State of Insurance Rating COVID-19 Weather Report #4

State of Insurance Rating COVID-19 Weather Report #4

 

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.

“You can't change the wind, but you can adjust the sails”

This quote has been resonating in my head for a few weeks now. Agencies and carriers are experiencing considerable headwinds these past few weeks. This report has attempted to provide guidance during this unprecedented event.

Much of our focus has been how to “adjust the sails” to tack the industry forward through COVID-19.

As such, within the previous weather report, the news was more of the same… bleak. Heading into Easter weekend, quoting continued to average 35% lower than expected.

So, within last week’s report, we predicted quoting volumes would stay the same through that week, and we prepared for another week of headwinds.

Then, on April 14, the winds changed. Americans started receiving their stimulus checks. And, the stock market was on its way to a second week of gains.

It is nice to be wrong.

 

Week of 4/13

Monday, April 13 started no differently than previous weeks. The news did not look good. Quoting volumes were 34% below expectations.

On Tuesday, stimulus checks started to hit Americans’ bank accounts. And, a marked change in quoting volumes started to emerge. Tuesday’s quoting volume increase by 35% to settle at 28% below expectations. The rest of the week was even better averaging 17% below expected quoting volumes.

The stimulus checks were a hit with consumers. We saw this reflected in the quoting numbers as well as the stock market gains.

As a whole, the week ended 22.9% below ITC’s expected quote volumes.

Quote Performance Chart Week of 4/13

Conclusion: The continued correlation between consumer confidence in a recovery and their financial well-being continues. The faster the economy can return to normal; the quicker quoting volumes can return to previous levels.

 

Online

Consumers seeking insurance online continue to out-perform the historical model. Traffic to Insurance Website Builder clients was up 3%. Online quote requests and goal completions jumped considerably over the past week. These two online activities ended at 25.2% above expectations for the week.

As shelter-in-place directives continue, consumers will use online resources to transact their day-to-day business. So, we expect no significant change in these online trends. ITC will begin adjusting the model to account for this new normal.

Online Quoting and Traffic Chart Week of 4/13

Conclusion: Online insurance offerings will continue to be a significant opportunity for insurance agencies and carriers during the current situation. So, it is our recommendation that agents and carriers invest in their online properties. This may include insurance agency websites, automated agency marketing, and online comparative rating portals.

 

Carrier Response to Last Report

As discussed last week, many carriers are enjoying significant tailwinds in this market. This is due to lower than expected drivers on the road.

Many carriers reached out to ITC last week about this. While carriers that use their own paper may benefit from this tailwind, those who do not are not enjoying the same advantage. This includes MGAs.

So, it is of continued importance that agencies work with their carrier partners to weather this storm together.

As new business has slowed, I want to reemphasize the first weather report’s recommendation. Agencies should continue to find ways to engage their clients. This includes working with clients to rewrite policies that are up for renewal. Agents can help their clients by getting them the best value for their already tight resources.

 

The Forecast

ITC predicts that quoting volumes will continue to remain below the expected quote activity settling between 28% and 30% for the week.

While we focus on the insurance industry, we must also look outside of it and find ways to help reopen the economy.

In studies by Stanford University  and The New England Journal of Medicine, data suggests that infections are significantly higher than reported. This leads to the possibility that mortality rates of COVID-19 may be significantly lower than predicted.

There is no question about the communicability of the novel coronavirus. Or, how the shelter-in-place directives are flattening the curve of its spread. But, we must work towards reopening the economy sooner rather than later.

Without a quick return of consumer confidence, the insurance industry will continue to be at significant risk. That could mean less new business coming in or, worse, an outright collapse.

 

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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