Comparative
Rating in the
Real-time World
Special Report
In case you haven’t noticed, comparative rating is changing.
Real-time rating is now a part of WinRater and soon will become the standard. Why is
this important? Because WinRater will now quote differently.
Long gone are the good old days of “fixed and established” rating when agents could
get a MA auto quote in a few seconds. We’re also well past the transition year of managed competition­— that seems but a distant memory! Now carriers are offering more
and more complex rate filings, with countless premium options based on many many
factors. Getting an accurate quote, unfortunately, can be difficult and time consuming.
In response to this, the industry has moved to real-time rating, which allows agents
to use comparative rating systems like WinRater to tap directly into their carrier’s web
systems and retrieve quotes in real time.
Plymouth Rock was the first carrier to plug into SinglePoint and implement real time
rating for MA Auto in WinRater in February of 2009. Commerce, OneBeacon, Safety,
and Travelers are officially plugging into SinglePoint in the fall. Other auto and homeowners carriers will be joining throughout 2010.
WinRater, as a result, will be a “hybrid system.” This means that WinRater will support
both real time rating and “manufactured” rating (i.e. quotes are calculated by WinRater
based on the rating data provided by the carriers).
As you can see, we’re not in Kansas anymore.
I wrote this report to clarify a few important things you need to know about realtime rating and using rating technology to compete for business in today’s changing
market. I’m not going to waste your time with sales talk and I’m not going to sugarcoat anything.
So if you are serious about succeeding against the stiff competition­—especially in the
MA auto market—I recommend taking the time to read the whole report.
Charlie Walsh
Director of Sales & Marketing
Boston Software Corp.
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A word about comparative rating as a survival tool
As a rating vendor that supports hundreds of MA agencies, we have a unique perspective on
agency automation workflow. In our opinion, agencies should use comparative rating as a strategic business tool, but too many are not. This opinion is based on countless conversations with
agents and CSRs, carriers, and other insurance vendors; analysis of agency rating trends and
behavior; as well as agency visits, surveys, etc.
Many agents simply fail to take full advantage of today’s rating technology. We know, for
example, that more than 200 MA agencies have not even registered their CSRs to use SinglePoint
or have barely used it.
This points to a greater issue we’ve uncovered with managed competition and the new rating
requirements. Agents have one big complaint: “It takes far too long to quote a policy!”
Unfortunately, many agents raise the white flag in response to that perceived problem; we’ve
heard this from many agents:
“I normally forget about running comparative quotes for the risk. I just ask the insured
some basic questions to qualify the risk and try to figure out which carrier might be
the best fit, and then quote one or at most two carriers.”
Because rating has become more complicated, agents are seeking quotes from fewer carriers. The
sad irony is that this the exact opposite of promoting competition, and it completely undermines
why consumers want to work with agents in the first place. Moreover, it plays right into the hands
of your fiercest competitors, direct writers who are spending big bucks to lure your customers
away.
When consumers contact insurance agents, they’re looking for pricing and coverage options.
They’re looking for professional expertise and guidance. They expect to be guided by a competent agent who works hard to understand their unique exposures, assets, concerns and can
provide pricing and coverage options for them to consider.
I believe these consumers do not want to purchase insurance over the Web­—they want the expert
advice and service that agents provide—so don’t push them right into the lap of the direct writers!
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Advantages
There are advantages to real-time rating
No doubt about it, agents, there is much to like about real-time rating.
ACCURACY
Proponents of real-time rating say it’s superior because the carrier’s system calculates
the rate, instead of an outside vendor like Boston Software. They say this is especially true
under competitive auto rating, where different carriers have complex, sophisticated rating
plans that cannot be “manufactured.”
TIME SAVINGS
The amount of time saved by entering the rating data once in WinRater/SinglePoint and
getting multiple quotes is significant. Our measurements indicate that agents can save as
much as 12-15 minutes on average when using WinRater/SinglePoint to comparatively
quote and submit new business. The simple fact is real-time rating is a valuable tool that
can help you more efficiently sell and service your book of business.
