The Homeowners Insurance Quoting Process: Is It Improving?

The insurance organizations who rethink this process from the outside-in customer perspective will be positioned for market growth.

(Image credit: mschiffm.)

One of the big areas of focus across the insurance industry, in general, has been to streamline the application/quoting process. Whether it’s agents who are submitting applications for their customers or individuals and business owners filling out their own applications, there is a clear recognition that faster and simpler is the way to increase customer acquisition. Many insurers have been improving the user interface, leveraging data prefill capabilities, or even rethinking what data is really needed to underwrite a particular line and application. Examples abound for personal auto, small commercial, renters, workers’ comp, and other lines. This brings us to the question of homeowners insurance. Are the same factors at work here? Is the industry making progress?

This summer, SMA conducted a mini research study to gain some insights into these questions. Applications for quotes were placed for a small number of homes in three states with 20 prominent insurers and MGAs. We conducted a similar study in 2010. Due to the complexities and variations in homeowners insurance by state, and types/sizes of homes, the research is not comprehensive enough to be statistically significant. (Also, we did not consider comparative rater sites for this project.) Nevertheless, it does give us a good idea of the state of the user interface for quotes, how much data insurers require, the types of data underwriters are requesting, and the level of prefill underway.

This project led to a few top-line conclusions and insights:

  • Estimating home value/replacement cost is difficult, but still reflects mostly the inside-out view by insurers (questions asked from the insurer’s viewpoint).
  1. What information do I need to make sure I understand all the exposures and costs before I price it?
  2. Few are thinking outside-in: how can I make this easy for the homeowner? (The InsurTech Hippo is an exception.)
  3. For the homes we used, which ranged in value from $225K to $600K, the number of data fields requested ranged from 15 to 60+. On average, there are over 30 data fields requested, only slightly better than ten years ago.
  4. The time to get an initial quote ranged from 2 minutes to 20 minutes.
  • The UI has improved in the last ten years with more radio buttons, better visual appeal, and responsive design elements. But there are still lots of data fields for the customer to fill in and limited prefill.
  • Even among the top insurers, many still do not offer online quotes. Many refer prospects to the agent immediately. Some ask a few questions first and then refer to an agent.
  • Unlike many other insurance products, there are relatively few direct-quote-access InsurTechs. There are a number of aggregators, but they follow the requirements of the insurers. The lack of InsurTech focus may be the result of the complexity of the line of business.

We understand the difficulties related to this line, including the limited availability of property characteristic data for older homes, the variability in perils by geographic area, and the uncertainties related to CATs. In fact, because of the region-specific catastrophe issues, there appears to be a hesitancy to do on-line quoting. The amount of data needed to quote/underwrite for things like sinkholes, coastal winds, floods, wave-wash, wildfires, earthquakes, and hail make it difficult, but not impossible, to generate a seamless on-line experience.

In addition, from an insurer perspective, insurance to value (replacement cost) at a book level is pivotal to profitability. Because of this, there appears to be a reluctance to let go of the building characteristics questions. In the limited instances where they are prefilled, there is a validation process. Where they are not prefilled, they must be answered by the insured. Frankly, most people cannot answer structure questions about homes they have lived in for a long time. And the number of questions asked about the structure varies significantly.

So yes, it is a challenge to create the five-question, two-minute online experience that many are striving for in other lines. But most customers don’t understand or care about the complexities. In the near term, the answer to this challenge lies in integrating external data from real estate databases, tax records, and other sources of dwelling/structure data for prefill. Validating information is significantly easier than inputting data. The homeowners line cannot be the odd man out in the quest for ease of doing business in a digital world. The insurer/agents/MGAs who rethink this process from the outside-in customer perspective will be positioned for market growth.

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Karen Pauli // Karen Pauli, Principal at Strategy Meets Action, has comprehensive knowledge about how technology can drive improved results, innovation, and transformation within insurance operations. Karen has worked extensively with insurers and technology providers to reimagine processes and procedures to change business outcomes and support evolving business models. Her areas of focus include underwriting, claims, business intelligence and analytics, data sources, agency distribution, and customer management. Karen’s real-world experience with digital transformation projects has given her unique insight into the changing customer and distributor experience in the digital age. In her more than 30 years at insurance companies, and in the technology research and advisory space, Karen has developed her talent for aligning business goals and perspectives with technology roadmaps to create competitive advantage.

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