and this means carriers cannot lose existing customers. A program helps carriers identify client flight risks and proactively reach out and engage customers before they leave.
  2. Identify opportunities. Active risk management programs help enable carriers to identify the right time to offer new coverage.
  3. Drive expense reduction. These programs help enable insurance carriers to align resources with those opportunities that stand to benefit the company the most.  For example, conducting a smart outreach campaign to customers who have applied for home improvements permits with an opportunity to speak with an agent and re-evaluate their coverage.
  4. Improve loss ratios. There are two ways active risk management programs can help carriers improve loss ratios. First by adjusting premiums for customers with known risk.   Second, by helping customers understand new risks and taking action to mitigate it.

Simply stated, active risk management is a smart way for carriers to monitor significant life events and the effects those events have on risk.  This enables home insurance carriers to provide customers with additional value and strengthen relationships while also growing profitably.

LexisNexis Risk Solutions recently sponsored an introductory webinar on active risk management with PropertyCasualty360.  A recording of that webinar is available for viewing on-demand here:  A Smarter Way For Home Insurance Carriers to Retain Customers and Grow More Profitably.

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