REPORTS
When WinRater presents the request for a real time quote to the carrier web system,
carriers can run some or all of their 3rd party reports including RMV lookups and credit
reports. The real-time quote that gets calculated is therefore based on carrier verified
information. Eliminating this “unknown” will be a welcome relief to agents.
ELIGIBILITY / DESIRABILITY
While calculating the real-time quote, carriers can also run the risk through their predictive analytic models to determine eligibility. So if the carrier finds the risk undesirable,
agents will know immediately. In this case, WinRater will display ineligible in the premium
panel instead of a quote. This should be good news to agents who need to know the
eligibility information as soon as possible. After all, if a carrier finds the risk undesirable,
why should the rating system quote it? And why would an agent want to present a quote
to a customer for a policy that ultimately cannot be written?
QUOTE BASED ON EFFECTIVE DATE
In most cases, carrier Web rating systems will be able to provide real-time rates based on
the effective date of the policy. The carrier site will support their previous rate filings and
generate a quote using the appropriate set of rates based on the effective date entered in
WinRater/SinglePoint. This represents a distinct advantage of real-time rating over manufactured rating, which can only support one set of carrier rates.
IT’S FREE
The cost of SinglePoint and connecting to your carrier Web rating systems for real-time
rating is included in your annual WinRater License Fee you pay Boston Software. There is
no additional cost to begin real-time rating or submitting ... so start using these powerful
features—you have no excuse!
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Rate comparatively—and give your customers what they want
We’ve heard that some agents have abandoned trying to get a comparative quote. Given the complexity of rate filings for some carriers, these agents believe that only the carrier can understand
and calculate their rate(s). So their rating workflow looks like this:
•Ask the insured some basic underwriting questions.
•Decide which carrier is most likely to have the best price and coverage.
•Then go directly to the carrier website to run a quick quote.
•They usually end up quoting only one of their carriers and, if the price is not right or
the carrier rejects the business, the agent is stuck re-keying the data at a second carrier
website.
This is hardly a good way to run your agency. The value of being an independent agent and
representing multiple carriers should not be so easily discarded.
For the advantages noted in the previous section, we believe real-time rating will help keep
independent agents in the practice of comparatively quoting. The way we see it, agents need to:
•Shop the policy for their customers from as many markets as possible.
•Provide comparative, accurate quotes from these carriers.
•Help customers sift through the price, coverage, and carrier options.
•Assist customers in making an informed decision.
•Complete the Quote-to-Issue process as quickly and professionally as possible.
This is the best way agents can demonstrate their expertise and build long-term relationships.
Moreover, it’s the best way to establish value in the customer’s mind; a value that the pricedriven direct writers cannot provide.
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CONCERNS
But there are concerns to be aware of, too
It may take more than a few seconds to run real-time rates for some carriers
Once you key the data into WinRater and tell SinglePoint to get a real-time rate for some or
all of your carriers, it may take a little bit of time for the quote(s) to be returned and displayed in the WinRater premium list.
The back and forth between SinglePoint and the carrier system may take some carriers only
2-3 seconds, but others may take as long as 30-40 seconds.
Many factors contribute to the time it takes for a round trip, including the speed of your
internet connection, the amount of traffic on the carrier rating service, and the types of
reports the carriers run. Another factor is the complexity of the quote. For example, quotes
with multiple vehicles and drivers will take longer than a quote with just one driver and one
vehicle.
The need to refresh real-time quotes
OK, so you can bear with a short wait as long as the rate is accurate. But what happens
when the premium that gets returned needs adjusting, for example, to increase the deductible or add an endorsement?
WinRater will no longer display the real time quote—hey, it’s gone stale now that the information has changed. WinRater will therefore remove the quote and display “re-rate” next
to the real time carriers in the premium list. This indicates that you will have to click the
SinglePoint rate button again and wait for the new real time rate to be calculated.
