Markov Analysis in Commitment Prediction of Insurance Customer to Minimizing Customer Attrition


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Abstract


Trust and commitment are the important things for insurance customer to continue doing business with insurance company. Customer commitment can be seen from payment history, whether customer doing payment on time or late. This research using Markov Analysis to predict customer commitment using data of insurance premium payment history from each period, identify customer profile, and analyze the type of insurance purchased. This research shows there are three steps of customer who vulnerable to terminate the insurance contract with company. Insurance company could use the result to minimize customer attrition level with several ways like review the applicant profile before make insurance contract, recommends which type of insurance will fit to applicant, and monitor customer who late to do premium payment for two consecutive periods. This research also propose Customer Relationship Management (CRM) strategy to handle customer who match with the three steps of terminating the insurance contract with providing special treatment and service to prevent discontinuance of insurance contract.
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Keywords


Commitment Prediction; Customer Attrition; Customer Relationship Management; Insurance; Markov Analysis

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References


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