How To Get A Quote For Insurance Online For Free

Transcription

1 .com White Paper 02: The Case for Upfront Price Quotes- The New World Order in On-Line Insurance Sales By Brian A. Hannigan, Co-Founder RateElert, LLC

2 Executive Summary ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: The existing insurance franchise system that granted the agency owners their territory or zone which would produce a certain amount of customers from that territory guarantying an agent s success has slowly eroded away in the past several years. The main driver of this is the internet. Today s insurance shopper is telling us that geographic proximity is no longer the primary decision factor of insurance sales. Buying insurance in your own backyard no longer beats out convenience; therefore, insurance policies no longer need to be sold as they once were. Replacing the old local agent model is a transformation built on upfront price quotes embraced by more and more forward thinking insurance providers that want to not only compete but survive and thrive in a rapidly evolving marketplace. Providing Upfront Price Quotes to the insurance shopper is the New World Order in on-line insurance sales. Upfront pricing provides the consumer what they truly are seeking, comparing rates from multiple providers while maintaining their anonymity via the internet as a result of the commoditization of the insurance industry. To help the consumer make a purchasing decision, the on-line commodity shopper wants an informational advantage that is only achieved when the consumer can get access to upfront price quotes, anonymously, and has the tools to compare prices from several providers all in one place to know what they are paying is fair. This paradigm shift is good news for consumers and for insurance providers who know how to compete. While many factors contribute to and play a role in customer satisfaction with their carriers including coverage selection, convenience, payment plans and the overall buying experience- consumers actions online prove that what they really want to know is: How Much? Which is the focus of my paper. 1

3 What has changed? The consumer has turned insurance into a commodity Market forces within the insurance industry have been tied up by a system that has traditionally favored the carrier in the shopping for rates transaction by making agents/carriers the customer s primary resource for comprehensive product information and by maintaining a lack of transparency in their rates. However, consumers are now empowered as they have anonymous access to product information via the internet. This empowerment puts the consumer in control of the insurance shopping experience, thus triggering the movement for carriers to embrace an on-line upfront comparison pricing model. Which TV would you buy? TV Brand X TV Brand X RETAILER # 1 Retailer # 2 Pricing Available in Store $405 TV Brand X TV Brand X RETAILER # 3 Retailer # 4 $395 $400 2

4 One easy way as a company to remove yourself from consideration is to withhold price on a well-defined product, such as insurance, in a market where others do provide upfront price quotes. While insurance policies are different than TV s, the pricing concept is the same. Insurance buyers are now more confident in the product as brands have achieved high levels of security, quality, and peace of mind. Given the same policy with the same coverage s, payment terms, claims service, meaningful variations are difficult to convey to today s price-conscious insurance buyer. Consider how a consumer might approach buying a TV in the above example. I do realize insurance contracts are not the same as TV s; however, the buying process for consumers is essentially the same. He or she would research various brands, find out what s available and compare features and benefits. He or she would assess his own wants and needs: plasma or HDTV, 40 inches or 50, appropriate color to match his living room. Then, he would compare prices. Now let s say the make and model of the TV he chose was available from Best Buy, Wal- Mart, Sears, and Costco, all conveniently located at the same intersection a block from his home. Now imagine three of those stores have signs out front advertising that TV for sale- one for $395, one for $400, and one for $405. The fourth retailer won t disclose its price. The decision is clear. The competitive price gets the business. Price matters and the insurance provider who does not give a price won t even be considered as part of the purchase decision. Insurance contracts are promises to pay and are more complex than TV s, but consumers follow the same steps when shopping for insurance because they have the same needs-to learn about the product and to compare prices to make informed decisions. And No, the lowest rate does not always get the business. Have you ever shopped for something at a store and saw one item priced far less than all the other similar items. What is your first question? Hey, I wonder what s wrong with this little guy over here that s 50% lower than everyone else. Something must be wrong with it or it does not have the same features or benefits. My point is being the lowest cost provider does not always equal a sale. The Internet has Replaced; Yellow Pages-Print Media- Direct Mail For most of insurance marketing history, agents could count on the geographic exclusivity of their franchise agreement with their carriers to ensure a certain level of walk-in traffic or telephone calls because walking into an agency was the only real way for consumers to research their insurance policies. They picked up the brochures, grabbed a free road atlas, looked around and talked to a Customer Service Rep and or the Agent. Technology has transformed the insurance sales paradigm. Today, the internet is enormously influential in determining how consumers find agents & carriers and how they decide when, where, and how to buy. That s not to say that buying from a local agent doesn t matter. It does, but serving the local community is no longer a sufficient differentiator or sole competitive advantage because consumers go online first. That means any other insurance carrier can make a better offer at an earlier or more critical stage of the purchase process thus getting the business. Put more boldly- and with very few exceptions carriers who don t embrace upfront internet price quotes won t thrive, or even survive in some cases in the next decade. 3

