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To enhance buying process, Homesite moves loss history to first rate call

I had an opportunity to sit down with Stephen Stayton, vice president and chief actuary at Homesite Insurance, to discuss a pending change in Homesite's process to order loss history reports. Stephen is primarily responsible for predictive analytics, reserving, countrywide rate indications, and forecasting for budgets at Homesite. He joined the company in October 2000, after 13 years with The Hartford insurance group.

What is Homesite's current process for ordering claim loss histories?

Homesite orders A-PLUSTM personal property claim history reports from Verisk for underwriting and rating. Currently, these claim history reports are ordered after the initial application is completed and an initial premium is offered.

What are the challenges with taking that approach?

In some instances, uncomfortable situations may arise for a customer when the report provides claim events the customer did not disclose earlier during the application. With the current process, a customer is asked to provide information on personal property claims that occurred during the previous five years to make an initial determination of program eligibility and price.

In situations where the A-PLUS report identifies additional personal property claims, the price of the policy is very likely to increase, and in some cases the customer may even be ineligible for Homesite's homeowners program if specific claim thresholds are exceeded.

How is Homesite addressing this situation?

Verisk and Homesite have engaged to implement a new process, obtaining the report earlier in the application and quoting process as other customer information is collected to underwrite and rate the policy. There will be no need to ask the customer to directly supply information on prior personal property claims, since Homesite can rely on the report.

Why do you think this will improve the customer sales experience?

Underwriting eligibility can be determined earlier in the process, and a premium can be quoted that is not subject to change upon discovery of additional claims. Since there is no need to ask the customer for information on prior claims, the time to complete the application will be reduced as well. These combined factors will serve to improve the customer sales experience.

Homesite has a history of innovation and has a unique business strategy. Can you tell me more about that?

Homesite was founded in 1997 to sell homeowners insurance directly to the consumer. Soon, a partner-focused business strategy was developed, given the high homeowners acquisition costs relative to the personal auto line.

Homesite has primarily partnered with insurance carriers focused on offering personal auto products, where the homeowners policy can be a secondary sale. Typically, a customer can receive an auto quote from his or her auto insurer and then have the opportunity to obtain a homeowners quote from Homesite. With Homesite's multichannel approach, the home, renters, or condominium policy can be secured on the web, through a call center, or from an agent.

In 2013, Homesite was acquired by American Family Mutual Insurance Company. The acquisition furthered an American Family goal to become a multichannel, national carrier. Over the years, Homesite had applied technology to develop an excellent web sales platform and successively applied technology in call center settings. Homesite's application of technology and its expertise in the homeowners lines were major factors in American Family's decision to acquire Homesite.

Thank you Stephen. I've enjoyed our conversation.

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