Let’s see what facts say. These facts have been pulled from public disclosures of Life Insurance firms. Persistency shown here is APE persistency based on Non-Reducing basis*
Based on above two plots one aspect that is clearly visible is that persistency measures of firms with Agency Channel as major contributor (atleast 50% of NBP) are more widely separated than rest of the firms (Plot 2). Average Deviation of 49th month persistency in case of Agency as major contributor is double the average deviation in rest (7.5).Average Deviation of 37th month persistency in case of Agency as major contributor is 1.5 times average deviation in rest (8).
Average 49th month persistency for firms with non-agency channels as major contributor stands out to be 37% as compared to 33% with. Average 37th month persistency for non-agency channels firms is 43% whereas for agency channel it’s 40%.
These statistics surely highlight impact of agency channel on long term stickness of customer. Lot can be done and needs to be done in address misselling and improving economics of this channel. Predictive Analytics can play an important role in identifying incidences of misselling, improving agent productivity if operationalized and executed well.
*Persistency measured in Mar’13-Dec’13