Renewing a health insurance policy can be a chore, but it turned out to be a positive experience for customers who received a $100 eftpos gift card with their renewal notice. The gift program surprised and delighted customers and successfully improved renewal rates by 28% for a major health insurance brand.
Created by Corporate Prepaid Gift Cards, the renewal incentive program created a ‘WOW moment’ for customers and delivered an impressive result for the insurer.
Health insurance customer churn
Health insurance is an industry with a high level of customer churn. Customers shop around and compare their coverage with other offers, many of them switching to another provider if they find coverage or pricing that better suits their needs.
Customers drop out or switch health insurance for a variety of reasons:
Fees become too high
Out-of-pocket gap becomes too great
Rely on Medicare
Poor service from health insurance providers
Change in family circumstances.
Research for the Australian health insurance industry shows that lapse rates can rise to over 20% of customers with some insurers.
Satisfaction down, cancellations up
New research shows that in the year to March 2018, an estimated 256,000 people decided not to renew their private health insurance, an increase from 182,000 during the same period in 2017.
Findings from the Roy Morgan Private Health Insurance Customer Satisfaction Report^ reveal satisfaction with private health insurance in the 12 months to June 2018 was 70.5%, unchanged since May 2018 but down 2.0% from June 2017 (72.5%), and well below 2015 levels.
Customer experience is key
The health insurance industry is looking for ways to retain customers and all Australian health insurers contributed to findings in the White Paper ‘Future Solutions in Customer Experience and Retention for Private Health Insurance’^^. Prepared by Energesse, the findings were designed to help deliver a greater customer experience and customer retention.
Providing insights and strategies on improving consumer experience for retention, acquisition and return on investment, the white paper indicates that high lapse rates have a significant financial impact on insurers due to the relatively tight net profit margins.