After a period of impressive top-line growth, AIG Life’s leadership now concentrated on driving for profitability on a US GAAP basis. Working with Curzon to isolate what could best deliver profit uplift, we zoomed in on a stubbornly un-moving customer persistency rate and recognised that every 1% point of lapse averted would yield significant and multiplicative profit gains.
Curzon was engaged on an ambitious programme to rapidly get control of lapse and release commercial benefit, and to build the capability to achieve best practice retention management. This was an enormous challenge given the starting point: no set persistency strategy, an absence of key lapse analytics, retention not owned or resourced in the organisation, and a lack of lapse prevention and turnaround processes.
Over 11 months through 2019, we took a pragmatic, agile, and ‘together’ approach to accelerate to retention excellence, securing the organisation’s buy-in to what it would take to get there, and quickly demonstrating the commercial, operational and customer benefits of joined-up retention management. Curzon enabled the new cross-functional working essential for success, and gave the business the structures and confidence to operate highly effective preventative and save processes – internally and leveraging external partners.
Among the prime watershed moments were revealing how:
- a shift in distribution mix from advised face-to-face to telesales had created a hitherto unseen problem of drop-out inside first 3 months
- customer communications from welcome onwards needed to explain clearly the personal value of life insurance, and how holding it ensures financial provision for those you love
- rather than automatically cancelling customers on request, customer service had a responsibility to engage them before they make a potentially uninformed decision
When the business took the reins 3 months after improvements were implemented, lapse rate had been reduced to the best practice % mark on a run-rate basis and incremental revenue and profit benefit unlock was exceeding our original target. This translated annualised into 5-figure policy saves and a cumulative £multi-million gain in Pre-Tax Operating Income by 2023. The business had taken ownership of a new retention management function, with a new Lapse MI suite providing the predictive insights to continually optimise retention. Beyond achieving the agreed objectives, the work also led to complementary projects including work to minimise drop-out in the Bank partnership sales channel.
Commenting on the success, AIG Life CFO Donald MacLean said:
“Curzon helped us obtain the confidence and operational ‘can-do’ to get control of lapse sooner than we could have expected, and then to push on to best practice performance.
As always, their skill was in balancing pace of change and the results imperative with the need to take the organisation with them on the journey. A key achievement was building the necessary collaboration between the many functions that needed to act together to manage retention in a joined-up way.
The result was a tangible and ongoing commercial win, and a vital new balance struck between sales and retention for business profitability and sustainability”.
View the Curzon Consulting profile in the MCA Members Directory.