Comparative raters for independent agents have been available since the early 80s with the introduction of personal computers. Just like today’s PC, they have made great strides since the days of the floppy drive only systems, 9-inch monochrome monitors and dot matrix printers. Today’s comparative rating products have seen a tremendous increase in the value of their services, while at the same time the cost of these services has been reduced. But, the core value of comparative rating remains the same—to assist agents in effectively providing the insured a fast and accurate insurance quote.
There are many agencies that currently underutilize or do not even have comparative raters. These agencies are missing out on an excellent opportunity to increase their profitability. Let’s go over a few benefits that comparative rating systems may bring to your agency:
Standardized Workflow – A single process for quoting all carriers is a great time saver. Many vendors have a flexible setup to meet the various needs of today’s independent agent. Also, many vendors work well with established management systems to streamline this process beyond just the quoting. A key benefit of a standardized workflow is speed. With an impatient insured on the phone, you may only have one or two minutes to get a quote to him. Comparative raters will win hands down versus online Internet carrier systems or carrier desktop point-of-sales systems.
Reduced Loss Ratio – The bottom line for any agent is their loss ratio. If an agent does a poor job of managing their loss ratio they simply cannot stay in business. Many systems are providing MVRs, undisclosed driver reports, credit scoring, CLUEs, home ownership validation reports and other underwriting tools to better underwrite the risks. All of this additional information improves your loss ratio by eliminating bad risks or charging the proper premium levels. A side benefit of these reports is that it reduces your time for data entry and eliminates having to touch the policy again to add missing data or to correct information.
Market Knowledge – Comparative raters give agents an excellent tool to evaluate alternate carriers or their customers. Many state markets have over 50 available carriers and it would be nearly impossible for an agent to evaluate all of these carriers without a comparative rater. In the information age, comparative raters can provide keen insight into your markets.
Elimination of Redundant Entry – With the ability to bridge to management systems or carrier provided point-of-sale systems, you can truly enter your information just once. This brings faster processing for your customer and reduced opportunity for data entry errors.
Best Consumer Price – The market is always changing and comparative systems allow you to find the lowest cost insurance for your client. Many systems allow the agent to evaluate the lowest down payment or lowest monthly payment option, allowing your client to choose what is most important to them.
Employee Training – With a common entry format for all carriers, employee training time is reduced. You are able to get new employees up and rating faster as they do not have to learn multiple system formats for each carrier. Many comparative vendors also offer very affordable training services on their product. Some even offer Internet or interactive training tools, and you would be surprised how effective and convenient these training sessions can be.
Now if you already have a comparative rating product, what are some of the key issues that are sure to impact your comparative vendor? There are several major market trends, including:
1) Credit scoring through comparative rating vendors.
2) Insurance carriers willingness to work with comparative rating vendors.
3) Online Internet quoting.
In many state markets, credit scoring is essential for providing an accurate quote. In order for your comparative vendor to make this work, he must coordinate with the insurance carriers and multiple credit scoring services. Yet, many carriers are unwilling to allow credit scoring to be ordered in a comparative quoting system. Carriers have a valid concern that the hit ratio for each complete application versus ordered credit scores will drop if credit scores are ordered for every quote provided, and since the credit score has a direct cost for the carrier this will increase their operating expenses. Vendors are solving this problem by giving agents more control of the credit score ordering process and building “logic rules” to order credit only in high hit ratio scenarios. With these changes, vendors are slowly getting carriers to cooperate on credit scoring.
Some insurance carriers are limiting the number of comparative rating vendors that have access to their rates and in some cases eliminating all comparative vendors. The strength of the independent agent is their ability to evaluate more than a single market. The best way for carrier to write more business is to do everything possible to make the independent insurance agent market more efficient. A key way to do that is to support comparative rating vendors and enable bridging from comparative rating systems to their point-of-sale systems.
Online quoting is finally starting to work. During the dot com hey days, there were many vendors selling online quoting services and many of those vendors have dropped out of the market. Established vendors are working hard to bring this service to the mainstream. Online quoting systems will bring some excellent benefits, such as access to quotes from any browser-based system, and will eliminate the downloading of new rates. For the market to accept these new products, they must be superior to the existing desktop solutions. This means that online Internet systems will have to overcome the following functionality issues:
* Internet Bandwidth – If an online Internet system is not built to optimize the limited bandwidth of the Internet, then even with a cable modem connection you will not match what is provided by the agent’s desktop systems. Most agents are using 100-megabit internal network connections and this is 50 times faster than an Internet cable modem.
* Rich Interface Issues – Desktop solutions rely on the Windows operating system to allow vendors to provide a very rich user interface that provides for an efficient quoting workflow. Browser based products do not have this same interface richness. Agents are not willing to have the workflow of quoting to be hampered by the inabilities to use function keys or hot keys or requiring 12 data entry screens to complete the quote information.
* Internet Security – With new viruses attacking the Internet daily, no one wants to be left stranded with a non-functional system. Your comparative rater is essential to the daily operation of your agency.
* Privacy Concerns – Who has the accountability of privacy when the data can be entered from any browser-based PC? Who owns the data?
Online Internet systems are coming, it will just take longer than many have expected for today’s mature desktop to be bested by tomorrow’s online Internet systems.
Scott Upfield is president for Insurance Technologies Corporation (ITC). ITC has specialized in insurance rating products for the property and casualty insurance industry for more than 20 years. They offer comparative rating products and services for the Independent Agent and Insurance Carriers that have the features mentioned in this article. Their brand name for their family of products is…TurboRater. You may visit them at www.turborater.com.
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