Baby (Image:Thinkstock) (Image: Thinkstock)

As people’s lives change so do their insurance needs. Buying a home, having a baby, adding new drivers to the household, and other common life events can help insurance companies proactively retain policyholders and generate new business opportunities.

The problem is life insurers and their agents often don’t know how these life changes could affect their policyholders’ needs until it is too late. Knowing when these events happen can help create an on-going relationship with the policyholder at the right time to manage the relationship before the change negatively impacts both the agent and carrier’s book of business.

(Related: LexisNexis Shifts Life Insurance Underwriting Into High Gear)

Life events often offer new cross-sell and upsell opportunities, so it is important for agents to discuss with carriers how they can receive these triggers, so they can be there to address their policyholder’s changing needs. Life event triggers should be viewed as opportunities to reach out to policyholders in an advisory role to build rapport, review coverage, and ultimately strengthen retention.

When comparing other lines of business such as auto or property, there is a regular cadence of policyholder contact that at a minimum happens at renewal. Ultimately, within these lines of business, the relationship with the policyholder is on-going, whereas in life insurance, the relationship can be a one-time/one-stop event. Making sure your carriers have these life event triggers in place, can give agents a competitive advantage and a reason to have an additional conversation about life insurance.

Educating Americans on their options is more critical than ever because the nation is experiencing a significant life insurance gap. According to LIMRA studies, there is an estimated $340 billion worth of new life insurance needed each year, which is a gap of about $200,000 per household . Considering that there are approximately 124 million life insurance policies currently in force, with 13.5% of those policyholders experiencing a triggering life event each year, the market opportunity to cross-sell or upsell life insurance to individuals who have experienced a life event is $14.3 billion .

Having the right data at the right time will lead to a focused conversation, helping agents close the life insurance gap for customers while maximizing their ability to sell policies.

Executing on Life Events

People buy insurance when they are ready to buy, not necessarily when the agent wants to sell. Reacting quickly to changing life events gives agents the opportunity to reach customers when they are most receptive. Having the right data at the right time increases life insurance cross-selling and upselling opportunities while coming across as trusted advisor.

For instance, financial advisors who perform outreach at the time of a triggering life event are up to 14 times more likely to close a sale than when they outreach outside of triggering events, according to a McKinsey study

New risk management programs utilizing advanced technologies have made staying on top of important changes in policyholders’ lives easy and timely. Active Risk Management is an approach that leverages massive amounts of data and advanced analytics to monitor an insurers’ book of business and trigger notifications when critical changes occur in a policyholder’s life that may affect their insurance needs. Agents will need to coordinate and discuss these opportunities with the carriers they represent, in order to know if they have an active risk management solution, and how can they leverage with their policyholders.

Technologies like automated life event monitoring tools can perform regular reviews on policyholders’ life events, isolating important life event-related information and delivering new insights when triggering events happen. For example, the technology can identify when a policyholder’s house has been listed and is now pending sale. The agent is notified via the carrier, and reaches out to retain the business by providing homeowners insurance for the new location, and by updating the address on the auto insurance. It may also notify the carrier that the policyholder is shopping for auto insurance, giving the carrier the opportunity to reach out, review coverage options, and evaluate discounts that will keep the policyholder loyal.

More recently, the technology has evolved to support death in network life events. The death of a loved one could be considered different from other triggers because life insurance is an altruistic purchase. The policyholder buys it for the protection of others, not himself or herself. Life insurance agents and advisors need to be mindful of this motivation, because no one should have to struggle financially after the death of a loved one.

LexisNexis Risk Solutions analysis found that 5% of life insurance policyholders experience a death of a loved one annually. On average, the insurance industry sees a half-million of these death in network events each month, with the majority of them (64%) being first-or second-degree relatives. More than three-quarters (76%) of these events happen to policyholders between the ages of 25 to 64 .

Agents can leverage death in network events by using their carrier’s active risk management tools, with the technology automatically notifying them when someone within a policyholder’s network of friends and family passes. The technology generates scores, attributes and insights proactively, as the data is analyzed, matching death in network events to the insurers and their agents’ monitored book of business. It proactively notifies the when such an event occurs so that the agent can act and outreach with fine-tuned messaging.

It’s all about expanding knowledge in relation to policyholders’ lives to anticipate their needs and behaviors, and to take proactive steps to meet those needs and retain them as policyholders. It’s also about understanding the value and risk associated with each customer to optimize resources and fine-tune retention and cross-sell/up-sell tactics.

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Ian Griffin

Ian Griffin is manager, product management insurance, for LexisNexis Risk Solutions.