The Insurance Journal brings us the news that customers are upset by rapidly rising auto insurance rates and are doing something about them.
“According to JD Power’s latest survey Auto insurance customer satisfaction dropped 12 points to 822, down from 834 a year ago (on a 1,000-point scale). The decline, according to the report, is driven by lower satisfaction with the price customers pay for insurance, a factor that declined 25 points this year. The industry raised rates an average of 15.5% as insurers fight record high loss ratios.”
JD Power notes that as a result consumers are flocking to Usage Based Insurance (UBI).
“UBI sees record adoption: Participation in usage-based insurance programs has more than doubled since 2016, with 17% of auto insurance customers now participating in such programs. Price satisfaction among customers participating in these programs is 59 points higher on average than among non-participants.”
Clearly customers are ready to try almost anything to reduce their auto insurance bill. And that means churn.
The Increasing Problem of “Churn”
Consumers are engaging in much more shopping behavior than in the past driven both by soaring rates and by the ease of getting online quotes. And that is driving the proportion of brand-new customers at carriers higher. Which is problematic because new customers tend to be quite a bit riskier and therefore less profitable than current customers. Carriers rely on repeat customer loyalty to earn back the losses they incur winning new business. The industry calls this process ‘seasoning’. But the bottom line is that the more churn, the more up-front losses carriers suffer.
Micro-targeted Risk Selection
But what if a carrier could find both the best and the worst potential customers before they made a coverage commitment? That carrier could use a range of selling and underwriting strategies to reduce losses and earn more profit, meaning carriers who used what we call the micro-targeted Risk Selection approach would take profitability from less capable competitors. And the faster the policy churn, the more the impact is magnified.
This is the concept behind our idFusionTM Risk Selection platform. idFusionTM lets non-IT carrier staff find opportunities and configure micro-targeted rules and interventions to resolve excess risk and encourage purchase in minutes rather than the months of IT “wrangling” new solutions usually take. When combined with highly predictive idTrustmarkTM Risk Scores, idFusion lets carriers consistently find more highly profitable, high renewal probability business while seeing off the rate manipulators and fraudsters. And to do so in the few minutes of the typical auto application session.
The need for speed
Carriers are just now waking up to both the promise and the threat of micro-Risk Selection. Indeed, a few larger carriers have begun large scale initiatives to develop these more agile, targeted capabilities. But take it from us: the lead time to success is counted in multiple years, all while the market continues to churn. By contrast, idFusionTM has been detecting and intervening in real time with customers at a major auto insurance carrier for four years. Delivering the promise of tomorrow’s highly targeted micro-Risk Selection today.
Even carriers that think they’re building their own would be foolish to not consider what VeracityID has already created.
VeracityID offers idFusionTM: an automated risk selection toolset that allows business teams to detect and rapidly compose highly targeted solutions to stop hundreds of different errors, premium leaks, and frauds – all before a new risk is bound. idFusion integrates seamlessly with personal auto and homeowners core systems.