Question

Which one of the following statements is correct with respect to customers leaving an agency or brokerage?

A. In most cases, customers leave because they have found a lower price elsewhere.
B. Price is rarely the only reason; often they leave because of service issues.
C. There is little insurance professionals can do to prevent customers from leaving.
D. Campaigns to prevent customers from leaving are generally not cost-effective.

Answer 1

Customers leaving an insurance agency or brokerage do so often due to service issues rather than just finding a lower price elsewhere, and there are complex factors at play in the insurance industry that affect customer retention.

Step-by-step explanation:

When considering why customers leave an insurance agency or brokerage, the correct statement is B: Price is rarely the only reason; often they leave because of service issues. This aligns with understanding that customer retention is influenced by multiple factors, including customer service experiences, perceived value, and trust in the service provider, not solely price differences. The insurance industry faces challenges like adverse selection, where those with higher risks are more likely to purchase insurance, ultimately increasing costs for the company. Insurance companies may raise premiums to cover these costs, discouraging low and medium-risk individuals from obtaining insurance, which can deteriorate the customer base and lead to further losses. Additionally, government laws and regulations impose constraints on the industry, preventing insurers from charging excessively low or high prices without long-term consequences.