How weather can help insurers increase customer retention
Think back to the last outreach you received from your auto or homeowners insurance company. It was likely your six-month renewal notice, a company newsletter or perhaps even a cheerful birthday greeting. This correspondence may be useful information or a nice sentiment, but beyond bills and birthdays, insurance chief marketing officers (CMOs) are challenged to find meaningful touch points with their policyholders.
Action is needed
This challenge impacts the bottom line. In an insurance market that is growing slowly—only four percent for auto policies—retaining clients by increasing policyholder loyalty is paramount. Database Marketing Institute has found that a $1 investment in retention creates more profits than investing $5 in customer acquisitions.
Increasing policyholder loyalty is where insurance providers can put weather to work. Weather provides the opportunity for touch points of engagement that encourage both interaction and customer retention. Moreover, studies have shown that insurers who contact their customers five times or more each year can increase customer retention by five percentage points. While large incidents grab the headlines (insurers paid out around $27 billion for natural disaster claims in 2015 with weather causing 94 percent of incidents) most policyholders are affected by the everyday incident. From hail to wind and heavy snow, weather impacts some portion of an insurer’s policyholders every day.
IBM’s newly available Weather Alerts for Insurance is a cloud-based offering that can help increase customer loyalty by giving marketers meaningful opportunities for interacting with policyholders and help reduce costly damage claims. For example, a CMO at an insurance company could subscribe to use Weather Alerts for Insurance and upload existing policyholder data to send notifications to clients in preparation for a severe weather event. These alerts can be tracked to see not only if the insured parties received or responded to an alert, but more importantly to see who did not respond so that the company can look for another way to create a relationship-enhancing touch point.
Data supports the action
Successful action is only as good as the data that backs it, which is why Weather Alerts for Insurance uses reliable weather data from The Weather Company, an IBM business, that provides clarity and actionable triggers for industry-specific needs. This curated data differs from public weather data sources in several ways:
- Precision: Enabled by its worldwide network of personal weather stations, The Weather Company’s coverage is 100 times greater than publicly available sources down to a 500 square meter resolution.
- Accuracy: Forecast data from The Weather Company is rated number one in accuracy for one- to three-day forecasts.
- Speed: Using a cloud-based delivery platform provides the speed to deliver frequent forecast updates—every 15 minutes for up to 2.2 billion locations worldwide.
Insurance companies can trust that they will have highly accurate customer predictions and alerts to help avoid false positives in light of a significant weather event.