Retaining customers in a price war

Advanced analytics provide the answer to customer retention

Auto insurers are facing hard times. There’s a huge price war going on, and insurers need to find a way to capture – and keep – consumers during the worst economic downturn in decades. Now, consumers are on the lookout for the least expensive coverage. How do you make data work for you in this kind of environment?

"The ability to analyze market trends and evaluate competitor pricing and products – and react almost instantly – is essential to our success. So we need the best market analytics solutions," explains Ángel Marín, Autos Technical Director of Caser Seguros.

For us, the predictive capability of SAS is essential. It’s vitally important for us to be prepared for churn and capable of launching retention initiatives quickly.

Ángel Marín
Autos Technical Director

Succeeding in a competitive crisis

“The Autos Technical Department provides services to various areas of the company – from reinsurance to commercial – with distribution channels as diverse as banking and insurance, agents and brokers, and large accounts," says Marín. “Each channel has different needs, and so the scope of operations is broad. We need a flexible solution that can grow along with us.”

To address this need, they adopted SAS® Customer Analytics, which they use in two ways:

  • To define their pricing strategy.
  • To build customer retention models.

When customer retention is vital

In a price war – where customers hop from insurer to insurer looking for the best offer – attracting and keeping loyal customers is very important. But there are plenty of challenges. So Marin says they looked to analytics to refine Caser’s price strategy and construct policy retention models.

Caser can now detect which customers are likely to leave for another insurer – before they actually do. That knowledge alerts them to begin actions to retain those customers. With SAS solutions, Caser has managed to control the lapse rate of its customers and maintain its market position despite the economic difficulties.

"For us, the predictive capability of SAS is essential. It’s vitally important for us to be prepared for churn and capable of launching retention initiatives quickly,” says Marín. “This is the best way to ensure that our retention actions are effective."

The value of information

In addition to using advanced analytics in customer loyalty and retention, Caser can anticipate other factors. For example, Caser measured the impact of regulatory changes, such as the recent ban on gender-specific pricing.

"Calculating the economic impact of a regulation of this type is very important to our bottom line,” explains Marín. “With SAS, we can quickly and reliably calculate the effect on our pricing models.”

The value of the information provided by the Autos Technical Department is felt throughout the company. "Anyone in the company who needs answers to business questions in the auto sector turns to our technical department for reliable information, precision and detail. In all business decisions, the power to detect where our profitable and unprofitable areas are – and what actions we need to take – is highly valuable to Caser."

Marín says that there is still a lot they can do to improve. And Caser isn’t sitting still. The company is already collaborating with SAS to deploy solutions to extract information faster using an increasingly larger volume of data. This information will benefit every area of Caser – not just the auto insurance department.

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Challenge

Maintain a granular and competitive pricing model to prevent customer churn.

Solution

SAS® Customer Analytics

Benefits

Improved premium pricing calculations and increased policy retention rates.

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.

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