Goal: Predicting Insurance Agent Attrition: Identifying those agents most likely to switching to another company

MoneyFromPrediction  (www.moneyfromprediction.com) is WizSoft distributor in Hungary,  specialized in data mining solutions by using WizWhy, analyzer and predictor.

Agent attrition is an important issue for any insurance company due to the intensive competition and saturated markets. The insurance companies know that the easiest and fastest way to increase their customer base is by gaining new successful agents over. Thus, agents become more demanding and tend to switch from one insurance company to another. As a result of losing good agents the insurance companies end up by losing customers.

In particular, non-life insurance companies compete for customers with lower premiums, as the car owners can compare insurance services and prices online and activate the selected insurance immediately. This situation triggers (a) the winner companies have to compensate the low premium by cross-selling, (b) the other companies have to compensate to the loss of contracts by cross-selling. Due to the ‘premium war’, the insurance companies perform huge cross-selling campaigns.

A Hungarian Life Insurance Company, lost many of its best agents to its competitors and consequently the company lost customers. Then its competitors try to sell their other products (life-insurance, home-insurance) to the new customers.

In order to improve the agent retention which can be the key to customer retention, Csaba Domjan, from MoneyFromPrediction, worked out a special, nontrivial methodology to predict agent churn by using WizWhy and the outcome had a very high success rate.

Special variables were generated to create the churn modeling and then the probability values of the agent churn were predicted. The result was that four months later, 50% of the agents with high probability values of the churn left the company to a competitor.

Advantages applying WizWhy to agent churn prediction:

  1. Reveals all the rules of the agent retention (more rules guarantee better accuracy)
  2. Analyzes all agents in one run automatically
  3. Detects soon which agents are about to resign and explains why (lists relevant rules)
  4. Predicts the probability of churn of each agent
  5. Prints into files the probability values, so experts can compare the results for each agent
  6. Reveals rules about agents behavior
  7.  Discovers new reasons about churn
  8. Can detect fraud cases
  9. Can improve the success rate of recruitment of new agents
  10. Helps designing personalized retention plans in order to reduce or avoid agents migration
  11. Doesn’t need special knowledge to use WizWhy

WizWhy is a cost / effective solution and can increase the ROI of an insurance company:

ROI = (A+B+C+D+E+F+G – $3,995)/$3,995

where:

A = Agent retention

B = Customer retention

C = Cross-selling

D = Fraud detection

E = Success rate of recruiting new agents

F = Up-selling

G = Market price and behavior monitoring

 

by:   Csaba Domjan, MoneyFromPrediction.com

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