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Life Insurers Still Want Sticky Policyholders

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Life insurance company executives may sound these days as if they think of policyholders more as burdens to shed than as assets to keep, but executives at LexisNexis see evidence that life insurers still want to attract and retain good customers.

LexisNexis Risk Solutions — a sister company of LexisNexis Legal & Professional, a news, legal and financial record storage giant — offers a collection of tools that can help an insurer identify and assess prospects, both inside and outside the insurer’s current blocks of business. The company, which is a unit of the RELX Group, has been serving property-casualty insurers and their lawyers with information services for decades. In recent years, the company has been focusing more on finding ways to make its streams useful to life insurers.

Sandeep Kharidhi, the vice president who manages the LexisNexis Risk Solutions unit’s insurance customer relationship products line, markets one tool that can help life insurance marketers filter potential prospects based on estimates of mortality risk. He also sells a tool that can help a life insurer filter a prospect list based on how likely the people on the list are to keep up their premium payments.

(Related: 4 Ways to Keep More Clients)

Still another LexisNexis tool uses techniques, such as mailing address validation, that can determine whether a life insurance lead submitted through a web form is worthy of the attention of a live-human agent.

Today, life insurers spend about $3 billion to $4 billion per year on advertising and other forms of customer outreach, Kharidhi said Wednesday in an interview at ThinkAdvisor Life/Health’s offices in New York.

That compares with annual outreach spending of about $6 billion to $7 billion at property-casualty insurers, Kharidhi said.

But Kharidhi said life insurers continue to make aggressive efforts to increase sales.

“We’re seeing a lot of carriers focused on retention,” Kharidhi said.

Life insurers are especially hungry for tools they can use to identify which current customers need and want more coverage, such as life customers who might be open to increasing their coverage levels, or term life policyholders who might be open to converting to permanent life policies, Kharidhi said.

LexisNexis expects to see life insurers increase spending on consumer outreach over time, as they invest more heavily in accelerated underwriting programs and direct sales programs, Kharidhi said.

LexisNexis began creating pools of Big Data before anyone had coined the term “Big Data.” The company has used, or experimented with, every imaginable technique for analyzing the data. But Kharidhi noted that it has focused much of that analytical wizardry on what to the users may look like a relatively simple task: determining which of the billions of records in the databases relate to a specific business, household or individual.

Here are three other highlights from Kharidhi’s remarks.

1. Marketing data v. underwriting data

Life insurers already get torrents of detailed personal consumer data from organizations such as MIB Group, and from applicants’ own applications and medical records.

But the data sources life insurers can use for marketing are often much different from the data sources they can use in the underwriting process, Kharidhi said.

Life insurance applicants usually sign waivers that let insurance underwriters look at sensitive, personally identifiable information, Kharidhi said.

Life insurers, life insurance marketing organizations and other life insurance marketers may have no relationship with their prospects, or no ability to use the prospects’ personal information in marketing campaigns, even if a relationship does exist, Kharidhi said.

Because of privacy concerns, life insurers need to find ways to use public information sources, such as driving records and tax lien records, and sources such as the kinds of credit bureau information available to marketers, to substitute for the kinds of information sources used in underwriting, Kharidhi said.

2. Underwriting psychology

Both life insurers and property-casualty insurers prefer to get applications from lower-risk applicants.

For life insurers, and for life insurance agents who have spent years building relationships with clients, determining whether the targets of marketing campaigns will be healthy enough to buy the products marketed is critical, Kharidhi said.

“Will they actually qualify?” Kharidhi said.

Kharidhi said analyzing potential prospects’ health in advance is especially important when an agent is thinking about trying to offer an additional product to a longtime client.

If, for example, a multiline agent who has been handling a client’s home and auto business for years is going to offer the client life insurance, the last thing the agent wants is to see the client’s application turned down, Kharidhi said.

3. Tobacco row

One of the goals of LexisNexis life tool designers is to come up with new ways for marketers’ to court healthier prospects without making use of the kind of records governed by the Health Insurance Portability and Accountability Act health information privacy rules.

In the future, Kharidhi said, one dream would be to find a tool marketers could use to filter the likely tobacco users in a prospect list from the non-users.

— Read 3 Ways to Retain Clients and Grow Your Base on ThinkAdvisor.

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