Personal auto insurers have faced substantial profitability challenges over the past three years.^[1] While digital transformation and modernizing quote experiences get a lot of attention, renewal book strategies are among the fastest ways to recharge profits—and when done right with precise analytics and skilled policyholder outreach, can help to maintain a solid customer experience (CX).

With CX, rate integrity, and retention in mind, consider these four best-practice strategies.

Are you keeping your renewal book healthy and fit?

Best Practice #1: Non-rate actions at renewal can ease personal auto profitability pressures

Circumstances can change—even more rapidly of late—and updating details that can impact the premium for an auto insurance policy may not be top of mind for insureds. The result is more than $35 billion in annual premium leakage for the industry.^[2]

Non-rate actions—solutions that don’t require a rate filing—can be dialed in at renewal while investing minimal resources from IT, underwriting, and customer service. These actions can align with factors that cause underlying premium leakage.

Tips:

1. Start with something easy. Consider mileage validation in a single state. A customizable program can enable targeted recovery where it’s most needed with a simple batch process.
2. Enlist outside support. Expand your reunderwriting footprint and target more premium leakage sources. Verisk can handle complete outsourcing of non-rate actions at renewal, including skilled policyholder outreach, or can assist with individual solutions to discover undisclosed drivers as well as usage, mileage, and garaging.
3. Remember your why. CX, rate integrity, and premium recovery should be top-of-mind. An ROI-based approach can optimize expenses and minimize unnecessary policyholder contact where premium discrepancies are slight.

Some Verisk clients have found these auto book health initiatives can generate an ROI of 7:1 in the first year and 22:1 over the life of a policy,^[3] all while helping to avoid adverse selection and establish a more secure market position.

Best Practice #2. Monitor in-force drivers for new traffic violations

Missing violations and accidents account for $4.1 billion in annual premium leakage for personal auto insurers.^[4] With risky post-pandemic driving behaviors persisting,^[5] motor vehicle reports (MVRs) are a critical but costly data source. The national average MVR fee has risen more than 25% over the past decade, now surpassing $11.^[6]

However, innovations in the market enable insurers to monitor drivers for new violations—a cost-effective way to identify surchargeable incidents at renewal.

Tips:

1. Consider ROI and driver risk. Although police issued 19.2% fewer surchargeable citations in 2023, major violations have increased 7.9% compared to a 2019 baseline.^[7] Seek to optimize underwriting expenses without premium-leakage trade-offs.
2. Use traditional and public data sources. Use the most optimal mix of data sources in each state where you write business.
3. Look for innovation and scale. The size and sophistication of violation data can determine how feasible it is to use at renewal, and analytic indicators can help optimize reunderwriting spend as well as monitor ongoing violation risk in near real-time.

Verisk’s extensive Public Records Intelligence^TM data warehouse includes over 2 billion records with connections to more than 10,000 traffic courts, plus more than 300 million crash records and 65 million non-traffic criminal offenses. With more than 30 years of DMV sourcing experience, Verisk’s Driving History Solutions provide valuable use cases across the policy life cycle and can save insurers up to 35%.

Best Practice #3. Monitor claims history at renewal

Insureds may be switching carriers because of a recent loss, which they don’t report when they buy a new policy. Ordering a loss history report in the initial underwriting period and at the first renewal can mitigate this premium leakage and help you charge the right rate for the risk.

Tips:

1. Leverage low-cost loss history indicators at renewal. Identify whether or not a claim has been recorded after the policy has been bound to confront pre-claim policy-switching risks while optimizing reunderwriting expenses.
2. Assess risk for accidents and surchargeable claims not reported to contributory databases. By harnessing public records such as crash reports, 5% more crashes are discovered.
3. Work with a provider that delivers better overall value. Optimizing ROI works across the policy life cycle, factoring in quality, service, and price.

Five of the top 10 property/casualty insurers rely on Verisk’s A-PLUS loss history data. Public Records Intelligence enhancements identify whether or not the insured or vehicle has been involved in crashes for which they neglected to file a claim, providing additional insights into fault, severity, and circumstances. These insights can be combined with major violation indicators to help uncover claims that may not have been filed during the policy period and reveal potential for pending MVR activity. A proof-of-concept test can demonstrate how Verisk’s proprietary search and match techniques often return more claims.

Best Practice #4. Identify shopping intent to drive retention efforts

Amid increasing churn in today’s hyper-competitive auto insurance market, customer retention is paramount—and that means knowing when customers are thinking about their insurance options.

