Value of an Immediate Decision
Monday, March 19, 2012 at 10:22AM
The traditional insurance selling process leaves a lot to be desired. It takes on average 47 days to issue a life insurance contract in North America. Buying other forms of insurance is much quicker and it has been possible for sometime to buy instantly online.
Companies also know there is value in this immediate issuing of business, but what is this value? Most companies see customers drop out during the underwriting process, this may be because it is not what they expected, perhaps they found insurance elsewhere, or simple changed their minds.
This is expensive to the insurance company as in most cases the underwriting process has already been carried out.
A recent study shows that the percentage of people that expect to make a purchase despite a delay is significantly higher than those who actually do return to make the purchase. The study was based on an offer for a credit card — 78% of the prospects who were presented with the offer said they would take it up if it was available immediately, 60% of them said they would take it up even if they had to wait a couple of days. An 18% drop out rate due to the delay is not significant, however when they were revisited a few days later only 14% were actually still interested. A staggering drop out rate of 64%.
While this study was not an insurance product, it does demonstrate that although the majority of people think a small delay in the purchase decision would not change their mind, the reality is very different.
Originally published at actuarialreview.com.