The point is, you need to be aware of the back and forth required to get the sellable premium quote in the real-time world and allow for this extra time. (Interestingly, as you know
the manufactured rates in WinRater will recalculate in less than a second. Advantage goes to
WinRater’s manufactured rating—at least for this point!)
Manufactured rates are accurate, too—and faster to calculate
We feel certain that the manufactured rates in WinRater are accurate. I could give you tons
of evidence why we feel this way, but let’s not waste your time. Let’s assume that as long as
you enter the correct rating data in WinRater, it is just as capable of calculating an accurate
quote as a real-time rate is.
If this is true, then WinRater will give you an accurate quote more quickly. You do not
have wait for SinglePoint to interact with the carrier site and retrieve the quote. And as we
noted above, if/when you need to make an adjustment to the quote, WinRater recalculates
instantenously. In this regard, real time rating does not represent a significant benefit over
manufactured rating.
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Some carriers may not run all their reports during real-time rating
The fact is only some carriers choose to run all their reports and predictive modeling at
the time the real time quote is generated. It may take longer, but their web system can
handle it and they believe it is important to collect this information upfront and is a better
workflow for their agents.
Other carriers may not be able to handle this from a technical perspective and/or they
believe it’s a better idea to give agents a “quick quote” in which some reports are run but
not all. This allows them to provide faster quotes. In addition, they believe it makes more
sense to run these reports only when the insured is going to purchase the policy.
So even though real-time rating holds the promise of 100% accuracy, the reality for some
carriers is it’s only a “quick quote” without all of the verified data.
Some carriers may not determine eligibility as part of the real-time rate
Just as above, some carriers may not have the technical capabilities to determine eligibility
when the real time rate is calculated. So they will return a premium quote to WinRater, but
really the risk is ineligible. Agents will find this out only when visiting the carrier web site
for validation/ issuance phase. We expect that all carriers will eventually provide eligibility
notice during the rating process, but this may not happen for a while. This may frustrate
agents.
And some carriers may not be able to support multiple sets of rates as part
of the real-time rate
Once again, some carriers may only be capable of handling a new business quote when
SinglePoint hits their system. Because of technical limitations they cannot handle endorsements or renewal rating when the request comes from a comparative rater. For these
carriers, agents will have to be careful not to quote new business premiums when it is
actually a renewal policy.
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NEAR FUTURE
Comparative rating in WinRater/SinglePoint in the near future
As you can see there are significant things to consider as we move to real-time rating. Besides
these specific details, we also want to make sure you understand that real-time rating and submitting with WinRater/SinglePoint works right now and is gathering momentum.
>Plymouth Rock was the first carrier to come onboard in February 2009 and since then
agents have run more than 250,000 real time rates through SinglePoint.
>More carriers, including Commerce, One Beacon, Safety, and Travelers, will go to real-time
rating for MA Auto business in the fall of 2009. Still others will plug in early next year.
>WinRater/SinglePoint will soon support real-time rating for homeowners business. We
expect to roll this out early 2010.
>Real-time submitting of new business apps (SinglePoint’s other great feature) is running
well for over 12 MA Auto and Home carriers. Agents have submitted over 100,000 Apps
through SinglePoint since the start of the year.
We expect that by the end of 2010, most (but not all) carriers will switch to real time rating.
Meanwhile, for the foreseeable future WinRater will be considered a hybrid system. Some carrier
rates will be manufactured by Boston Software and others will be supported by real-time rating.
Agents and agency staff will have to get used to working within this hybrid environment.
Rest assured, we here at Boston Software will be doing everything possible to make rating accurate, easy, and efficient.
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MYTHS
Myths that cause agents to underutilize comparative rating
So why are agents so readily giving up their competitive advantage—their ability to shop multiple
carriers? We don’t have all the answers, but here are some ideas we’d like to bounce off you:
Myth 1
Agents and CSRs have too much work to do on any given day and believe they simply can’t
spend 30-60 minutes generating comparative quotes for an insured.
