Demystifying Insurance Prescreen

This article was adapted from an interview conducted at the 2019 LexisNexis^® Risk Solutions Customer Advisory Meeting. LexisNexis^® Risk Solutions representative James Winship spoke with David Flam, COO & General Counsel at DataLab Data Solutions.

More than two billion insurance prescreen offers were extended over the past two years¹ and the numbers are expected to continue to increase!

LexisNexis^® Risk Solutions internal analysis indicates that prescreen campaigns can result in an average 1% to 1.5% higher response rate compared to invitation to apply (ITA) campaigns – where credit criteria is not used as a precursor for acquisition. We’re also seeing at least 10% higher conversion rates by underwriting consumers who’ve been prescreened.

Prescreen is not just a tactic used by the big guys – you don’t have to be a top five or top 10 carrier to engage in prescreen campaigns. In fact, all of the campaigns executed in 2019 were deployed by carriers across the top 50¹. If you’re wondering when would be a good time to get started with insurance prescreen, that time is now.

Why should you prescreen?

Using credit attributes such as those available via LexisNexis^® Insurance Prescreen could be considered the purest form of one-to-one marketing. It targets consumers who are in your market, at an identifiable address, and who are qualified from a credit perspective. It’s safe to say that prescreen outperforms standard ITA campaigns because the right prospects are being reached. Prescreening allows you to connect with specific consumers and get immediate measurable results. You can also establish test and control environments to measure potential campaign effectiveness with greater specificity, especially if attribution is done properly.

It is also important to note that LexisNexis^® Insurance Prescreen features models that are specific to the insurance industry – aligning your marketing efforts to your underwriting practices. 

Best practices for executing an effective prescreen campaign

The best prescreen programs are driven by defined goals and designed to reach specific consumers in a very measurable way. While prescreen programs have traditionally been based on attributes that extend beyond demographics, such as credit scores, today’s prescreen programs are honing in on the best prospects through the use of additional attributes that indicate a consumer is ready to buy and is the right match for your market.

These attributes are viewed as “triggers” to a potential insurance purchase and include applying for an auto loan, making a mortgage inquiry or other similar activity that would point to the need for insurance. Financial triggers can be either in the form of an inquiry or the actual opening of an account. There are also specific insurance triggers, such as shopping for insurance or applying for a policy, that are useful attributes in identifying good prospects for your business. Whether you are experienced with insurance marketing prescreen or just getting started, including triggers can significantly enhance your prescreen results. In fact, they are an excellent starting place for first timers.

A best practice for carriers experienced in prescreening is to carefully review the past couple of years of promotional history and then set the target for performance going forward. For example, by using sophisticated analytics, you can determine where performance could be improved by a deeper dive into the credit file. Incorporating triggers can provide a more substantive and predictive view.

Common stumbling blocks

One of the most common problems in existing marketing prescreen programs is an overabundance or saturation of consumer targets who should not be targeted. These are consumers who, based on the use of the credit file or in many cases the use of an external third-party file, are unlikely to be responsive to new offers of insurance.

An example is consumers who are very “sticky” with another carrier, and so you have reason to believe that stickiness is not likely to change. It simply becomes too expensive to attempt to acquire them. If you have justifiable long-term value expectations for these consumers, you can move forward in pursuing them, but this should be part of your planning process and not an accidental maneuver.

Another common stumbling block is misconceptions about the Fair Credit Reporting Act (FCRA) “firm offer” requirements. Carriers who have not prescreened before are often concerned they could be required to make a firm offer to potentially millions of consumers in cases where credit-based information is used as an attribute. This can be a complex area and points to the advantage of working with an experienced processor who can help guide you through credit bureau interactions and requirements.

While FCRA concerns are valid, they should not be a deterrent to taking advantage of the benefits marketing prescreen campaigns offer.



The value of an experienced prescreen partner

Engaging with an authorized third-party processor of credit has become standard for any sophisticated FCRA prescreen program, for the reasons mentioned above and more. A processor’s expertise and participation can help you zero in on the right prospects while fulfilling the FCRA requirement to make a firm offer of insurance – the benefit being offers are required to only selected prospects, as opposed to all consumers the processor receives.

Such a partner can also be an invaluable resource when it comes to attribution, which is crucial to identifying the right prospects. By refining attribution to deeper levels, leveraging additional data sources and incorporating historical data into modeling initiatives, an expert partner can help you better target the right prospects and improve campaign performance.

Lowering the cost of customer acquisition with Insurance Prescreen

While prescreen campaigns can be more costly to implement than ITA campaigns, the returns are greater ―and we believe worth the effort. Using credit-based and behavioral attributes (triggers) along with demographic qualifiers can significantly boost performance. By establishing campaign baselines, models and measures you can better determine acquisition costs and gain more control over your marketing investments.

In our experience, it’s very typical to see costs per customer acquired reduced by as much as 50% when using prescreen programs. These reductions can be further improved when modeling and demographic data are included in the mix. Your comparative response rates will tell the story.

Your next step

Is your marketing objective to take a very targeted approach to customer acquisition? Or are you taking the chance that anyone you connect with could become a customer?

If you haven’t yet looked into the merits of prescreen for your business or if you’re questioning how well you’re currently using prescreen, we encourage you to contact us. We can help you define your strategy, select the right partners and execute your campaigns with precision.

Your time to try LexisNexis Insurance Prescreen is now and nothing is in your way.

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