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The Rough Notes Company Inc.



April 27
07:42 2020

ISO Emerging Issues Perspective

By Jason Polayes


Build trust with your clients by eliminating second rate calls

The imperative to deliver a good customer experience is pressing into every corner of the business-to-consumer world, a product of high expectations set by online behemoths, including those in retail and in home lending. But personal lines insurance agents may find there are limits to their power over the policyholder experience. That power often rests in the tools and processes they use in selling and servicing policies.

The insurance-buying experience can fall flat in many ways, and customers’ patience may be low from the start for what’s often a compulsory purchase—required by law or by lenders.

One common pitfall is the point of quote. After enduring a lengthy application process, a customer receives and accepts a price. And then the premium changes, often upward, in a second rate call that feels to the consumer like a bait and switch. Verisk research and anecdotal reporting from clients suggest that as many as 60% of initial auto quotes may be adjusted near point of bind.

With just a few basic pieces of customer information, it’s possible for insurers to tap an array of validated data sources. These can prefill applications and drive a rules engine that produces a dependable quote—the first time.

This is where many sales fall through, and irritated customers take their business elsewhere. As prospects drop off, the quote-to-bind ratio may deteriorate, chipping away at efficiency for both the agent and the insurer. If they’re lucky, that’s the end of it. But as millions of consumers become accustomed to sharing bad experiences on social media, an abandoned insurance purchase can echo across the internet and compound the harm from just one failed interaction.

It’s in the insurer’s and agent’s mutual interest if the second rate call—especially any up-charges—can be avoided. Otherwise, trust may be eroded at this point of contact between the insurer and the policyholder.

Rate call two: Good intentions, unintended consequences

How did the insurance business get to where this is even an issue? In some cases, it’s through the best of intentions: an effort to achieve savings that can help keep rates competitive in what can be a bruising marketplace. One way some insurers have chosen to save is by limiting the amount of underwriting data they order to help in generating an initial quote. Motor vehicle reports, loss history, credit headers, and other information come at a cost for every query, and it seems logical to delay spending money on a prospect who hasn’t yet committed to buy.

But the money saved by waiting to order data could be outweighed by hidden costs. The missing information can contribute to poor business decisions, multiplied many times over in sale after sale. But the worst consequence might flow from a poor customer experience: lost business for the insurer and a damaged relationship for the agent.

Even if the customer stays after the higher second rate call, the relationship may be off on the wrong foot. Such policyholders could be ripe for poaching by competitors offering a less painful process. A MuleSoft survey, titled “Consumer Connectivity Insights 2018,” found that 58% of policyholders feel “disconnected” from their insurers, and 56% of those customers consider switching companies as a result.

On the flip side, there are the hidden costs of pursuing nonviable leads. By the time reports are ordered on a delayed basis, significant time is already invested in cultivating the would-be buyer. If the reports reveal disqualifying risk information, then time, effort, and money have been wasted. Still, the far greater risk is losing a desirable customer through an outdated quoting process.

Consider an insurer that asks 25 questions in its application, subjecting customers to a lengthy grilling. The insurer doesn’t use prefill and, when the policy appears likely to bind, pulls more data before rate call two. By the time the prospect receives the second quote, the process has eaten goodwill, time, and perhaps any chance the agent had to upsell or cross-sell the customer. And that’s assuming the customer still comes on board after being uprated from the initial quote.

Another insurer asks three initial questions, relying on prefill to plug the gaps. So far, so good; it’s a much better initial customer experience, personal yet efficient. There’s more time and a better tone to the conversation, helpful for building the customer relationship and exploring other sales opportunities. But it could be better: The prefill data isn’t validated and may be incomplete, leading to 10 follow-up questions with the potential to drive an uprated second quote.

The second insurer is on the right track but may need to fully embrace the lessons it can learn from the customer and agent experience. It’s bringing data forward in the quote flow, but a concerted strategy and a focus on data quality could make for a marked improvement in customer interactions.

A data-forward strategy: Focusing on the experience

Some insurers are trying new ways to keep prospective customers happy in the sales pipeline, all the way through bind. These customers may be more inclined to stay at renewal, increasing the return on earlier acquisition costs and improving the chances of building a wider relationship over time.

The secret could be a data-forward strategy. With just a few basic pieces of customer information, it’s possible for insurers to tap an array of validated data sources. These can prefill applications and drive a rules engine that produces a dependable quote—the first time. Speed through automation, coupled with accuracy through rich data, can be the winning combination that helps land and retain more business.

Loss history reports are one example of data that may be more powerful early in the quote flow—helping to close not just any sales, but the right ones. Ordering only at bind can limit opportunities to optimize and use the data to full advantage, while access to indicators and detailed loss history reports at point of quote may reduce overall underwriting costs and result in a higher-quality book of business.

By bringing data-driven decision points forward in the application and quoting workflow, tailoring business rules to each transaction, and aligning quote throughput with risk appetite, “one-rate” insurers can make faster decisions, maximize policyholder satisfaction and loyalty, and refine underwriting and rating.

Having a data-forward strategy in place can also position insurers and their agents to compete more effectively in a field that’s being upended by innovators. New and forward-looking market leaders are already working to drive the second rate call to extinction.

Agents might be wise to examine what efforts are underway at the insurers they represent.

The author

Jason Polayes is senior product manager for data-forward prefill solutions at ISO, a Verisk business.

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