Life insurers use specialised tools to manage persistency

Use analytics and persistency management systems to boost renewals

Life insurance companies are now using specialised techniques and tools to manage persistency. Renewal premiums, which stood at Rs 1,93,862 crore for the quarter ended March, have been an area of constant innovation and development to ensure that these premium collections continue to see an upside.

Insurers such as Max Life and Aviva Life Insurance have already taken research and technology-aided initiatives to boost the premium renewals and policy persistency. Others like Reliance Life are looking to have similar processes to reduce cases of policy lapses.

Arvind Nahata, co-founder of Decimal Technologies which specialises in providing technology solutions to improve productivity of field-force, said they had several insurance companies working with them to improve renewals.

"We provide life insurers with a persistency management system. This is basically an application used to increase management visibility on renewals and why policyholders drop out of policies," said Nahata.

Decimal Technologies provides a platform that can be availed of, through the agent's mobile phone by which renewal information is automatically pumped. They ensure no customer goes untouched and the process begins 30-60 days in advance of premium due date.

After an agent contacts a customer and receives further instructions on when to collect the premium, this information is loaded on to the platform which enables the insurance executives to constantly track the persistency performance. If a customer refuses to pay premiums or has some concerns with a particular policy, that information is also stored on the platform.

Max Life Insurance has analytical tools to segment customer behaviour. After these tools are used, customers are identified and bracketed into low-risk, high-risk or medium-risk for policy lapsation.

In the high-risk segment, more efforts are taken by the agents to ensure that premiums are paid on time. In the low-risk segment, while the agents do remind policyholders to pay if they haven't, the efforts taken are far lesser. This is because their tools have shown that customers in the low-risk category usually pay their premiums on time.

Aviva Life Insurance has similar techniques. Mahesh Misra, chief distribution officer, Aviva Life Insurance, said they recognise that agent engagement is a specialised task and cannot be treated as a mere sub-component of sales activity. They have, therefore, carved out a separate unit to manage the entire agent lifecycle, where they onboard agents using a combination of analytics based profiling tools, comprehensive training and joint client meetings with our branch teams for prospect conversion.

"Persistency is one of our most important levers and forms an integral part of our gating criteria and recognition programs. For convenient online access,  our agents have a unique ID that provides them with all the requisite product/client details through our full-function, highly advanced agent portal," said Misra.

Others are not far behind. Reliance Life is in the midst of setting up persistency management system. The company is likely to introduce it next month.