Table of Contents
- Benchmark Groups
- Key Finding
- Company Business Practices
- Customer Profile
- Retention and Loss Performance By Line of Business
Appendix: Detailed Study Results
This report presents the findings of a study of business practices insurance companies have implemented to address customer retention and to assist companies with establishing current customer retention benchmarks. The study was conducted during the March – May 2010 timeframe and focused on results for 2008 and 2009. This study updates 3 prior retention studies conducted by Ward Group last conducted in 2006 (based on 2003 - 2005 results).
The objective of this study was to collect and analyze industry information from insurance companies to develop benchmarking comparisons regarding the following issues:
- Develop the relationship between customer retention and overall performance
- Analyze the impact of business mix, distribution system, payment plans and other factors on customer retention
- Survey the business practices companies have implemented to improve customer retention
We collected an extensive amount of information focusing on current customer retention practices. This report presents the findings from a diverse group of 43 property-casualty companies. 26% of companies distributed products as a direct writer, 9% through captive agents and 77% through independent agents (numbers do not add to 100% due to multiple channels used by several participants). In order to maintain the confidentiality of the data, the names of the participants have not been disclosed. Results are calculated using the total number of participant responses to each study topic.
To further analyze the survey responses, we developed various benchmark groups. The following briefly summarizes the primary benchmark groups used for the study:
- Comprised of 43 insurance companies. The average size for this benchmark was $1.6 Billion Gross Premiums Written (GPW). The mix of business for this group was 64% personal lines and 36% commercial lines.
Product Focus Benchmark Groups
- Personal Benchmark: Comprised of 18 insurance companies with more than 50% of business generated by personal lines premium. The average size for this benchmark was $2.7 Billion GPW. The mix of business for this group was 84% personal lines and 16% commercial lines.
- Commercial Benchmark: Comprised of 25 insurance companies with more than 50% of business generated by commercial lines premium. The average size for this benchmark was $730 Million GPW. The mix of business for this group was 13% personal lines and 87% commercial lines.
Size Benchmark Groups
- Over $500 Million GPW Benchmark: Comprised of 19 insurance companies with more than $500 Million total GPW. The average size for this benchmark was $3.3 Billion GPW. The mix of business for this group was 66% personal lines and 34% commercial lines.
- Under $500 Million GPW Benchmark: Comprised of 24 insurance companies with less than $500 Million total GPW. The average size for this benchmark was $203 Million GPW. The mix of business for this group was 42% personal lines and 58% commercial lines.