Leading Online Quote Strategies: Assisting Coverage Selection

The process of advising prospects on appropriate levels of protection is a precarious one and it is difficult to provide a personalized process of coverage guidance that is not overly cumbersome. Many carriers make some attempt to provide assistance or guidance in the selection of appropriate coverage levels during the online quote process. This brief will identify the three primary strategies pursued by industry-leading carriers.

For over five years, most of the nation's leading insurance carriers have offered online auto insurance quoting and now count it as one of the most significant lead generation tools within their new business strategies. Firms struggle to balance simplicity and accuracy (the more accurate quotes generally depend on more complex questioning), and there are a host of different areas that pose challenges to prospects seeking to answer questions accurately. However, one area stands out as particularly troublesome for prospects and carriers alike: coverage level selection.

In order to receive a quote online, a prospect must select specific coverage limits for things like collision and bodily injury as well as accompanying deductibles. Prospects must also take into account a variety of factors such as minimum state requirements, lien and leaseholder requirements, pre-existing medical coverage and a litany of personal factors such as degree of assets and dependents to protect and, more generally, personal risk aversion. As such, the process of advising prospects on appropriate levels of protection is a precarious one and it is difficult to provide a personalized process of coverage guidance that is not overly cumbersome.

Further complicating the matter is the self-interest of the carrier. Highly competitive on price, carriers want to be able to advertise low premium quotes to prospects. However, carriers need to be careful to avoid directing prospects toward lower levels of protection that, while resulting in a competitive quote, could also result in inappropriately low levels of protection. Similarly, they are hesitant to guide prospects to higher levels of coverage that could price them out of competition.

Nonetheless, prospects must ultimately be confident that the levels they have selected are appropriate in order to have confidence that their quoted premium is a true picture of what it would cost to be insured appropriately for their needs. As a result, many carriers make some attempt to provide assistance or guidance in the selection of appropriate coverage levels during the online quote process. The approaches taken vary widely from firm to firm and this brief will identify the three primary strategies pursued by industry-leading carriers.

Bucketed Coverage Packages. One approach used to simplify the process is to allow prospects to select custom levels of protection but to also offer the option of selection a pre-set package of coverages. In this scenario, a carrier generally offers three or four packages such as low, standard, medium and high. For example, Farmers Insurance Group presents a page that allows prospects to select their own choices for eight different coverage levels but also offers a drop-down list of three packages via its Easy Auto Coverage Selector.

GEICO's revised online quoting process now also offers pre-set package options, but takes a different approach, requiring prospects to choose their own individual levels but later provides the option to choose a package after they've received their initial quote. Progressive also takes a unique approach. The carrier quotes a pre-set package before prospects even have the option to select individual coverages. The quoted premium is provided alongside a list of drop-downs that offer options for each individual coverage. From that point, prospects have the option to change their individual coverage options or select among four pre-set packages (Minimum, Economy, Choice or Plus). As the prospect changes individual coverage levels or selects among available coverage packages, the quoted premium price changes dynamically on the same screen without requiring the prospect to hit a "continue" or "re-calculate" button.

Interactive Coverage Selection Tools. A second approach is to integrate a tool within the quote process that asks prospects a variety of questions and attempts to provide them with a suggested "personalized" package of coverage levels geared for their particular needs. St. Paul Travelers' Coverage Wizard asks questions about household income, assets, dependents, pre-existing membership in roadside assistance programs (example: Triple A) and health insurance programs. It then provides suggested coverage limits for bodily injury, property damage, uninsured bodily injury and property damage, medical payments, comprehensive, collision, towing and extended transportation.

Textual Assistance. Other firms choose to avoid directing clients toward packages (custom or pre-set) altogether and simply require them to choose their own individual coverage limits and deductibles. In this scenario, firms like Safeco and State Farm require prospects to choose each individual level but provide context-sensitive help that gives definitions for each coverage type. Safeco integrates its definitions right on the selection page, while State Farm provides clickable coverage titles that spawn pop-up definitions when double-clicked. While this approach does little to guide the prospect to specific coverage selections, it does put into context what each selection will effect and provide greater clarity for deciding which coverages the prospect may want to be riskier or less risky with in his selections.

The process of advising prospective customers on appropriate levels of coverage, like other aspects of designing an effective online quoting system, is one of balancing factors. While all firms would like to be able to identify the ideal package of coverage limits for each individual prospect and guide them directly towards it, the process is complicated by not wanting to advise them improperly. When deploying an assistance strategy, firms have to ask themselves if they are at risk of guiding the prospect to an inappropriately low level of coverage and also whether they are guiding them to an overly-protective level of coverage that will result in a premium quote that is not to the liking of the prospect. This is the main reason many carriers shy away from the interactive model and instead offer pre-set packages or textual assistance that ultimately place the onus on the prospect for determining if the selected levels are appropriate for their situation and needs.

Lastly is the issue of channel-conflict. It should be noted that the majority of carriers offering pre-set packages are those that do the majority of their business through the direct channel and, in general, tend to have more self-directed customers. Firms that have significant agent-bases are leery of guiding customers to coverage packages that their own agents might not suggest for the same customer if that customer were getting an in-person quote in the agency branch. Firms such as Nationwide and Allstate offer sophisticated and interactive coverage selection tools elsewhere in their public site, but have been hesitant in many states to integrate the tools into online quote process. Like many full-service brokerages, these carriers have the unique obstacle of providing highly desired guidance-based content to self-directed online users while not conflicting with or undercutting more personalized messages being levied offline by their trusted intermediaries.

Tim Carpenter is an insurance industry analyst with Watchfire GómezPro in Waltham, MA. He can be reached at [email protected].