Demystifying credit consent

Demystifying credit consent | Insurance Business Canada

Insurance News

Demystifying credit consent

Simple but powerful tool uses same info as your Starbucks app, said Intact’s Alastair Lebo

Insurance News

By
Mallory Hendry

This article was created in partnership with Intact

Brokers are always on the hunt for the most competitive premium they can get for their clients, and a soft personal credit check is a simple, powerful, and underutilized way to do just that.

“It needs as much information as we give our Starbucks app,” said Alastair Lebo (pictured), vice president, underwriting commercial lines West at Intact, adding that although uptake in personal lines is higher, it’s relatively new in commercial insurance.

“It’s an awareness thing, but people are used to providing credit consent to get more favourable prices in many areas of life; the opportunity is just as great in the insurance industry. Brokers could serve their clients even better — and win more business too — by taking advantage of it.”

Straightforward process has no downside

The current commercial market is a competitive one, and it’s imperative brokers deliver the best price to business customers. That means exploring all discounting options and leveraging customers’ personal financial stability to achieve the most cost-effective commercial policy possible is, frankly, low-hanging fruit for brokers, Lebo noted.

The straightforward process requires the person’s full name, address, and date of birth — with the latter likely the only piece of information a broker might be missing — and it’s safe. It doesn’t reveal any personal information nor impact the customer’s credit score, but if they have great credit they could be looking at up to 25% shaved off the premium.

“The great part is there’s a whole lot of upside and no downside,” Lebo said. “If they don’t have great credit or aren’t eligible for a discount, the premium simply stays the same.”

Providing solutions for businesses of today and tomorrow

While every business customer with a good personal credit score will benefit, it’s particularly effective in driving down the prices of risks in emerging industries or for new entrepreneurs. Due to climate transition and other market trends, there are plenty of new businesses, industries, and products rolling out that lack an established history and face a hurdle in securing necessary coverage.

Intact prides itself on providing solutions for the businesses of today and tomorrow, but for these cases “it’s a bit more difficult to accurately price the insurance because of less data,” Lebo explained. Intact wants to support these innovators as best it can. With less data to consider, “We look at that risk and we ask, what do we need to know to understand it? How can we work together to find a fair price?”

Brokers have a lot of power here to provide a full picture of their customer in the space and advocate that their customer is a good risk — backed up with data from a soft credit check.

“A great personal credit score is a strong starting point because it gives us some certainty about the customer we wouldn’t otherwise have,” Lebo said. “We want that business, and brokers are the ones best positioned to tell us the story of a customer’s risks and help get them the best price by leveraging their personal financial stability. When we take a collaborative approach, everybody wins.”  

The best offer out of the gate and down the line

Many markets chase new business aggressively, pricing premiums low only to claw back those savings at renewal. As a result, some brokers like to keep rate-saving strategies in their back pocket for down the line — but Intact is committed to long-term, sustainable pricing no matter where an insured lands on the timeline.

Through the use of sophisticated segmentation and data analysis — and by working closely with the broker — customers can count on the right price the first time. Intact’s Stability Advantage paves the way for brokers to maximize discounts for price-conscious customers whether they’re growing or established, large or small.

“We want to use this as a tool to win new business customers, but also as a tool to keep them,” Lebo said. “It’s not a one-time discount. Let’s get the best offer to the customer out of the gate and it will also factor into the stability of renewals down the line. Personal credit checks are a very effective tool at a broker’s disposal.”

If you don’t ask, the answer is always “no”

Despite the many benefits of leveraging an individual’s financial stability in commercial lines, the use of personal credit checks to get business customers the best price for insurance is underutilized in the industry. Why? Brokers are already getting almost all the required information to do a quote submission, and customers are used to giving it – but it’s not always making its way up to the insurer. Lebo suggested brokers make it part of the regular conversation and part of their process because the main hurdle — “that we’re just not asking” — is easily overcome. It’s time to take the step, Lebo urged, where it becomes standard practice to ask for personal credit consent while gathering other essential information.

Explicitly ask customers if they agree to the insurer running a soft personal credit check on them to potentially get a better price and be sure to stress that it won’t affect their credit score or increase the premium quote. Brokers report feeling awkward about asking, but if you don’t ask, the answer is always “no” — and the customer isn’t getting the chance to save up to that significant 25%.

“Most customers who would benefit from this tool will happily volunteer this information,” Lebo said, adding that while Intact underwriters will always start this conversation with brokers, other carriers may have a different approach. Again, the broker can and should ask about the opportunity.

“The bottom line is, this is one more way of getting business customers the best price on their commercial policies, both in traditional and in emerging industries, and we hope to see a lot more brokers taking advantage of it,” he said.

For more information, reach out to your Intact Insurance representative today.

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