Unlocking >£20M in Increased Gross Margin at a Major Health Insurer

Shrinking customer base
13 legacy books and numerous policy variants causing customer and staff confusion
Operationally complex to manage – high cost to serve
Existing proposition and pricing created trigger points for customer exit
Customers not segmented by value
No differentiated renewal or save strategies
Not pricing for risk or maximised value retention
Poor customer journey: passed from function to function, advisors not empowered

Designed and executed a pricing, product and service migration of all policyholders to one new modular product
- Developed new proposition which drove retention of high value customers and higher return from lower value customers
- Built in upgrade/downgrade ‘right-size’ choices to mitigate competitor switching
- Created pricing engine enabling all business to move to NCD-based policies and set renewal premiums to optimise gross margin
- Cut expected IT lead time to launch from 12 to 3 months
- Changed customer communications and management processes to de-risk customer disruption and loss
- Engaged Legal and regulator on ‘automatic renewal’ plans throughout
- Piloted the transition on 2 highest lapse-risk books to ensure error-free process and no adverse increase in lapse rates

Exceeded the £20Mpa gross margin improvement target
Reduced customer loss by 25%
Improved operating cost ratio from 30% to 16% with greatly improved IT flexibility
Excellent customer and FSA feedback
Successfully rolled out from personal to SME & Group schemes

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