Hanging on to your customers in an economic downturn

The banking meltdown has meant that many insurers around the globe are seeing their investment incomes completely disappear due to the industry’s reliance on the equity market to create surplus from invested premium incomes. The problem of underperforming investment returns is compounded by the fact that cost bases have either remained the same or are growing. With an attrition level of above 40% in specific lines of general insurance business, insurers must rethink the way they interact and deal with their customers. Here, Sabine VanderLinden, director of worldwide insurance solutions at Chordiant, looks at the opportunities for insurers to retain existing, and generate new, sources of revenues through retention schemes, product extension schemes or new business acquisition schemes

In 2007, the world insurance market grew by 3.3% to $4.061trn, driven mainly by the life business in industrialised and emerging markets and to a lesser extent by the non-life business in emerging markets, according to Swiss Re. By contrast, 2008 was a year that insurers would probably rather forget.