A question of keeping the client happy

Just over half of consumers have used the same motor insurer for the past year, but some companies are only managing to retain a third of their customers.
By The Newsroom
Published 19th Nov 2010, 19:33 BST
Updated 19th Nov 2010, 19:33 BST

Around 56 per cent of drivers have not switched insurance provider during the past year but policyholder retention rates range from 80 per cent for some firms to just 35 per cent for others, according to market research group JD Power and Associates.

The research, based on interviews with 5,000 policyholders, found that insurers Zurich/Zurich Connect, Liverpool Victoria and RSA had the highest customer retention rates.

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Jeremy Bowler, senior director of insurance practice at JD Power and Associates, said: "While some of the highest-performing car insurance companies successfully renew more than eight in 10 policyholders, others manage to retain barely one third of theirs, which means they have to invest in advertising and lead commissions to replace two-thirds of their customers annually.

"Furthermore, 44 per cent of customers overall switched insurers during the past 12 months, which represents nearly 3.5bn in premiums that were up for bid.

"It's clear that focusing on customer retention can bring insurers substantial benefit in reducing costs and boosting profitability."