Declining Application Volume Offers Subscriber Opportunity

Following AutoOne’s attendance at multiple state auto insurance plan meetings, it has become clear that the significant decline in application volume continues unabated. This is great news for subscriber companies and affords each of them a "moment in time" opportunity to trim expenses and focus all of their assets on the writing of voluntary business that is core to their success.

The steps in seizing this opportunity involve eliminating confusion, eliminating unnecessary costs, and partnering with a carrier through a Limited Assignment Distribution.

Cause for confusion

The rating systems for assigned risk plans are quite different from what companies are using today. Programmers often struggle with algorithms and logic that is foreign to what they deal with every day. And if a company writes in all 50 states, that’s 50 separate assigned risk programs that must be maintained.

The handling of claims for assigned risk business requires a unique perspective by everyone involved. Claims often involve minimum limit policies requiring a special mindset for the quick settlement of each loss. Flags that the SIU coordinators are looking for on claims are likely to be different than from the voluntary business. Assigned risk producers are not going to be familiar with a company’s procedures on reporting.

Customer service is faced with many of the same problems as the claim department. Producers are unsure of who to call or proper procedures. Payment issues are complicated by frequent cancellation and reinstatement transactions, not to mention premium financing arrangements and calls from insured drivers confused by being "assigned" to a company while knowing only the name of their producer.

Critical to all this is that it takes away from a company’s focus on its core business. With the fierce competition in the voluntary market, the pressure to reduce expense levels and maintain focus on the core business is enormous.

Save effort and expense

The opportunity for subscriber companies begins with the elimination of all expense associated with staffing and maintaining an infrastructure (rating systems, claim systems, customer service, etc.) involving a segment of the business that is not germane to the company’s business. Self-writing assigned risk business is all overhead with no positive contribution to the bottom line.

The solution

Eliminate the receipt of assigned risk business through a Limited Assignment Distribution or LAD. This process allows a carrier to transfer the expense and potential losses from involuntary business to another carrier for a certain fee. And the opportunity is perfect right now, because as application volume declines, the total fee for the buy-out will be at its lowest. Now is the best time to eliminate all of the expense of dealing with assigned risk and turn it over to the specialists.

AutoOne is focused on the handling of assigned risk business. For further information about a LAD and how it can benefit your company, please contact Pete Treutlein with AutoOne at 631-547-2010 or visit http://www.autooneins.com.

Pete Treutlein,
Director, Assigned Risk Services