The Insurance Sales Cycle & Policy Placement Ratios: Why It Matters
In the insurance industry, there are certain criteria that wholesalers, MGAs and agencies can use to best measure the efficiency of their business and determine key areas that need to be addressed. Two critical metrics are the sales cycle and policy placement ratios. Here, we’ll look at both and how today’s automation technology can help.
The insurance sales cycle
There is an old saying in the business world that “time kills all deals.” Simply put, this adage is a warning to sales professionals that if they take too long to close a deal, their prospects will likely lose interest and go to a competitor. And while not every deal has a set time limit, shortening the sales cycle should be taken seriously — especially in the insurance industry.
The insurance sales cycle refers to the number of days it takes for an application to go from the initial submission to policy issuance. During this time, a series of steps and processes are conducted before a policy is issued. Currently, the average insurance sales cycle is between 60 and 90 days.
If you don’t know how big the problem is, you can’t fix it
For insurance entities to determine their approximate sales cycle, they need to ascertain the total number of days it took to issue a policy and divide that by the total number of new accounts put on the books during a specific time parameter – such as every month or quarter. And while some transactions may happen sooner or even later, knowing the estimated sales cycle can serve as a baseline to help them better understand if this is a problem area they need to address. One way to do this is through automated reporting, such as the feature offered in the Surefyre platform that can be set up to land in your inbox daily, weekly, monthly, or any time new data is added.
Policy placement ratios
The placement of an insurance policy refers to the initial purchase of an insurance product or the renewal of existing coverage. Of course, the more policies placed, the better the ratio and a business’s bottom line! Simply put, the policy placement ratio is the actual number of in-force insurance policies.
Understanding the policy placement ratio is important because it measures just how well a business is performing. For example, if a wholesale agency is struggling to place new or renewal policies because of a lag in underwriting or processing that has delayed the delivery of quotes to their retail broker client, the placement ratio will reflect this issue.
A policy placement ratio can be calculated by taking the number of policy submissions during a specific period and subtracting that figure from the number of policies actually issued. For example, if 10 submissions were made in 30 days and eight were issued, an agency’s policy placement ratio would be 80%.
Why it all matters
Insurance sales cycle and policy placement ratio are critical issues that insurance entities must address. Doing so can help minimize policy processing time, underwriting delays and submission declinations while increasing client satisfaction and revenue.
Luckily, today’s advanced automation technology has become a vital tool in helping wholesalers and MGAs shorten the insurance sales cycle and place more policies by reducing the number of manually driven tasks and streamlining processes. From full automation to high-touch underwriting, workflows can be easily matched to a property and casualty business process that has been identified as slowing down the sales cycle and negatively impacting the policy placement ratio.
About Surefyre, Inc.
Surefyre is a highly configurable insurance automation platform and agency portal focused on digital distribution and automated workflows. Our easy-to-implement process can integrate with almost anything, from outdated legacy systems to top-of-the-line programs. Our code-less integration platform makes your life easier by automating the submission, rating, quoting and binding process for all P&C insurance products.
To learn more, contact Shawn Gonzales, adviser and account executive, at email@example.com or 415-480-9283.
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