Survival of the Fastest–Strategy 2: Auto Quoting that Saves Customers and Insurers Time and Money
Survival of the Fastest–Strategy 2: Auto Quoting that Saves Customers and Insurers Time and Money
(Image source: Getty Images.)
In this, the second article of a four-part series, see how speed and innovation can widen your sales funnel and often beat the ROI of a traditional “expense-optimized” auto quoting process.
A typical auto insurance quote takes 7 to 15 minutes to complete—a long time in a world where online retailers empower one-click purchases. How hard do your customers have to work for a quote?
If your applicants repeatedly enter or confirm information while their patience dwindles, they may be stuck in a quote flow that prioritizes cost savings for the insurer. This approach, widespread in the industry, stages expenditures on third-party data according to a prospect’s progress toward binding a policy. But this outdated process may lessen the chances of the very outcome you’re seeking: A completed sale.
It’s possible to lose sight of the customer experience (CX) in the pursuit of cutting expenses. But CX, scale, and efficiency are the metrics of forward-thinking insurance leaders.
It turns out that speed and innovation can often beat the return on investment of a traditional expense-optimized process—in plain, hard numbers. That’s even before accounting for the hidden costs of handling applications that never make it to quote or bind or the poor word of mouth that may follow a subpar quoting experience.
Consider instead the potential effects of a data-forward strategy and simplified application process that pulls critical underwriting information such as violations, accidents, coverage history, demographics, and household details at quote start. This can boost sales funnel throughput, close, and conversion rates, producing a win for insurers and customers. An illustrative case study breaks down the numbers:
| Modern Auto Insurance Buying Experience Metrics:
An Evolved View of Auto Insurance Quoting |
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| Key Metrics | Multiple-Rate-Call Sales Funnel | Evolutionary Single-Rate-Call Funnel | Benefits of Modern Insurance Quoting |
| Quote starts | 1,000,000 | 1,000,000 | Same starting point |
| Time to final rate | 7-15 minutes | 2-5 minutes | 50-85% faster quotes |
| Finish quote % | 60% | 80% | Greater throughput |
| Finish quote # | 600,000 | 800,000 | 25-40% more completed quotes |
| Close rate | 10% | 9% | Dropouts now occur pre-sale* |
| New business count | 60,000 | 72,000 | More new business |
| Conversion rate | 6.0% | 7.2% | 20% higher conversion rate |
| Economics | |||
| Marketing/UW expenses | Similar spend over fewer new policies | Similar spend over more new policies | Leveraging data-forward pricing |
| Cost per acquisition | Higher | Lower | More business for less |
*Because more quotes are completed and getting a rate, we assume a slightly lower close rate here due to more high-risk drivers making it further through the sales funnel.
These metrics will vary by insurer, channel, risk mix, and strategy, but industry experience shows quote time can be cut by half or more after modernizing processes. Combine that result with more bound policies, and the economics suddenly look different, with more conversions from the same sales and marketing spend.
That spend is significant, and parts of it may reflect conventional pricing models bound by reseller or pass-through agreements that are subject to higher costs at the original source. How can you make the most of that investment? Watch for the third article in this series to explore a new vendor pricing model that may hold the answer.
Click below for the other articles in the four-part series:
Survival of the Fastest–Strategy 1: Auto Quoting that Avoids the Hidden Costs of Lost Business
Survival of the Fastest–Strategy 3: Auto Quoting Built on a New Vendor Pricing Model
Survival of the Fastest–Strategy 4: Auto Quoting for Nimble Insurers—of Any Size