Customers who leave and then come back-lost business?

[DebAmstutz]

Our owner is going to begin looking more closely at personal lines new and lost business.  One of the CSRs said that most agencies consider ANY new policy written as new business, even if the client moved from a home on Elm Street, cancelled that policy and a policy was written for the home on Oak Street into which they moved.  At this time, we consider that a cancel, rewritten on the Elm Street policy and a rewritten policy on the Oak Street policy.  Those policy statuses are not included in new or lost business reports.

I am looking for input on what other agencies consider new business to be.  Is it EVERY new policy?  And if that is the case, is EVERY cancelled policy considered lost business? 

All agencies have clients who, when they see a rate increase, leave for a cheaper rate only to be back when the policy renews because they discover the other company wasn't all that great.  Are these treated as lost and new, or do you have a cancel code such as "cancelled-rates" and treat them as a rewrite if they return to the agency by the next year's renewal?  Right now, we use a "cancelled-rates" code and if they come back in a year or less, they are considered a rewrite.  I think the "cancelled-rates" policy status should be excluded from the lost biz report, mainly because a producer or CSR can't do much about a client determined to go to some other agency in order to pay less.

The other thing that happens here is that people will cancel non-pay on boat or other recreational vehicle policies when they put those items in storage, and then we write a new policy in the spring when they get them back out.  Should the springtime policies be considered as new or as rewritten?  My guess is that it involves 2 dozen or less out of several thousand clients. I'm not sure it's worth tracking, actually, but those CSRs don't want any more lost biz on their report than there truly is.

So my question is, at least for personal lines, is EVERY policy with a new policy number considered to be new business?  Is EVERY policy that's cancelled considered to be lost business?

(My apologies for my excess use of words!)

[Ric]

Lots going on there Deb.

Answers will vary by agency for my money as long as things are done consistently there is no wrong answer

A New policy is a New policy to our agency. So if a client cancels / sells their home and then buys a new policy for a different home then this would be a New policy on our books.  (the cancelled policy would also have hit our lost business report)

If we "renew" an account within our agency but place the "renewal" with another carrier we consider this a renewal/pay renewal commission although we use an agency specific status code of RRW to indicate that it was Renewed/rewritten with different carrier.

Seasonal policies that are "renewed" months later to coincide with the season of use (snow mobile, water ski etc.) are simply renewal policies.

Hope this helps.

Ric

Our owner is going to begin looking more closely at personal lines new and lost business.  One of the CSRs said that most agencies consider ANY new policy written as new business, even if the client moved from a home on Elm Street, cancelled that policy and a policy was written for the home on Oak Street into which they moved.  At this time, we consider that a cancel, rewritten on the Elm Street policy and a rewritten policy on the Oak Street policy.  Those policy statuses are not included in new or lost business reports.

I am looking for input on what other agencies consider new business to be.  Is it EVERY new policy?  And if that is the case, is EVERY cancelled policy considered lost business? 

All agencies have clients who, when they see a rate increase, leave for a cheaper rate only to be back when the policy renews because they discover the other company wasn't all that great.  Are these treated as lost and new, or do you have a cancel code such as "cancelled-rates" and treat them as a rewrite if they return to the agency by the next year's renewal?  Right now, we use a "cancelled-rates" code and if they come back in a year or less, they are considered a rewrite.  I think the "cancelled-rates" policy status should be excluded from the lost biz report, mainly because a producer or CSR can't do much about a client determined to go to some other agency in order to pay less.

The other thing that happens here is that people will cancel non-pay on boat or other recreational vehicle policies when they put those items in storage, and then we write a new policy in the spring when they get them back out.  Should the springtime policies be considered as new or as rewritten?  My guess is that it involves 2 dozen or less out of several thousand clients. I'm not sure it's worth tracking, actually, but those CSRs don't want any more lost biz on their report than there truly is.

So my question is, at least for personal lines, is EVERY policy with a new policy number considered to be new business?  Is EVERY policy that's cancelled considered to be lost business?

(My apologies for my excess use of words!)

[Sherry Burrell]

As Ric said, each agency sees it differently!  If a client sells a house and buys another, the new house is not considered new business.  We have a code for the sold house/policy as CRW - cancelled rewritten - that applies to any policy cancelled and rewritten by our agency.  RRW we would use for the new homeowners.

My thought is that you don't do new and lost business when they trade cars, why do it trading houses?  ( or other things)

We don't have any seasonal policies in GA so I can answer that part.  We do consider a lost account NEW if it was gone for 12 months.

[DebAmstutz]

I know agencies differ on what they consider new and lost.  I'm wondering if it's 50-50 like Ric's and Sherry's replies or if there is a definite trend one way or the other.  I like the car analogy.

[Ric]

As Ric said, each agency sees it differently!  If a client sells a house and buys another, the new house is not considered new business.  We have a code for the sold house/policy as CRW - cancelled rewritten - that applies to any policy cancelled and rewritten by our agency.  RRW we would use for the new homeowners.

My thought is that you don't do new and lost business when they trade cars, why do it trading houses?  ( or other things)

We don't have any seasonal policies in GA so I can answer that part.  We do consider a lost account NEW if it was gone for 12 months.

Sherry, Interesting point about the cars and comparing them to homes.

The problem is people generally do not go without a car.  Families typically have multiple cars so dropping one and adding another at a later date or they trade a car in the same day the get a new car.  These situations do not affect continuity of coverage. 

Generally people do not add a new home or change the location on their homeowner's policy the same date.

Interesting conversation.

RT

[Coral]

I think what matters most is the consistency. You can't count the new home as new business and not count the old home as lost business.

[DebAmstutz]

This is true, Coral.  Consistency here has been sporadic.

[Steven Strauss]

Ditto to what everyone has said so far. Create bright-lined rules and stick to them. Here, while we don't write very many personal lines policies, we do use the following rules to differentiate between new business on a cancel/re-write:

1) Time: if there has been a gap of at least 90 days,it is new business.
2) Entity: if the insured has changed entity for some reason (different FEIN number), it is new business.
3) Replaced Coverage: if the insured replaced coverage in the intervening period, it is new business
4) Change in Exposures: if there is a material change in exposures that couldn't be handled by an endorsement if the policy remained in-force, then it is new business

As we use a separate transaction code for a re-write, we run a re-write report each month and validate the reason that the code was used to catch problems of this nature each month.

[DebAmstutz]

Good set of rules, there, Steven.