Insurance companies spend billions of dollars a year on advertising—and for good reason. With auto insurance mandated in nearly every state and home insurance required by mortgage lenders, insurance product providers are competing for the attention of almost every American. This massive ad spend highlights just how fiercely competitive the industry is and the lengths companies go to in order to stay visible and win customers.
At the same time, insurers must balance the pressures of customer acquisition and retention while navigating complex decisions around risk selection and product innovation. Not every provider can—or wants to—offer policies to every potential customer. However, turning away business is particularly challenging for smaller insurers and managing general agencies (MGAs) that don’t spend the same level of marketing dollars and lack the brand recognition of national giants. For these companies, losing a sale after effectively engaging a prospect can be especially costly.
All is not lost
Success for an insurance product provider has traditionally been measured in binary terms: a policy is either bound or it isn’t. However, new technology and partner ecosystems have driven the ongoing reinvention of insurance distribution. As a result, product providers now have a lucrative opportunity to create value beyond just selling their own products. This allows them to enhance customer experiences and monetize their leads or existing customers, all while still maintaining optimal risk management.
What a monetization partnership might look like
Consider a scenario where a carrier lacks the capacity to underwrite policies in a high-risk state or decides to exit the market entirely. When an existing customer in that geography receives a non-renewal notice, they might typically turn to a competitor.
To avoid losing that customer altogether, the carrier could instead offer alternative options through a partner, allowing the carrier to maintain the relationship and earn commission. If the carrier later re-enters the market, they will have valuable business intelligence to effectively reconnect with that individual in the future.
Another example is a regional or monoline carrier looking to enhance customer retention and increase lifetime value by cross-selling complementary products. For instance, a monoline auto carrier might seek to provide home insurance. This is especially crucial because a customer with a home policy from another provider with a wider selection of products may later be targeted by that provider for auto insurance as well. Without a well-rounded portfolio, carriers risk having their customers poached by competitors.
By leveraging a platform to create a marketplace of additional products, carriers can expand their offerings without the heavy investment of building their own solutions or products from scratch.
Creative, de-risked growth
These are just a couple of examples of how strategic partnerships help companies expand beyond their core offerings, becoming a go-to destination for customers by providing a broader product selection—without the need for a major business overhaul. By doing so, a carrier can remain close to the customer while continuing to generate revenue, whether that’s through direct written premium or otherwise. Plus, the more policies a carrier provides to a customer the stickier (and more profitable) that customer becomes.
Additionally, partnerships enable carriers to operate in ways they couldn’t on their own, gathering valuable business and market intelligence that informs future strategies. For instance, instead of launching a new product from the ground up, first partnering with another provider in the space who manufactures that product will give you access later to historical data on customer purchasing behavior, helping you design a more informed go-to-market strategy to avoid pursuing a failed initiative.
It’s important to note that the examples provided here illustrate that simply selling leads is neither the most effective nor the most strategic way to monetize customers. The right technology and partnerships allow companies to do more than just pass customers off to others—a practice that can damage brand reputation through poor external experiences. Instead, offering branded solutions, even when they don’t involve in-house products, positions a company as a trusted advisor. This approach creates more curated, holistic experiences that drive deeper customer engagement.
From transactions to relationships
Insurance products may seem undifferentiated to an indifferent consumer, but that changes when providers take a more holistic approach to meeting customer needs.
To succeed in the future, product providers must take a more nuanced approach to selling insurance, rethinking how to best meet customer expectations and maintain relationships while optimizing business models to maximize every dollar spent. By offering a variety of products, rather than just their own, insurers can monetize traffic they might otherwise miss due to risk profiles, geography, or product gaps, transforming the carrier into a go-to destination for consumers.
Ultimately, what benefits your customer benefits your bottom line. Embracing “coopetition” will enhance the insurance experience for customers, driving long-term relationships, deeper engagement, and increased profitability.
Topics
Carriers
Profit Loss
Insurance Wholesale
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