Why Insurance Carriers Should Make the Choice to Offer Choice

Insurers should be focused on conveniently offering customers a variety of insurance options that go beyond their core business solutions in order to more broadly meet the expectations of today’s consumers.

(Image credit: Courtney Cook/Unsplash.)

In the midst of one of the toughest operating environments in recent years, it’s clear: in order to attract and retain the right insurance customers, the U.S. property/casualty insurance industry needs to go beyond traditional business practices and do things differently. We must reimagine how we create and deliver value to customers, who are demanding that insurance be much simpler and more relevant, personalized, and accessible.

According to a recent report from the Insurance Information Institute and Milliman, the 2023 net combined ratio for the P&C industry is forecast to be 103.9, with personal lines at 109.9.There’s no doubt that P&C insurers are still feeling the effects of a hard market, but that of course doesn’t mean it will last forever. Afterall, every industry experiences market cycles, and insurance is no different.

It’s only a matter of time before we move onto the next phase of the cycle and begin to see insurance rates stabilize—and eventually fall—and carriers’ risk appetites expand. And when we do, there’s no doubt that the competition for select customers will be intense.

So while during a hard market insurers are inclined to reduce exposure by curtailing marketing spend, suspending distribution, and toughening underwriting measures to protect loss ratios, at the same time, they shouldn’t neglect investing in tactics that can enhance efficiency and improve customer experiences. Now is exactly the time insurers should be making strategic decisions that will not only help differentiate them when it comes time to grow, but will also make future hard markets more bearable as we move through our continuous cycle.

Choice: a win-win for carriers and their customers

As any business leader regardless of industry knows, finding novel ways to appeal to buyers through customer-centric offerings is crucial to not only acquiring, but also retaining valuable customers. When it comes to making purchase decisions, modern consumers crave convenience and optionality. Just look at Amazon; their success is due in large part to their ability to: provide an unparalleled selection of products, offer comparative shopping, and ensure seamless experiences that leverage practicality.

Insurers should similarly be focused on conveniently offering customers a variety of insurance options that go beyond their core business solutions in order to more broadly meet the expectations of today’s consumers. Having more comprehensive and robust insurance solutions that thoroughly address customers’ needs (even if it’s not through the carrier’s own product) can bolster consumer trust in and loyalty to a particular provider, resulting in longer-lasting relationships that are defined by more than price alone.

Additionally, insurers are continuously challenged with making the right risk selection while balancing the pressures of pricing, retention, and customer acquisition. Not every insurance carrier is able to (or even wants to) accept the business of every person that comes to them looking for a policy. But that doesn’t make it any easier to turn business away, especially after spending the time, money, and effort it takes to engage with that person to begin with.

By offering choice, when a carrier either doesn’t have a particular product a customer needs or a customer doesn’t meet the carrier’s current risk profile, the carrier can place that business with another provider. That way, the carrier can avoid losing the sale completely and instead monetize the customer and capture valuable information about their purchase decisions. Then, if and when the carrier does have a new product or the appetite to take on that same customer, they have the business intelligence to effectively pursue the sale again.

People don’t just want products, they want solutions

Innovation in the coming era of insurance will not just be about what products insurers sell, but rather the value they provide to consumers and the business models they adopt to create that value.

As the distribution of insurance becomes more democratized, the benefits of the choice business model as an effective way for product providers to service more customers and gain relevance will become increasingly clear.

Subsequently, as the number of carriers that provide access to curated choice increases, the lines between carriers and independent agencies will begin to blur. With this in mind, carriers should also explore how they might expand their distribution through alternative channels for further growth; choice is a key component of building effective sponsored distribution relationships.

Even as we weather through the current hard market, the industry is bound to experience stormy times again. The providers that today embrace a choice business model to become insurance destinations—rather than providers of a generally indistinguishable product—will ultimately come away with the most profitable and loyal customers not just now, but time and time again.

A Shifting Insurance Market Requires Shifting Priorities in 2024

 

Bill Suneson // Bill Suneson is the CEO and co-founder of Bindable, the full-stack, tech-enabled solutions provider for modern insurance distribution. He has a demonstrated track record of building successful alternative distribution ventures and developing partnership strategies for Fortune 500 brands, and has robust experience in affinity and sponsored insurance marketing. In addition to co-founding Bindable, Suneson is a co-founder and a board member of GradGuard, the leading digital insurance platform for college students. Suneson also previously served as president of the Professional Insurance Marketing Association (PIMA), the national industry group for insurance marketers.

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