Making Programs Successful

Policy application too complex

A customer often needs to answer many questions when applying for an insurance. In some cases it is a daunting task to even apply for a home owners insurance. Many of these questions are redundant and can be avoided. This would help to simplify the process and would increase the number of sales.

Insurance companies want to avoid getting ‘bad risks’ in their books. It is for that reason that they ask many questions to a potential buyer of a policy. This increases the administrative costs and hinders the customer. The Pareto-principle, or 80-20 rule, also applies to this application process. 20% of the questions reflect 80% of the risk, where the other 80% of the questions merely influence a small part of the risk.

When assessing the application process, the insurance company needs to look at their data and show which questions indeed matter and which questions can be avoided. Of the remaining questions, some do not have to be answered by the customer if the application process can be organized in an efficient way. E.g. in many countries a zip code is enough to calculate the regional risks or to get the total address data.

Try to minimize the number of questions a customer needs to answer. This increases the sales ratio.


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