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Quote
An insurance quote is an estimate provided by an insurance company detailing how much you can expect to pay for an insurance policy along with other details.
It includes details such as the premium, optional coverages included, limits of the policy, agent information, policy term, etc
Quoting
Quoting in insurance refers to the process of providing an estimate of the premium for an insurance policy. This is typically one of the first steps in the insurance purchasing process and involves evaluating various factors to determine the cost of coverage (premium).
Premium / Rate
Premium is the amount of money that an individual or a business must pay for an insurance policy. The premium is essentially the cost of obtaining insurance coverage, which provides protection against various risks.
Risk Appetite / Appetite
Appetite refers to the types of risks that an insurance company is willing and prepared to underwrite and insure. It's a term that describes the insurer's preferences and policies regarding the acceptance of risks.
Eg: An insurance company might have appetite for Construction business but not for Nuclear waste management businesses.
The Appetite of a company can be based on many factors such as industry, location, revenue, payroll, state regulations etc
Quote Indication / Rate Call 1
Quote Indication is an initial estimate of the insurance premium. It is given based on limited information provided by the policy holder. It is not a formal quote and cannot be bought/bound to obtain a policy. It is just a rough estimate of what the insurance policy might cost.
A quote indication can be obtained without providing all the required information to obtain a formal bindable quote. Usually only the basic details are required for obtaining a quote indication and the client does not need to answer the underwriting questions.
Bindable Quote / Rate Call 3
A bindable quote is a more definitive and detailed quote provided by an insurer. It includes a specific premium amount for a specific insurance coverage, and it's an offer that can be bound (bought) by the insured, resulting in an insurance policy.
A Bindable quote means the insured no longer needs to provide any further information and that they can buy the policy.
Refer Quote
In the digital API landscape, there is a 3rd type of quote called a Referable Quote.
A referable quote is a more definitive quote than a quote indication and possibly even a bindable quote. However, it requires further human review before the quote can be bound. During the human review, the quote premium might change a bit and the decision to accept or reject the insured’s application might also change.
This quote exists because insurance companies might not be 100% confident at times in the underwriting decision made by their digital algorithm/underwriting model. In those cases, they would want a human to further review the application before allowing the insured to buy the policy.
Market Blocking / Block the Market
In order to prevent an insurance customer from going to multiple agents, many carriers implement Market Blocking. That is if Agent/Agency1 gets a quote for a business then no other Agent/Agency can get a quote for that business for X days (X varies by Carrier but usually it is 90 days). This ensures that a business owner cannot use multiple agents for the same carrier so as to prevent competition by reducing commission percentages.
Market blocking is usually implemented by identifying the business (Name, Address or FEIN in case of WC) and tying it to the Agent/Agency who first quoted the business.
The Market is never blocked permanently and some carriers even have a process to unblock the market.
Binding / Bind
Binding is the term for the moment when an insurance company officially begins covering something, whether it's a home or a car or something else. Once the policy is bound, they're obligated to pay any claims that arise, provided they're covered by the policy.
The payment is not necessarily made at this point. In many insurance policies the payment is broken up into installments and collected after the policy is Bound.
Issuance / Issuing
Issuing is the term for the process of issuing the policy document. After a policy is bound it might take multiple days to issue (generate) the policy documents. This process is called issuance/issuing in insurance. The policy document is sent to the agent and the insured once it is generated.
Payment
In insurance the payment of a policy is separate from the binding/buying the policy. The insured/agent can bind the policy, start coverage and pay for it later.
The most common payment plan is paying upfront for the full policy. However, many insurance companies offer payments plans especially in commercial insurance since the premiums are larger.