Insurance carriers often struggle to extract the full value from their renewal portfolios, largely due to inefficiencies in pricing and outdated systems. According to Quantee, more than 20 factors outside of pure pricing can erode performance. In response to this, the firm has delved into seven actionable strategies that insurers can use to enhance both customer retention and portfolio profitability.
1. Start with clear business goals and strategy
Many insurers fail to set separate KPIs for renewals and new business, leading to poor visibility of GWP, retention, and profitability. Without clarity, underperformance goes unchecked. Begin by tracking these metrics independently, then set realistic, measurable goals for renewal success.
2. Use renewal capping to control premium volatility
Sudden price hikes—even without claims—cause churn, while underpricing eats into margin. A basic cap of ±10% on renewal premiums compared to the previous year can stabilise retention. The cap should reflect inflation and risk—higher-risk clients may justify pricing beyond the cap. Legacy tech often makes implementation a challenge.
3. Offer the right number of renewal options
Sending too few or too many renewal offers hurts conversion. Avoid downgrading packages from last year, and instead provide 2–3 options: basic, same-as-last-year, and enhanced. This simple strategy leverages behavioural science to steer customers toward mid-tier choices, increasing satisfaction and revenue.
4. Separate risk models for new business and renewals
Renewing customers offer more data—claims history, product usage, behavioural patterns—than new clients. Yet many insurers still rely on one ratebook. With better segmentation, risk prediction improves. Even using renewal channels as risk factors can significantly boost pricing accuracy and CoR.
5. Tailor price tests for each customer segment
New business benefits from symmetrical price testing. Renewals, however, need tests focused on premium increases and bundled product behaviour. Testing full configurations rather than individual items ensures more precise adjustments and improved retention strategies.
6. Optimise prices separately for renewals and new business
True price optimisation uses machine learning to balance margin and KPIs. Renewal and new business segments require different models and constraints. While full engine deployment helps, offline optimisation through actuarial tools is a solid start for batch renewals.
7. Be bold in refining your renewal portfolio
Sometimes, bad risks must go. If a renewal book has a high CoR, minor tweaks won’t help. Strong price increases—even at the cost of retention—may be necessary. It’s essential to have leadership backing to make these tough but profitable calls.
Read the full blog from Quantee here.
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