5 Same Game, New Rules- My 67 year old Father Has a Facebook Page! To adjust to the new rules of insurance selling and to take advantage of how these new tech-savvy consumers now shop for insurance, carriers must first understand the new expectations created by today s online model, including how potential policyholders are using the internet during the shopping process, what they re looking for, what they hope to avoid, and what they re getting and not getting online. Today, the internet is most often the first stop for prospective new policyholders. In an April 2009 survey*, 73 % of consumers had used the internet to find information about car insurance and that number continues to grow. The number of auto insurance policies purchased online has more than quadrupled since 2004, from 700,000 to more than 3.2 million: can you say wow! *Statistics from April 2009 comscore Online Auto Insurance Report. Consumers are primarily seeking an informational advantage when shopping online for insurance rates. To get it, they filter the process down to answering these key questions: What kind of policy do I want or need? What kind of price can I get? What will my monthly payment be? While some consumers will, at some point, want to talk to a representative at the insurance company, the conversation is no longer as important or required in an insurance as-a - commodity world. As outlined in my previous report, most consumers do not want to speak with an insurance salesperson when researching rates. (See White Paper 01: Internet Leads are Broken for Insurance Companies, Agents and Consumers to learn more). For many insurance shoppers, it s enough to browse products and features online and then narrow selections down by price. At this stage, consumers need a price to gain the very informational advantage they seek. For many, any price quote will do even if it s not a particular good price (which explains, in part, why online lead generation has worked until now). The lead generation model is built on the assumption that consumers will surrender their names and contact information, passed on to agents for a fee, in exchange for a price on insurance. Yet this model ignores what consumers dislike most: exposure to the commissioned salesperson. In Fact, the main reason many go online in the first place is to be able to remain anonymous while they research rates and begin the shopping/buying process. This is the purgatory of the informational advantage consumers seek online: not only do they want pricing, but they want to get that price in the same way they would get a price of an item on ebay.com; immediately and anonymously. What s more important, they need to know the price they get is a good one. That explains why online shoppers typically cross reference rates with three other sources to confirm the fairness of the price, and to move forward in the purchasing cycle knowing they are informed enough. Why offer an Upfront Price Quote? An upfront, transparent rate is an informed, fair price given in real time. The consumer doesn t have to provide personal information or wait for an response from a carrier. While online, the insurance shopper can remain anonymous until he or she is ready, and that places the consumer where he or she yearns to be; In Control of the shopping experience. 4

6 The sheer volume of online quote requests consumers submit every month shows just how badly they want this information. In 2008, a ComScore study revealed consumers submitted 32.1 million quotes online. And what do you think they were searching for? They are seeking up front comparison rates, NOT to be contacted over the phone by eight insurance salespeople during dinner time. Is it any wonder agents receive a prospects voice mail * 9 out of 10 times when trying to call the lead to present a price quote. * Based on a survey of 10 leads purchased by Hannigan Insurance Agency from a top lead generation firm. If price is pre-determined, insurance agents can spend their time with the prospective customer telling them about the policy coverage s, information about the agency, getting them excited about their purchase, and cross-selling other lines of insurance rather than spending that time haggling over price quotes. Innovative Carriers who engage in upfront price quotes online don t have to spend personnel time negotiating the rate. Decreased staff time results in lower costs and higher productivity for agencies. Upfront pricing drives down marketing costs, especially with RateElert.com s introduction of performance-based marketing systems premised on providing that upfront price. Carriers and Insurance Agents achieve higher closing rates. A consumer that knows the price before completing an online insurance application with a carrier or requests to be contacted by a specific carrier agent will be 5 x s more likely to complete the sales process. Thus, resulting in a higher closing ratio of sales to quotes. The bottom line is that if insurance carriers offer upfront price quotes, agents won t have to spend all their time quoting prospects that have no intention of buying and can concentrate on selling to consumers that want what they have to offer. Conclusion Changes in the insurance marketing world have come fast. The invention of the internet has diminished the agent s frontline role as product information gatekeeper; insurance shoppers now seek- and have obtained-an informational advantage online. Nearly 7 out of 10 insurance consumers are referencing the internet as their first step in the insurance purchase process. And what are they looking for most as they surf insurance carrier, agent, and third party websites during their research for unbiased insurance information online? Pricing on Policies. To take advantage of this trend among online insurance shoppers, smart-forward thinking carriers are embracing upfront price quotes on the RateElert Insurance Marketplace. Those in the insurance industry who reject such developments and resist upfront pricing risk market irrelevance and, over time, a likely exit from the insurance business. Pricing and rate transparency is both inevitable and profitable. It offers a better buying experience for consumers and a more efficient selling experience for carriers. Satisfied online insurance shoppers mean higher sales volume over time. Because Carriers are giving consumers what they want, closing ratios will grow exponentially. Upfront Price Quoting is the catalyst to making this happen and the key to thriving in the online insurance sale s New World Order RateElert.com 5

7 RateElert, LLC Garfield, # 400 Clinton Twp., MI (P) , Ext 310 For more information, contact: Brian Hannigan brian.hannigan@rateelert.com RateElert, LLC CONFIDENTIAL Do Not Distribute Without Permission All rights Reserved

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