Professional associations, employers, banks, and alumni groups. This is the traditional core of affinity, and for a good reason. These tight-knit groups comprise a channel that’s consistently delivered some of the best customers to insurers. The challenge of affinity isn’t the quality of leads, it’s the quantity. But today, digital delivery is reshaping that, and proving it can be much bigger than we thought.
The API economy has enabled the expansion of affinity to other lifestyle adjacencies, like buying a car or home, by making it easier and more accessible. By opening up direct integration into other relevant business processes, today, any company that has a customer network has the potential to deliver sales leads. Fintech applications, auto dealers, mortgage companies, retail brands and other adjacencies all now have a stake in the affinity market. And digital tools are now allowing for brokers and carriers to acquire more profitable customers through these preferred channels, which in turn is more efficient and reduces costs.
The size of the opportunity in the channel is also evolving along with how we as an industry think about creating opportunities for brands to enter the insurance business. And it’s not just small players looking to enter — big brands like Amazon are looking to stake their claim in the insurance industry. IKEA and UBS Wealth Management recently expanded into the insurance market — IKEA is offering its customers easily accessible home insurance, while UBS customers have the opportunity to purchase life insurance through the financial firm. Technology is powering the opportunity for brands to join and diversify the insurance market through digital purchasing, convenience, relevance and personalization.
Affinity has expanded its reach, gained more groups, and has seen more innovation in terms of accessibility, but there are strategies for how brands can best take advantage of this as they look to enter the market. While being an insurance carrier is both appealing and desirable to consumer brands, in most cases, it will prove better for them to remain as intermediaries. By white-labeling products and taking advice from carriers, companies reduce overall risk to their brands. For instance, does a strong retail brand want to be part of a claim dispute or a substantial increase in premium and risk losing their primary relationship? They are much better off focusing their efforts on the role affinity plays in their overall business strategies.
Technological advancements opened up affinity, and now, the COVID-19 pandemic is accelerating it. Timing has never been better for agents, brokers, and carriers to take advantage of this and look to preferred distribution to ensure they are getting in front of the right customers.
Not only is affinity scalable, but it is also more cost-effective and profitable for agents and carriers, which adds to its overall appeal and will continue to drive the industry for years to come.
Technology column from PIMA Insights Magazine