Ways to put more cash in your pocket as an insurance agent: Limiting MVR Chargebacks

One quick and easy way to put more cash in your pocket as an agency owner is to look at your MVR chargeback conversion percentages. These seem like small one-off charges, but they add up rather quickly, especially as you grow. It is always best practice to run MVR reports only on the policies you are truly confident in closing. But let’s see what it looks like if you really focus on helping to limit these expenses.

For all the newbies out there, MVR chargebacks are fees (often the reversal of a commission already paid by the carrier) for running a Motor Vehicle Report, or MVR, when quoting an auto policy. Typically, MVR chargebacks come out of your new business commission rate. On average, insurance agents lose about 1% on new business commission due to MVR chargebacks alone. Each state differs in the amount they charge per report. (See a full list at the bottom of this post.) At first glance, 1% does not sound like a lot, but it can accumulate the more you quote.

Let’s say you do $50,000 in new business a month (for ease of math). Your commission at one of your carriers that also have MVR chargebacks is 15%. That comes out to $75 in chargebacks for that month. Times that by 10 carriers, that equates to $750 lost out of your pocket per month or $9,000 in unnecessary and avoidable fees per year.

What can you do?

A lot of agents will simply quote with the basic information provided by a client or by filling in the minimum requirements. But if violations are underreported at the start, the policy price ends up increasing significantly. This creates unhappy clients and can directly lead to lower retention rates. Plus, carriers have started to catch on and are tired of clients bolting to another company after their prices increase due to inaccurate quoting. As a result, most standard companies won’t let you bind a policy without first running the MVR.

So what’s a better strategy?

Add anything the customer tells you for quoting purposes with clear and concise disclaimers attached. A good example to say is: “If there is anything else on your record you are not disclosing to me now it can increase your rate later.”

Next, wait to run the MVR until it’s time to close the deal (i.e. the client has committed to buying the policy). Once you are ready to issue, run the MVR and communicate any changes immediately to the client. If you are open and direct in how the process works from the beginning, the majority of clients will be appreciative and more accepting.

For most carriers, if you successfully keep the policy active for 30 days, you won’t even receive the chargeback.¬† As a result, look for ways to optimize your conversion and retention. The higher your conversion rate the lower your NB Impact. A good conversion rate for auto policies typically runs between 40-60% for independent insurance agencies.

For techniques on closing the sale, we recommend checking out the article: “How to Close a Sale: 7 Closing Techniques & Why They Workby Adam Wiggins at Hubspot.

Stay tuned for more sales techniques from ASNOA’s very own Sales Director, Kevin Rigsby!

MVR Charge Back Breakdown

Base charges/starting costs by state (what you would get charged as a consumer on the DMV website) for MVRs. This is subject to change at any time. Source: PolicyGenius

  • Alabama: $5.75
  • Alaska: $10
  • Arizona: $3
  • Arkansas: $10
  • California: $2
  • Colorado: $2.60
  • Connecticut: $20
  • Delaware: $25
  • District of Columbia: $7
  • Florida: $8
  • Georgia: $6
  • Hawaii: $9
  • Idaho: $7
  • Illinois: $12
  • Indiana: Free
  • Iowa: Free
  • Kansas: $8.70
  • Kentucky: $5.50
  • Louisiana: $18
  • Maine: $7
  • Maryland: $9
  • Massachusetts: $6
  • Michigan: $8
  • Minnesota: $9
  • Mississippi: $11
  • Missouri: $5.88
  • Montana: $7.25
  • Nebraska: $3
  • Nevada: $8
  • New Hampshire: $15
  • New Jersey: $15
  • New Mexico: $10
  • New York: $7
  • North Carolina: $14
  • North Dakota: $3
  • Ohio: $5
  • Oklahoma: $30.50
  • Oregon: $1.50 and up
  • Pennsylvania: $9
  • Rhode Island: $19.50
  • South Carolina: $6
  • South Dakota: $5
  • Tennessee: $7
  • Texas: $7.50
  • Utah: $6
  • Vermont: $13-16
  • Virginia: $8
  • Washington: $13
  • West Virginia: $5-6
  • Wisconsin $5 online
  • Wyoming $5

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