Harnessing the power of in-market signals can be a game-changer. Imagine knowing precisely when your existing customers are actively seeking additional coverage or exploring options with competitors. With this insight, you can strategically bundle offerings and personalize interactions, enhancing your auto policy retention strategies to sustain business growth.

Tips:

1. Detect shopping at the earliest stages. In-market signals can alert you to the earliest signs of customers exploring alternative options, so you can intervene proactively and reinforce their loyalty through targeted retention efforts.
2. Pinpoint targeted outreach when customers are in the buying mindset. In-market signals can help you identify precisely when customers are shopping. This enables you to tailor outreach efforts effectively, avoid generic messaging, and deliver personalized experiences that resonate with each individual.
3. Maximize cross-selling opportunities. In-market signals not only highlight customers’ current needs but also uncover cross-selling opportunities. By observing customers comparing different products, you can capitalize on these moments to propose additional offerings, expand your share of wallet, and enhance customer satisfaction.

In-market signals empower data-driven, actionable insights derived from real-time consumer behavior—who’s shopping, when, how often, and for what products—to support optimized marketing strategies that deliver measurable results. Unlock the full potential of in-market signals with Activate, Verisk’s innovative auto policy retention solution. Activate can help monitor customer shopping activity to support strategic delivery of personalized experiences and success in customer acquisition, retention, and growth.

Learn more about Activate and discover how Verisk Marketing Solutions can help you create strategic advantages with actionable insights that help you align your renewal outreach and improve customer experiences.

Get the best return on your renewal book strategies

Verisk has a full complement of renewal book solutions that can help with both ROI and CX. For example, managing credit-based insurance score risk is recommended every year or two, and many states’ guidelines suggest no more than a three-year reordering cycle, which enhances rate integrity and helps ensure every policyholder pays their fair share.

With a little focus, the right tools, and these best practices, you can keep your auto book fit while tackling and optimizing CX.

To learn more about renewal book best-practice strategies, ask your Verisk account executive to schedule an insurer strategy session or visit verisk.com/personalauto

By Agustin Erdaide. Agustin Erdaide is a senior underwriting product manager at Verisk. Brad Magick, CPCU, leads the management of Verisk’s loss history solutions. He is responsible for delivering several of the latest innovations to Verisk’s A-PLUS to help increase competitive advantages for his clients.

By Greg Jacobs. Greg Jacobs, director product management, leads product management for Verisk’s auto underwriting solutions. Before joining Verisk, he held several positions in personal and commercial product management with a national carrier. Greg is passionate about developing innovative data and analytics capabilities that help insurers achieve their goals with advanced driving history solutions and valuable use cases for public records intelligence.

By Brad Magick, CPCU. Brad Magick, CPCU, leads the management of Verisk products for auto underwriting fraud, application and rate integrity, and book health. These products include Verisk’s RISK:check suite to help insurers mitigate fraud and confront premium leakage—a $35.1 billion annual problem for the industry. He oversees point-of-sale and renewal solutions, as well as advanced analytics that enable prioritized pursuit of premium recovery and policyholder outreach programs.

By Jeff Piotrowski. Jeff Piotrowski is vice president insurance at Verisk Marketing Solutions. He is at the cutting edge of marketing solutions development, delivering In-market signals that help empower data-driven, actionable insights derived from real-time consumer behavior with Activate, Verisk’s innovative auto policy retention solution.

[1] AM Best Aggregates and Averages, 2021-2022, Combined ratios exceeded 100 in both years, setting a new record at 112.2 in 2022, and are expected to top 100 for 2023 when new data is available.
[2] The Impact of Insurance Fraud on the U.S. Economy, Coalition Against Insurance Fraud, August 26, 2022
[3] Verisk client experience.
[4] Updated 2022 estimate based on Coalition Against Insurance Fraud’s The Impact of Insurance Fraud on the U.S. Economy, pages 23-26, applying overall annual premium leakage increase to Verisk’s estimate from The Challenge of Auto Insurance Premium Leakage, 2017
[5] Early Estimate of Motor Vehicle Fatalities for the First Quarter of 2024, U.S. Department of Transportation and National Highway Traffic Safety Administration, June 2024; traffic fatalities reached a 20-year high in 2021, and although the rate per 100 million vehicle miles traveled has declined, 2023’s rate remains 13.5 percent higher than the pre-pandemic 2019 baseline.
[6] Verisk’s Visualize, “As MVR Fees Increase, Verisk Expands Violation Risk Capabilities,” July 14, 2023
[7] Verisk analysis of public records data, 2023 vs. 2019