Aged auto insurance leads are used to checking up on current rates, but a new study suggests they should be checking for new laws as well. For agents cold calling and sales prospecting with auto leads, a recent auto insurance news story is worth a closer inspection and some thought about the business implications.
Study Finds Not-at-Fault Rate Hikes
A study by Consumer Federation of American (CFA) looking at not-at-fault accidents caught my eye on Insurance-Forums.net. The study found some drivers faced an auto insurance rate hike of around 10% for being hit by another driver.
The research analyzed premium quotes in 10 cities from five of the nation’s largest auto insurers. Among the cities tested, drivers in New York City and Baltimore pay out the most for doing nothing wrong, and customers in Chicago and Kansas City also face average increases of 10% or more when another driver crashes into them.
What’s more, the study found that the apparent not-at-fault rate “penalty” set by underwriters was steeper for moderate-income drivers.
- Higher-income drivers faced a 6.6% rate penalty, paying an average of $78 more after a not-at-fault accident.
- Moderate-income drivers faced a 9.6% rate penalty, paying an average of $208 more after a not-at-fault accident.
The study reportedly sought quotes for a married, college-educated, home-owning bank executive and a single, high-school educated, renting bank teller. Both hypothetical drivers were 30-year-old females, living at the same address, licensed for 14 years, and driving the same 2006 Toyota Camry 10,000 miles a year.
As you can guess, the study’s findings touched a nerve. Here are some quotes from J. Robert Hunter, the CFA’s Director of Insurance and a former Insurance Commissioner for the State of Texas:
Innocent drivers who don’t cause accidents should not be charged more because someone else hit them. Most people know that if they cause an accident or get a ticket, they could face a premium increase, but they don’t expect to be punished if a reckless driver careens into them…
Penalizing safe drivers hit by another car is not only very unfair; it also discourages them from filing legitimate claims. Lawmakers and regulators need to protect consumers from being punished when they’ve done nothing more than use the policy they have already paid for.
Researchers working on the study brought up both insurance cost and the potential for legal regulatory action:
“We already have a severe problem in this country, because so many Americans live in communities where auto insurance is unaffordable,” said Douglas Heller, an insurance expert who conducted the research along with CFA’s Michelle Styczynski. “State leaders should at least prevent insurance companies from punishing good drivers for having the bad luck of being in the vicinity of someone else’s bad driving.”
“Diverse states such as Oklahoma and California have banned the practice,” Heller said. “A little push from consumers could persuade other states to do the same.”
These findings will likely make their way out into the mainstream press, where they will generate some controversy. Auto clients probably aren’t aware of this move by some insurers. (CFA found one insurer didn’t enforce a penalty.) And clients in states that don’t have regulatory protections like Oklahoma and California will likely look into changing that.
Business Implications for Auto Agents
The takeaway for auto insurance agents should be to get out in front of the story. The CFA is encouraging drivers to talk to not-at-fault rate issues with their agent and insurer as well as their state insurance department. But there’s nothing that says you can’t bring up the study findings first.
It’s always a good position to be in to be that contact point educating leads about insurance issues that matter to them. The more current clients and client prospects see you as a trusted partner, the better your business is going to do. With sales, with referrals, with cross-sales, etc.
Consider how this auto insurance news could be used as a conversation starter with your current backburner aged leads or a brand new batch of purchased aged leads. You could craft a new script and start making some calls. This is a topic that lends itself to lots of questions on the part of leads and some nice open-ended discussion for agents. You could also turn this study information into a drip campaign for leads who want to read more or use it as a single email newsletter topic to check in with your leads. The possibilities are wide open.
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