It’s extremely challenging to establish a profitable business as a carrier in the auto insurance space. Countless factors come into play when navigating the lead, quote, bind and renewal cycle that can either help or hinder your profits and overall success as a business. Below we discuss insurance industry challenges that personal auto carriers face, along with a comprehensive underwriting platform that works to solve these issues.
Problem: Overall Insurance Industry Challenges
To start, the insurance space is highly competitive. Finding quality leads is expensive and challenging, with lead quality evolving into a $7.6 billion problem. When it comes to marketing, insurance keywords are among the most expensive in Google and Bing Ads, with some costing $50 or more per click (WordStream). To make matters worse, much of the auto insurance space as a whole hasn’t been profitable for over a decade, with high combined ratios and underwriting loss trends seen across the industry.
Problem: Underwriting Expenses
Underwriting can be costly and time-consuming if there isn’t a streamlined process in place. On average, 70-75% of drivers have a clean driving record. Those who still use outdated practices, like manually pulling MVRs for every driver, are spending more time and money than is actually needed to accurately price a driver’s risk. But many are unaware that comprehensive solutions exist to improve these processes. Through enhanced data solutions and a reduced reliance on MVRs, insurance carriers can start making changes today that will instantly save significant time and money throughout the policy lifecycle.
Problem: Customer Application Process
Many carriers struggle with outdated and time-consuming processes that create friction for the end-user. 75% of consumers begin their journey seeking a simple, quick and transparent buying process. They are willing to pay more for a better customer experience, which is expected to overtake price and product as the key brand differentiator in the near future. By offering an optimal customer experience, insurers can convert digital customers at up to six times the rate of their peers (McKinsey). Offering white-glove service throughout the purchase process also acts as a great preview for the level of service your company will offer once someone becomes a customer.
Problem: Identity Fraud
One in ten Americans provide false information or omit important data when buying auto insurance (Compare). For example, the number of those in possession of a foreign driver’s license (FDL) or those without a license has increased over the years. Many of these drivers also hold a United States license – around 30% – but falsely claim FDL or lack of license to avoid a motor vehicle record (MVR) pull and violation activity discovery.
In partnership with SambaSafety’s carrier customers, a study was conducted that confirmed a large population of drivers falsely claiming FDL or were unlicensed. They did this either to avoid previous violation detection or to hide identity, fraud or more serious criminal behavior. Regardless of motive, this driver subset presents both risk and/or opportunity when effective underwriting methods are employed.
Through enhanced data solutions and efficiencies, auto insurance carriers can start making changes today that will instantly save significant time and money throughout the policy lifecycle. With our comprehensive underwriting platform, Volta, you can improve your customers’ buying experience, speed up and streamline your administrative processes, reduce your MVR spend and improve underwriting efficiencies – all while increasing your profitability.
Learn more how carriers can make underwriting more profitable and instantly improve quote-to-bind ratios by downloading our white paper.