Insurance companies fight hard to retain their customers. Most customers prefer the convenience of doing all of their insurance business with one company, so a single customer can be worth hundreds or thousands of dollars a month. Insurance agents are authorized to renegotiate policy rates within limits to retain customers that threaten to switch to another company or cancel their service.
Selling Additional Policies
Insurance companies tend to try to envelop their customers in a web of various insurance policies, which raises the barrier to exit. The more policies that they have with more varying renewal dates, the more annoying it'll be for them to jump to another insurance company to get a lower rate. If the insurance company can sell an additional policy to a customer, they're also spending much less money on marketing to acquire that additional policy than they would on a new customer.
Insurance companies use basic customer service and sales strategies to keep their customers from leaving for another one with lower rates. Many sales and customer service representatives will identify themselves using their names and attempt to be friendly with their customers. This makes the insurance relationship more than a business transaction for the customer. Leaving for another insurance company becomes as difficult as leaving a friend if the insurance company can successfully create a personal bond with the customer.
Insurance Emotional Product
In most cases, insurance policies provide customers with more of an emotional peace of mind than actual financial protection. Insurance companies would not be profitable if they did not pay out much less in claims than they took in from premiums. The vast majority of their customers are paying to free themselves from the stress of worrying how they would recover from the destruction of their car, their home burning down or dying and leaving their family without support. Many people make insurance purchasing decisions based on their feelings rather than financial calculation.