Reality: It does NOT take 30-60 minutes to generate a comparative auto quote in WinRater/
SinglePoint. Assuming you have some familiarity with WinRater and you have the risk data at
hand, the average time to get a quote should be about five minutes.
Myth 2
Customers will not tolerate waiting a long time while the CSR rekeys data or tries to build
comparative quotes.
Reality: They shouldn’t have to wait long. If it takes more than five minutes to work up a quote
the CSR is not properly trained or perhaps is in the wrong position in the agency. Rating requires
a smart, meticulous worker with better than average keyboarding, communication and analytic
skills. Agency principals should make it top priority to deploy their best-suited workers to the
quoting department. Getting an accurate, sellable policy premium for new or rounded business
is one of the most important and revenue-generating functions an agency can perform. Don’t
leave it to just anyone. The more practice your staff has with multi-carrier quoting, the faster and
better they’ll get.
Myth 3
You must go to a carrier web site to make sure the quote is accurate.
Reality: There is no reason to re-key all the quote data on the carrier site to “double-check”
WinRater. The manufactured rates in WinRater are accurate (please call me directly if you feel
otherwise!) proven everyday in hundreds and hundreds of MA agencies.
But now with SinglePoint real-time rating, you can generate the quote directly from the carrier
rating engine, which should ease your mind. Moreover, with SinglePoint real-time submitting, you
can instantly transfer all the quoting data from WinRater to the carrier web site. This eliminates
the re-keying of the data and allows you to “double-check” the quote if you need to.
Myth 4
Customers just want a quick quote—the lowest price, fast.
Reality: Customers appreciate it when you give them a bit more of your time. It’s like going to
the doctor. You wouldn’t like it if your doctor did a physical in five minutes. You wouldn’t trust the
results. Just because some people purchase cheap auto insurance from Progressive and GEICO,
doesn’t mean everyone does. Most people want advice. When you use comparative rating to show
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customers that you’re shopping for them, they’re more likely to forget about trying to save a few
bucks online. When you take the time to truly understand their risks or put together a package that
combines auto insurance with a good deal on their home insurance, you can compete with anyone.
Myth 5
The existing automated workflow for quoting and submission will never meet agent needs.
Reality: The current workflow isn’t perfect. But it’s improving all the time. And by working with
us, your carriers, and insurance industry groups, you can be part of the solution.
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SUCCESS
Success formula for 2009 and beyond
You may not have asked, but I couldn’t resist offering some advice to help your agency stay
competitive and to help move our industry forward:
>Learn how to do comparative auto rating efficiently and make sure your staff consistently
shows clients and prospects comparative rates. Comparative rating should be a standard part
of your agency practice.
>Have the right person produce comparative rates and make sure they get the proper training.
You don’t have to be a computer genius to produce quotes from multiple carriers, but it does
take some skill and training. And the right attitude. Someone who’s only interested in the
easiest way out isn’t the right person for the job. The responsibility for comparative rating
responsibility should not be seen as a drag, but an opportunity!
>Stay educated about technology. There is no getting around the fact that technology changes
very quickly. You have to invest your time and money or suffer the consequences. Read the
insurance trades. Attend agent-association meetings. Update your hardware and software. Etc.
>Let us and your carriers know how we can improve your workflow. Your suggestions and
needs drive the automation workflow. Don’t leave your success to others.
>Use SinglePoint real-time features! Sure, these features are significant time-savers and
proven efficiency tools. But, just as importantly, they represent months of hard work and
effort by your carrier(s) and vendor(s) to simplify your workflow. Now it’s your responsibility
to use them. After all, if you don’t, they will most likely go away.
Agree with my comments? Disagree?
I hope you found this special report to be informative, worthwhile reading. I’d love to
hear what you think. After all, a healthy exchange of ideas and perspectives is always
a good thing.
Charlie Walsh
781.449.8585
[email protected]
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