Personal Touch Critical In Auto Sales

The lack of the personal touch in auto insurance sales can hurt in carriers in many ways, according to a new study out this week.

The Quality Planning Corporation, a subsidiary of the Jersey City-based ISO, released findings this week that concluded “from high turnover rates to adversarial relationships, there are hidden costs to ever increasing depersonalization.”

Ted Harris, research manager and one of the report's authors, said the study clearly indicates that “those insurers committed to maintaining direct contact with their customers will likely see financial benefits.”

The researchers evaluated one year of renewal data of a major carrier that embarked on a “high-touch” approach to customer interaction, and compared its claims and costs data with equivalent data from other auto insurers.

Among the findings:

oThe insurer that employs a high-touch approach with its customers saw a 12 percent reduction in claims per policy the year following a phone interview, compared with an increase an increase in claims of between 4 and 8 percent for insurers that did not take the “high-touch” approach.

oAverage claim costs over a one-year period fell $1,200 to $1,055 with a total reduction in claims over a one-year period of $4 million.

The study asserted that the non-renewal rates in the automobile insurance industry remain generally high and companies that make an effort to build relationships with customers can positively influence retention rates.

“But, unlike other industries, not all automobile insurance customers are created equal when it comes to acceptable levels of risk,” the report said. “Some relationships are worth severing.”

With the “high touch” approach, carriers can determine what policyholders are less than forthcoming and therefore worth letting go. “The trick is to retain the right customer, while letting go the customer who continually misrepresents risk or claims,” the report stated.

Fostering a personal relationship with customers will be critical for companies in the growingly competitive market of auto insurance. “By improving relationships with customers a more trusting relationship will grow, cross-selling products will become easier and retention will rise,” the study concludes.