Protection: Why ongoing communication is vital for client retention

The need for change

I must admit, in our early years we used to arrange a protection policy for a client and only interact with that client again if they came back to us under their own steam. That’s not a great client service and results in far higher than needed lapse rates. We knew this had to change.

I’ve heard some people in the industry put forward the worry that if you reminded a client about their protection plan they might cancel it. My view is that it’s crucial to regularly remind clients why their cover is important. With online banking being so prevalent now, clients will see the premium coming out of their account each month so it’s important not to let their memory fade as to why they took out the policy in the first place.

Automated contact

One aspect of our ongoing communication with clients is an automated email chain. In the first 12 months of taking out cover we send the following:

• A reminder that they can come back to us if they need to make any changes to the policy
• Providing information of what to do if they feel they need to make a claim (we encourage them to contact us first so we can assist)
• Details of all the additional benefits that come with their specific policy
• Asking them to get in touch if their circumstances change, such as changing jobs or having a child so we can review their cover
• A reminder about the valuable cover that their policy provides with a video claims story of one of our clients
• Details of whether they have guaranteed or age banded premiums and what this means as they approach the second year of holding the policy 

The frequency of our contact declines after the first year but we continue to invite clients to get in touch if their circumstances change and they need to review their policy.

In addition to automated email communications, we also send periodic emails if there’s something relevant to communicate about their policy or insurer. For example, if the insurer releases a new additional benefit to existing customers. Another example is when their insurer releases their annual claims statistics, like when Vitality paid out 99.8% of life insurance claims in 2018, thus providing reassurance that claims really are paid.

The open rates for these emails range from 81% to 59%, which is incredibly high relative to the average open rate for emails in financial services of around 21%. We’ve also had some great client feedback. I remember when we first started our ongoing communications, one client replied to say he’d never heard from any insurer or adviser in the past and was really pleased to see that we clearly look after our existing clients.

Manual contact

Naturally automated / bulk email communication is very time efficient but there are times when a more manual / personal approach is needed. Our advisers will also put in calls / emails to review any policy exclusions or when they know a client's circumstances are likely to have changed, such as the end of a work contract or birth or a child.

In a recent Protection Review Big Read, Philip Roche of SPF Private Clients takes it a step further by booking in a 10/15 minute review call with every client every year, and he states his lapse rate is 4%, which is exceptional.

From the above, the moral of the story is that ongoing client communication is welcomed by the client and there’s no doubt in my mind that it’s essential if you want to cultivate leading lapse rates.

Tom Conner is a director at Drewberry, the London and Brighton based financial advisers. Tom has worked in the health and protection advisory market for 10 years and is a founding member of the Protection Distributors Group (PDG).