Risky Business; Dealing with Applicant Rejection
Part 7 of the Insurance Onboarding Series
In the last post we talked about the application and the many roles it serves in insurance products, other than simple data collection.
Today we’ll focus on the most challenging feature of an insurance application; full rejection by the company; in which the application ends by saying to the applicant “We don’t feel comfortable selling you any coverage.” Yikes.
There’s nothing less delightful for a would-be customer than filling out an application full of private, detailed information only to be told that the insurance company cannot help them at all.
Imagine you work for an insurtech startup. Customers will judge the quality of an your product based on their ability to get what they want at a reasonable price. Your NPS (net promotor score) will be volatile, and rejected applicants might leave with a crappy impression of your brand when you’re just like, “Dude, your business sells vapes to babies - we can’t insure that.”
If you’re a product person or designer in insurance, what is up to you is how you handle those “dead ends” in your product journey, and how you protect the customer from frustration and disappointment. Rajat Kongovi, the Chief Product Officer at Vouch, regularly challenged my design team to turn dead-ends into hand-offs and deliver value to every customer that came to our door.
How can you make a great hand-off when you need to fully reject an applicant?
The first and best option is to catch them before they apply.
Make sure that your website and marketing is clear about who would make a good customer for your insurance products. Then, consider organizing your application so that big qualifying questions are up front. Remember, you really don’t want to waste your customers’ time, and the best rejection is an early one.
If they’ve already applied, make sure they don’t leave thinking “What did I do wrong?”
“What did I do wrong?” is one of the most unproductive, downward spirals of emotion a person can feel. If a customer has already completed your application, and underwriters (or more likely your underwriting algorithm) has decided they are not a good fit, give them some solid reasoning why.
If the reason for rejection is not debatable, be clear and direct about why the insurance company cannot cover them. Think of this as preventive, word of mouth marketing. You are giving this rejected applicant the information they need to prevent other similar applicants from applying and getting rejected too.
If the reason for rejection is debatable, in one sentence or less, explain why you are a poor fit for them. “It’s not you, it’s me.” is a breakup classic. Make sure the applicant understands that the coverages you sell aren’t actually suited for the rare and expensive ways the precious thing they own might be damaged. You’re not rejecting them, you’re protecting them from coverage that’s probably not gonna meet their needs.
One other strategy you might consider is giving the the applicant actionable ways to reduce risk, and increase their likelihood of being eligible for similar insurance products from you or other companies. But remember, they’re shopping for insurance because they need to get insurance… now-ish. Giving them advice might be helpful, but won’t solve their problem fast.
Reject and hand-off to another insurance company
If you can’t sell any coverage to an applicant, refer them to other insurance companies that might be a better fit for their needs, or get licensed as an insurance broker so you can serve customers a mix of your insurance products and another company’s insurance products too.
Sending clients to your competition might feel odd at first. But in an industry as frustrating as insurance, it’s almost always better to be a part of a customer’s journey to getting the coverage they need at a reasonable price, even when that means with someone else’s product. Customer's will leave feeling like you were at least marginally helpful, not a complete waste of time.
The last option: Stand up for your dead-end.
Remember the business insurance applicant who was selling vapes to babies? Maybe it’s right to tell the baby vape guy that his business is risky, violates your core business values, and refer him to no one. Lemonade, a renters insurance provider, did a wonderful job with this back in 2019, in a piece titled “Guns, and Why Lemonade Is Taking a Stand” saying;
”Our company, like our community, includes gun owners as well as gun control advocates. Many are both. But while we respect gun ownership, we’re not into gun worship.This is why our policies limit the amount we will pay out for the damage or theft of firearms to an entirely adequate $2,500. If you own more than $2,500-worth of firearms, we recommend trying one of our competitors. They seem to all offer additional coverage. We don’t.”
Will the baby vape guy be happy when he gets fully rejected by your insurance application? Probably not. But if he complains about it, you can bet a handful of folks within earshot will be getting a positive impression of your brand.
Reject Responsibly
As we said when starting this series, insurance companies invisibly steer where we live, what we build, how we drive, where we seek medical care, and more. They can enable innovation, or hinder it by making it too expensive to pursue.
So turn your dead-ends into hand-offs, or stand by the reason you reject an applicant with pride. But don’t leave your customer wondering what they did wrong. We are as responsible for the products we build as the emotions we create in the people that interact with them (can you hear me, designers in social media?).
We can do better than that.
On to quotes next!
Carrie