Cross-Buying Behaviour and Customer Loyalty in the Insurance Sector

Customer loyalty is one of the main business challenges, also for the insurance sector. Nevertheless, there are just a few papers dealing with this problem in the insurance field and specifically considering the uniqueness of this business sector. In this paper we define the conceptual framework for studying this problem in insurance and we propose a methodology to address it. With our methodological approach, it is possible to estimate the probability that a household with more than one insurance contract (policy) in the same insurance company (cross buying) would cancel all policies simultaneously. For those who cancel part of their policies, but not all of them, we estimate the time they are going to stay in the company after that first policy cancellation, that is to say, the time the company has to try to retain a customer who has just given them a clear signal of leaving the company. Additionally, in this paper we present and discuss the results obtained when applying our methodology to a policy cancellation dataset provided by a Danish insurance company, and we outline some conclusions regarding the factors associated to a higher or lower customer loyalty