Comparative Raters Aren't the Enemy

Editor’s Note: In the Aug. 14 edition of News & Views, Doug Eden of Main Street America shared his views on how comparative raters will affect the future of independent agents. This week, AnMarie Bozick of ITC offers her perspective on the role comparative raters play.

There is an assumption that comparative raters have a sort of hypnotic ability that transforms the independent insurance agents’ business philosophies from selling value to selling only on price. As a prior agency owner and a comparative rater user, I can assure you: the rater is not morphing agents into order takers who sell on price alone.

Agents either know how to sell on value or they don’t. And it is an unfortunate reality that there are agents who only know how to sell on price. Not only is selling on price a great disservice to the insureds, it also directly impacts agents’ relationships with their carriers, as previously mentioned. Selling insurance on price alone, whether obtained via a comparative rater or multiple carrier systems, results in adverse selection and higher loss ratios.

Comparative raters are a tool for independent agencies to improve efficiency and accuracy by eliminating the need to enter the same risk information into multiple carriers’ systems. Less time spent on data entry enables agents more time to focus on what is truly important:  selling the value of their services and the carriers they represent.

Following up with potential and current clients is a key attribute that differentiates a salesman from an order taker. Order takers simply quote a price and hold their breath hoping they made the sale. A salesman identifies the prospect’s risks, needs and wants and sells how his agency and the carriers he represents will meet those needs. A reputable comparative rater will automate much of the follow up process, thereby further increasing the agency’s efficiencies and ensuring there is a consistent process that results in every prospect being followed up with every time. This is a critical component to agencies improving their sales and retention rates.

Another misconception is that comparative raters only sort the quote results by premium, therefore listing the cheapest carrier on top. Agents can sort quote results in comparative raters on more than premium, including, but not limited to, company name, down payment and number of payments.

Our agents use it precisely for many of the reasons mentioned in the previous article. They want to look first at their carriers that provide top-notch claims, customer service or attractive compensation structures or because they have preferred relationships with the marketing representatives.

So the true culprit is education, not comparative raters. Both parties, the consumers and the agents, need education. Many direct writers have recognized this and run marketing campaigns to educate consumers on the importance of coverage versus price, e.g. the Mayhem or Farmers University campaigns. Carriers have a great opportunity to help agents succeed by educating and advising them on why it is critical to their future to learn how to sell on value and not take orders on price.

AnMarie Bozick, CIC is the comparative rating product manager at ITC.