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Adapting to the Digital Consumer: Accelerated Underwriting via Single-Rate Quotes

In the ever-evolving landscape of the personal auto insurance market, understanding the current state and historical evolution of consumer behavior and insurer practices is crucial. Traditional long quote forms that once dominated the industry are no longer sufficient to meet the demands of today’s digitally savvy consumers. In this blog post, we’ll explore the challenges faced by insurers and the evolution of the rate call process. We’ll then uncover expert strategies for implementing accelerated underwriting processes, transforming the customer experience and boosting conversion rates. 

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The Challenge of Outdated Quote Forms 

Traditional auto insurance quote forms relied heavily on consumers to self-report information, often involving pages of questions. However, this approach has a couple of significant shortcomings: 

1. Application Fatigue 

Research shows that approximately 84% of potential customers abandon the insurance quote process – the highest of any industry. Lengthy and complex forms can be overwhelming, causing consumers to lose interest. 

2. Inaccurate Information 

Roughly 10% of applicants who complete an online quote form provide incorrect information, leaving underwriters to go back to the customer later with a higher quote, better known as Rate Call 2 or “uprating”. 

The Rise of Rate Call 2 and Its Impact 

Rate Call 1, or the first insurance rate quoted by an insurer, is often based on self-reported details such as driving history. However, with inflation trending up, competition among insurers increasing and consumers shopping and switching carriers with more frequency, Rate Call 2 has become more common.   

Rate Call 2 refers to an increase in the quoted price after insurers validate the information provided and find discrepancies. According to the JD Power Q2 2023 Quarterly Shopping List Report, the current shopping rate for insurance is at 12.5%, the highest auto insurance shopping rate since they began tracking in 2020. 

This phenomenon poses several challenges that could, ultimately, kill the deal. Consumers expect an Amazon-like process when shopping for anything, including insurance. This means that quotes need to be delivered quickly and accurately the first time. Following the trend of immediacy, the rate call process takes more time than consumers want to spend thinking about insurance with a standard timeframe of 7 to 20 minutes.  

If we couple misaligned time expectations with inaccurate data and applicant fatigue, we have a recipe for disaster when it comes to binding the policy. Uprating can derail conversion as consumers become wary of premium increases, particularly when the initial quote process has become lengthy and cumbersome. 

Evolving Your Rate Call 2 Process 

To address these challenges and improve conversion rates, insurers need to transform the customer experience. The best place to start is by reducing friction.  

  1. Streamline the application process to make it more user-friendly  
  2. Simplify forms  
  3. Minimize repetitive questions   
  4. Use alternative data sources 
  5. Guide customers through the process smoothly 

Incorporating alternative data sources can quickly and easily enhance initial quote accuracy and minimize discrepancies. This can include data from sources like IoT devices, telematics and other non-traditional sources. Finally, ensure that assessments are accurate from the lead generation stage through to the quote. Avoid surprises for customers and work to build trust with them from the beginning by verifying data upfront. 

The Advantages of Accelerated Underwriting 

A highly effective way for insurers to gain a competitive advantage in this evolving landscape is by enabling accelerated underwriting with one-rate acquisitions. Doing this provides consistency and transparency, simplifying the process for both insurers and customers. Single-rate insurance quotes can not only improve productivity but also increase revenue.   

In conclusion, the personal auto insurance market is experiencing rapid changes in consumer behavior and insurer practices. To stay competitive and boost conversion rates, insurers must adapt by reducing friction in the application process, leveraging alternative data sources to prefill forms and ensuring accurate assessments. By doing so, insurers can move closer to one-rate acquisitions and provide the Amazon-like experience consumers now expect while maintaining profitability and efficiency. 

To learn more about how improved underwriting processes can help insurers increase conversion rates and retain better customers, download our case study below

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