The importance of predicting risk of lapse
Lapsing policies not only represent lost future margin for Insurers, but can often be a symptom of deeper issues around target customer segments and competitiveness.
In a study conducted by Bain & Company, it was found that if there is an increase in customer retention of just 5%, then the profit of that company can increase by 95%. To build your customer base and brand image, it is important to maintain a healthy relationship with your existing customers and make them a key marketing vehicle for future growth.
Here at Lumera, we have deployed Machine Learning on a Caribbean client’s dataset of more than 70,000 policies to gain insights into the predictors of policy lapse.