State of Insurance Rating COVID-19 Weather Report #6

May 4, 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.

April is now gone, which means it is time for the second full month review within this weekly weather report.

At the beginning of April, things were looking dire. Quoting volumes were 32.4% below expected numbers.

The second week of April looked even worse. Quoting numbers had fallen to 34.7% below expectations. The industry was reeling. Carriers were offering refunds to customers under the scrutiny of lower claim numbers. The industry was being reactive.

The next two weeks signaled a marked change with the introduction of stimulus checks. Consumers were building confidence and were starting to shop. Rating activities for the weeks of 4/13 and 4/20 ended at 22.9% and 25.1% respectively.

Agents and carriers began asking if these were our new norms and if there was improvement on the horizon.

Week of 4/27

Agent and carrier quoting activities improved to its best level since the initial drop seen in the week of March 16. This week was only 21.3% below ITC’s baseline rating performance number.

At 21.3% below expectations, a new baseline for the industry has emerged in the low 20s.

Quote Performance Week of 4/27

Full Month of April

Throughout April quoting volumes have consistently improved.

A noticeable bump in the middle of the month signals that consumers are still out there. It is the financial hardships consumers are feeling that is depressing insurance spending.

Quote Performance April 2020

ITC expects the upward trend that started in April to continue through May. However, it will be months, if not the rest of the year, for quoting volumes to return to pre-COVID-19 levels.

Non-Standard Markets

According to J.D. Power, non-standard markets could be adversely affected above and beyond the current impact of the industry. Their report shows a couple factors driving this. Like non-standard shoppers being less aware of premium relief or more likely to encounter financial hardship. Both of which cause a higher incidence of shopping.

This argument is flawed by one component. Non-standard consumers are the regular and savvy price shoppers. Therefore, there is already higher quoting and rating activities in non-standard markets.

An argument can be made that non-standard agencies are better prepared for a shift in buying habits. In the same J.D. Power report, consumers are looking to their agents and carriers for better rate management options. These include reducing premiums, missed payment forgiveness, and suspending coverages at will. These actions are nothing new to agencies focused on volume sales.

I’ve had discussions with agencies across the nation. Those focused on non-standard shoppers have seen a minimal downturn in business. Active renewal, rewrite and education campaigns have replaced any decrease in quoting.

Agencies that have focused on value selling are now facing the reality that their long-term clients have become price shoppers. These agencies will need to use assistive technologies to aid their client base at scale.

Knee Jerk Carrier Reactions

As reported in week three of the State of Insurance COVID-19 Weather Report, many carriers raced to be the first to refund money. That reaction might have been premature.

There is mounting evidence that the windfall many carriers initially saw was a momentary blip. That frequency remained unchanged while severity is on the rise due to open roads increasing the incidence of speeding.

This leads to the suggestion that everyone should continue to take a diligent look at data and not make knee jerk reactions to news or events. That is why ITC provides these reports… to provide an additional data point to help agencies and carriers make informed long-term decisions.

The Forecast

ITC predicts that quoting volumes will continue to remain below the expected quote activity settling between 21% and 24% for the week.

Many people have said that the world has changed. That things will never be the way they were. In many respects that might be true. Work from home and air travel are examples.

But, people still need to drive. Whether they go to the grocery store or have their groceries delivered, driving is a critical and essential part of life in the United States.

All of us – agents, carriers and technology vendors – have a job to do. We must be ready to help this industry recover quickly and for the mutual benefit of our real customers… the consumer.

Next Report

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

  • A recap of this week.
  • Comment below on any other data metrics you want to see in this report series.

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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