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Policy retention activity

M

Mahima Singla

Active Member
Hi
I am having difficulty understanding below given paragraph. This is from Ch 29, Page 6

"For those distribution channels where the insurance incurs the cost of acquiring business for example quotations systems the number of quotations produced versus the actual business acquired should also be monitored and managed"

Could you please explain what is quotation system and what does it mean with reference to this context.
 
Mahima Singla said:
Hi
I am having difficulty understanding below given paragraph. This is from Ch 29, Page 6

"For those distribution channels where the insurance incurs the cost of acquiring business for example quotations systems the number of quotations produced versus the actual business acquired should also be monitored and managed"

Could you please explain what is quotation system and what does it mean with reference to this context.
Click to expand...
Hi Mahima

A quotation system is a system that produces quotes. So a prospective policyholder may ask for a quote of their likely premium. Many people will look at the quote and decide not to buy (maybe they can't afford or they have a cheaper quote from another insurer). So it is important to monitor the number of quotes against the number of policies sold.

For example it might cost 20 to produce a quote. But maybe only one in three of the quotes become new policies. So the acquisition cost is actually 3x20=60 per new policy.

Best wishes

Mark
 
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