Research shows that several factors influence the retention rate of customers. The customer's tenure and bundle choice often reflect how likely that individual is to stay with the company or look elsewhere. Research shows that the overall retention rate for homeowners insurance was almost 90 percent. Of that percentage, the amount of retained customers who had bundled policies was 95 percent. Retention rates for customers who used multiple insurers was slightly more than 80 percent.
The discovery that customers who pay for multiple policies with one insurer are more likely to stay with that company is something that remains consistent across various generations. This study surveyed people who bought a combination of homeowners and auto policies. However, the retention averages were higher for people who had more than two policies with one insurer.
Customers who were insured with companies that did not offer multiple coverage options did not say that they were certain about renewing their coverage. However, more of the customers who used insurers with added benefits answered that they would definitely renew their policies. Offering the option to bundle auto and home insurance is usually the first and most important step toward building a long-lasting relationship between insurers and customers. In customer satisfaction surveys, customers who bundled two policies were more satisfied. The customers who were most satisfied had three or more policies bundled.
The study also looked at what specific products were the most influential for bundling options. In addition to the combination of homeowners and auto policies, personal liability umbrella coverage followed close behind. This type of coverage has a high bundling rate overall. Secondary residence coverage also had favorable feedback. However, life insurance policies did not have a major impact on retention in relation to bundling. This is likely true because of the uniqueness of life coverage and the issue that customers do not always have the ability to transfer such a policy to another company. However, the option of offering life coverage certainly does not create a disadvantage.
Understanding bundling trends and preferences of customers will help insurers market their products better and provide more efficient options for consumers. It is also important to remember that a customer's income affects what type of coverage he or she is more likely to buy. For example, people with higher incomes are more likely to purchase umbrella coverage to protect their assets. However, younger people are more likely to bundle life insurance if the option is presented to them. This is due to people in this age group getting married, buying homes and having children. Overall, bundling products with homeowners and auto coverage is something that both customers and insurers can benefit from. Customers who are interested in this option should discuss their concerns and needs with an agent at 314-351-HALO(4256).