Close Close

Life Health > Life Insurance

3 steps to proactively manage orphan policies

Your article was successfully shared with the contacts you provided.

More than 40 percent of all life insurance policies are considered orphans with no active agent servicing the policyholder. And the problem is only getting worse. LIMRA estimates that 25 percent of all life agents will retire in the next five years.  That equates to one policy for every man, woman and child currently living in California, New York, Texas and Massachusetts COMBINED.

Imagine the daunting task in trying to contact and service that many policyholders. Where do you start? How do you attack the problem?

Related: 5 ways to lose a customer

The opportunity

Taking these numbers into consideration, it’s worthwhile to examine exactly how orphan policies are managed and what can be done to address the onslaught of new orphan policies over the coming years. Most orphan policies are managed reactively as BGAs and other agents scramble to take on stray in-force books as colleagues unexpectedly leave or retire. With no infrastructure in place, orphan policies often slip through the cracks and add up to millions of dollars of lost revenue opportunities, as well as unsatisfied clients.

But what if orphan policies could be managed proactively instead? With proper tools, safeguards can be put into place so that turnover doesn’t stop a policyholder relationship in its tracks.

Step 1: Create a central infrastructure for contact management

When agents leave the industry, the first problem arises with their contact lists. Agents may store contact information on their personal cell phones or computers, which makes it impossible to recover that information when they leave. Over time, the contact information listed on the in-force policy may fall out of date, or multiple iterations of a contact may be mixed in with accurate information.

A centralized database that can be updated from any device will make it easier to update policyholder contact information and ensure data is clean and usable. Cloud-based functionality ensures that agents can still access the database on their preferred devices, but if they leave the files won’t be stuck on their physical hard drives.

Step 2: Call sooner rather than later

When an agent leaves, time is of the essence. Instead of waiting several months initiate a new relationship, aim to reach out in the 3-6 weeks following agent departure. Clients appreciate being in the know, and informing them about changes to their policy will show them you do genuinely care about their customer experience.

Step 3: Set up automated nurture streams

Consistency is key when it comes to building and maintaining relationships with orphan policies. Once initial contact has been made to address their policy management changes, regular communications from the new BGA or agent is necessary to ensure no revenue is lost in the future. If the policyholder wasn’t ready to discuss additional or changing coverage in the introductory call, keeping them informed via email is a great way to make sure the new relationship stays top of mind.

Email automation platforms are helpful for setting up campaigns that can be scheduled or triggered to send on certain days or under certain conditions. Establish a schedule, content strategy and call-to-action, and create contact lists based on lapse date, policy type or other defining characteristic.

The takeaway

Orphan policies are a significant part of the life insurance industry, and they should be regarded as high-priority opportunities for added revenue and business growth. While it can be inconvenient to redistribute a book of business, using these steps to set up a proactive system will make the transition smoother. Instead of viewing orphan policies as a problem, agents can change their perspective by taking a forward-thinking stance and approaching orphan policies as opportunities for increased client satisfaction and a source of growth for their own business.

Editor’s Note: The original version of this blog post was co-written by Rick Stevens, and first appeared in the InforcePro blog.

Sign up for The Lead and get a new tip in your inbox every day! More tips:

We’re on Facebook, are you?


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.