Why Your Policy Dollars Are What Speak To An Insurance Company
When an Internet user stops by an insurance company website to obtain a free auto insurance quote, the wheels begin to turn. After inputting some basic required information, the applicant will receive a quote for an appropriate automobile insurance plan, while the website host will log this visitor's information into their database, possibly to be used in future marketing efforts.
The free auto insurance quote may be considered or rejected by the person receiving it, but the point is that now the insurance company has a lead on what could be considered a 'hot prospect', defined as someone who has expressed both an interest and a need for a specific product, an automobile insurance plan.
As can be expected, the free quote given will usually represent the lowest rate possible, in the hopes that the recipient will find it enticing enough to take further action. If no action is taken, there's a good likelihood that a follow-up contact of some sort will be initiated by the insurer in an attempt to persuade the prospective policyholder to make a decision and to close the sale.
During this entire exchange, an insurance company has one major goal in mind - to acquire new business and to obtain new policy premium dollars from a new customer. Because the auto insurance industry is extremely competitive, their efforts should be well focused and time is of the essence. Just about everybody carries some amount of auto insurance and if they don't buy it from one company they're sure to buy it from another. Because of this, the first company to make the pitch stands a good chance of success, especially if they are able to deliver a quality product and service upon which the potential customer looks favorably.
An insurance company's dream client is someone who faithfully pays his or her premiums on time and who never makes a claim. Someone who has a bad driving history and has had claims in the past is not such a good catch, but premium amounts can always be adjusted upwards in order to take these shortcomings into account.
Insurance is a risk/reward business and for an insurer to remain profitable the rewards (premium dollars) must outweigh the risks (claims payments). Hopefully, these regular, incoming premium dollars will also be put hard to work in profitable investment strategies. For some insurers, that's where the real money is made.
An online insurance quote will never be exact, as there are too many factors involved when writing an actual automobile insurance plan that will affect the final premium amount. Some factors will cause rates to rise while others, including discounts, will lower them.