State of Insurance Rating COVID-19 Weather Report #2

April 6, 2020 Laird Rixford

 

ITC will continue to provide these ongoing weekly weather reports throughout this situation. These reports provide agencies and carriers a general baseline of their operations.

As consumerism slows, everyone has been affected. People have stopped buying cars and houses. People have stopped traveling. People have stopped patronizing business. Every one of these behaviors, and many more, have come to an end due to the spread of the novel coronavirus.

What all of these have in common is that they need insurance. Insurance to cover the new cars and houses. Insurance as they drive cross country for their latest vacation. Insurance to cover the business and its employees. It has all come to a standstill.

The following weather report is for the week beginning on March 29 through April 3, 2020. It covers how this slowdown in consumer behavior is affecting agents and their businesses.

 

Week of 3/29

As predicted in last week's weather report, quoting volumes settled between 30 and 35% below the expectation. The week ended with an average of -32.4% below the baseline target.

Some good news prevailed in the data with quoting volumes raising slightly throughout the week.

Last month’s correlation between the Dow Jones Industrial Average and consumer confidence as pertains to rating seems to no longer be applicable.

Quoting performance week of 3/30

 

March Recap

For the full month of March, ITC’s clients recognized a 13.5% decrease in expected quoting volumes. The first two weeks represented 2.6% over the expected volume. The following two weeks saw quotes 28.3% below expected volumes.

The final week of March seemingly found the floor of the lowered rating volume delta settling in the mid-30% range.

 

Online Traffic and Quote Requests

On ITC’s Insurance Website Builder platform, our clients’ websites usually see an uptick in quote requests during the busy season. This leads to a nearly 200% increase in goal completions during the peak weeks. 2020 was no different.

The online goal completions trendline tracked closely to previous years throughout March. The number of goal completions returned to normal after the second week of March.

 

 

The volatility seen in the quoting data during the last two weeks of March does not show up in the online quote requests. During the same period, online submissions were up 0.1% versus the baseline.  

Conclusion: Website quoting and visitor activity have not been significantly affected by COVID-19. This is because consumers continue to use online methods for requesting quotes and service. There may be some drop off due to consumer confidence about COVID-19. But, it is offset by new users visiting an insurance agency website to take care of their insurance needs.

 

Online Rating Activities

Last week I only shared the rating activities agents were doing in TurboRater. I did not include any consumer driven rating activities. This would be the data from TurboRater for Websites or the TurboRater Rate Engine API. The activity from these products show similar results as Insurance Website Builder.

In the first two weeks of the month, online activities remained normal (within the ±5% margin of error for this metric). During the third week of March, online rating activities remained within the normal range. Actually, there was a slight uptick versus the baseline.

The fourth week of March had a marginal decrease in online quoting volume. The final week of March (and into April) showed the first major decrease in online quoting traffic. However, there is no evidence that this decrease is related to COVD-19. It may in fact be due to lowered advertising spend.

 

Quoting by Source

 

Overall for the month online rating activities were 3% higher than expected versus the 13.5% decrease seen within agency quoting.

Conclusion: Agencies and insurtechs that have invested in online properties with consumer driven quoting have not been significantly affected within their online activities as much as agencies that rely on foot, referral or phone traffic.

 

State Impact

This week we wanted to see if there were differences in quoting volumes on a state or other geographic basis. There was not a large difference in rating volumes by state compared to the national average.

However, we did observe a difference in how the timing of state and local shelter in place orders had a significant impact on quoting activity.

Some states like California, Washington and Illinois reacted quickly to the pandemic. These states showed earlier drops in quoting volumes but settled into 30% below expected quote volumes.

Other states like Florida and Georgia had a lesser initial impact. They remained at normal rating levels longer than others but quickly came into the national norm once orders were enacted.

Conclusion: These shelter in place orders will continue to affect insurance quoting for the foreseeable future. It also points to things returning to some semblance of normal once these orders are lifted.

 

The Forecast

ITC predicts that quoting volumes will remain below the expected quote activity by the mid-30s% through this week.

Shelter at home directives continue. So, consumers will continue to use online methods for their insurance buying needs. Over the past five years, many insurtechs and direct writers have invested in their online technology. Agents should have been doing this as well.

As recently as two weeks ago, an agent called regarding their lower than expected quoting numbers. Yet, they still shunned the need to have a strong online presence. Their fear of something new might be the unraveling of their agency.

Agencies should use this time to build a strong online presence that can capture consumer traffic. A strong online presence includes a few things. First, a great looking insurance agency website. Second, an online comparative rating system for consumers to get a live rate while on your website. Finally, an automated marketing system to quickly and consistently follow up on any online leads.

A strong online presence is also important for your existing clients. An online portal allows clients to access their documents and forms. It will also streamline the client experience with your agency.

Consumers have embraced technology during this unprecedented time. It is time that agents that agents do the same.

 

Next Report

Stay tuned as next week’s report will include the following:

  • A recap of this week.
  • A follow up to the online versus agency quoting
  • A breakdown of non-standard and standard quoting volumes during the COVID-19 pandemic.

 

Methodology

ITC maintains a regular baseline of expected quoting volume for TurboRater. We also maintain an expectation of submission and traffic upon the Insurance Website Builder, TurboRater for Websites and TurboRater Rate Engine API platforms.  

We built the baseline on a model that reflects multi-year historical performance, usage of the platform, state demographics, and market conditions using data from ITC’s business intelligence and analytical products.

The margin of error for the agency quoting and rating baseline averages less than 1.5% as calculated daily. The data analysis excludes rates returned without a premium.

The margin of error for the online properties and submission volumes averages less than 5% as calculated weekly.

All models only attempt to predict Monday through Friday. Agency operations over a weekend have too much variability.

 

About the Author

Laird Rixford

As CEO, Laird Rixford is responsible for providing strategic direction and leadership for the company. Rixford has a proven executive management track record and has more than 20 years of experience in entrepreneurship and insurance technology. An expert in insurance technology and marketing, Laird is a recognized public speaker and has presented at industry events across the United States.

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