During your quoting process, have you ever wondered if you’ve seen a prospective policyholder before, and if so, is that potential policyholder a bad risk? You probably have. Many carriers have multiple underwriting companies. This can allow previous policyholders to bounce undetected from one carrier underwriting company to another.
Let’s say you have a customer who generates an unearned premium by cancelling their policy early. That customer spends the next couple of years out in the insurance marketplace shopping and moving from one carrier to another, eventually returning to you through a different channel. In the absence of comprehensive and easy-to-access visibility into former policyholders, this “boomerang” prospect could look clean, even if they’re not.
As high as 20%
Boomerang policyholders are more common than you might think. When we analyzed LexisNexis® Current Carrier® results in June 2020, we found that carriers using our Prior Policy Alert feature had quoted former policy holders up to 20% of the time, depending on the makeup of their book.
Prior Policy Alert, a feature of our Current Carrier® contributory data solution, lets you know when an inquiry is coming from a previous customer. It also helps identify adverse risks who move from carrier to carrier in order to provide proof of coverage to a third party, then quickly cancel.
Boomerang policies can be costly if you continue to write new policies for previous customers who have a greater propensity for risk. Having information about prior policyholders at time of inquiry can help you make the right underwriting decisions, decrease bad debt expense and improve profitability.