The business landscape is shifting, and home insurance is not exempt from the forces driving change. Evolving customer expectations, increase in shopping frequency, and a greater level of modeling sophistication combined with increased use of data are shaping current trends and outlooks within the home market. To survive and thrive in these fluctuating times, carriers must find ways to boost their home insurance revenue while pursuing other business growth opportunities. An essential element of any growth strategy is generating accurate customer lifetime value (CLV) calculations.
LexisNexis® Risk Solutions recently published a new white paper, Make Customer Lifetime Value a Strategic Business Driver, to help carriers develop a strategy for utilizing CLV calculations to provide personalized customer experiences and develop precise pricing models to provide the right coverage and the correct price. In this blog, I share a few highlights from our research.
Applying CLV is the right strategy
Assessing CLV allows you to better price risks over the customer lifetime, amortize lifetime customer expenses and appropriately focus your customer retention efforts, either on individuals or segmented cohort groups. On its face, CLV seems straightforward; it takes into consideration the difference between the revenue and profitability from a customer and how much it costs the carrier to acquire the customer. It’s useful in applying to decisions about your marketing campaigns, loss costs and loss ratios, and uncovering potential exposures. CLV is only useful, however, when it is computed accurately and to do that, you must know your customers.
Knowledge is power, as the saying goes, and the more knowledge you have about your customers, the more accurately you can appropriately service and price for them. Participating in a policy history contributory database, like LexisNexis® Current Carrier® Property, can help you acquire and apply accurate CLV. Current Carrier Property draws from robust data sources to help you access actionable insights and create sophisticated statistical models. Carriers can see and better understand risk history at point-of-quote without having to slow the quoting process by asking customers additional questions. This means you can quickly offer appropriate coverage and pricing in real time, engage in more productive interactions with potential customers and provide a better customer experience.
Current Carrier Property enhances efficiency and profitability by:
- Automatically populating and validating key policy underwriting information so you can more easily and accurately assess risk and drive profitable growth;
- Providing robust information and proactive policy monitoring so you can offer a consultative and advisory approach; and
- Providing easy access to a compliance reporting solution that delivers notification to financial institutions through a proven, cost-effective process.
Developing and implementing a comprehensive CLV strategy now can help you continue to grow your business and please your customers as the insurance landscape changes. Download Make Customer Lifetime Value a Strategic Business Driver and learn how Current Carrier Property can help you know more about your customer and accurately determine their customer lifetime value.