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What Customer, Policy and Distribution Characteristics Drive the Development of Insurance Customer Relationships
Journal
International Journal of Bank Marketing
ISSN
0265-2323
Type
journal article
Date Issued
2018
Author(s)
Staudt, Yves
Abstract
Purpose – Over the last decade, technological and social trends have significantly influenced the relationship
between customers and insurers. New buying patterns, price comparison platforms and the usage of different
interaction channels driving single-product purchases and impacting lapses have influenced insurers’
customer portfolios and development. The purpose of this paper is to study the features driving the customer
relationship along three areas, namely, customer acquisition, development and retention.
Design/methodology/approach – After defining 14 related hypotheses, the authors use econometric
analyses to quantitatively support these hypotheses in the three areas of interest. The authors build on a
large-scale longitudinal data set from a Swiss insurance company covering the period from 2005 to 2014
and including 2,757,000 customer-years. The data comprise information on private customers, their
contract history, including coverage and losses and the channels used for buying insurance. This
analysis focuses on the two most common non-life insurance products, namely, household/liability and
car insurance.
Findings – The authors provide descriptive statistics and results from econometric analyses to determine
the significant features and patterns affecting customer development and retention. Among the main results,
the authors underline the significant influence on cross-selling given by the customer’s age and the interaction
channel. Customers from rural regions are more loyal and likely to conduct cross-buying when compared to
their peers from urban regions. Car insurance holders are more likely to lapse than household/liability
insurance clients. Finally, while newly acquired customers tend to buy only a single product, the authors
show the importance of cross-selling for retaining customers. In fact, customer retention is positively
influenced by the number of products hold.
Research limitations/implications – This work is relevant for academics and practitioners alike, adding
a quantitative basis to the understanding of managing customer relationships and for the development of
further prospective models. Further work could investigate or add products, extend the study to other
companies and focus on customer development with time.
Originality/value – This study explores a large-scale longitudinal data set. The analyses of customer
acquisition, development and retention can support insurers to construct their own models for customer
relationship management.
between customers and insurers. New buying patterns, price comparison platforms and the usage of different
interaction channels driving single-product purchases and impacting lapses have influenced insurers’
customer portfolios and development. The purpose of this paper is to study the features driving the customer
relationship along three areas, namely, customer acquisition, development and retention.
Design/methodology/approach – After defining 14 related hypotheses, the authors use econometric
analyses to quantitatively support these hypotheses in the three areas of interest. The authors build on a
large-scale longitudinal data set from a Swiss insurance company covering the period from 2005 to 2014
and including 2,757,000 customer-years. The data comprise information on private customers, their
contract history, including coverage and losses and the channels used for buying insurance. This
analysis focuses on the two most common non-life insurance products, namely, household/liability and
car insurance.
Findings – The authors provide descriptive statistics and results from econometric analyses to determine
the significant features and patterns affecting customer development and retention. Among the main results,
the authors underline the significant influence on cross-selling given by the customer’s age and the interaction
channel. Customers from rural regions are more loyal and likely to conduct cross-buying when compared to
their peers from urban regions. Car insurance holders are more likely to lapse than household/liability
insurance clients. Finally, while newly acquired customers tend to buy only a single product, the authors
show the importance of cross-selling for retaining customers. In fact, customer retention is positively
influenced by the number of products hold.
Research limitations/implications – This work is relevant for academics and practitioners alike, adding
a quantitative basis to the understanding of managing customer relationships and for the development of
further prospective models. Further work could investigate or add products, extend the study to other
companies and focus on customer development with time.
Originality/value – This study explores a large-scale longitudinal data set. The analyses of customer
acquisition, development and retention can support insurers to construct their own models for customer
relationship management.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Emerald
Volume
36
Number
6
Start page
1098
End page
1124
Pages
27
Subject(s)
Division(s)
Additional Information
Prof. Wagner is Professor at the HEC Lausanne; http://people.unil.ch/joelwagner; joel.wagner@unil.ch
Eprints ID
255439