The nirvana of insurance marketing is to acquire young consumers early and retain them throughout their lives, anticipating and meeting their coverage needs at each key life event. 

For example, let’s say, Joe Smith purchases an auto policy during college.  A couple of years later, he changes his address.  Then a few years later, he adds a driver to the policy.  By tracking the data and pattern matching, the insurer could see the trajectory of maturity and pitch products accordingly. 

In this scenario, the insurer could potentially cross-sell roadside assistance, then renters insurance. When John added the second driver to his policy (most likely a wife), the insurer could cross-sell life insurance, and begin to market home or condo insurance in anticipation of a purchase. 

A huge opportunity exists for insurers to anticipate the needs of each customer and develop and market products to meet their needs at the precise time they arise.  However, few insurers, if any, are positioned to do this effectively.  Why not?

Product-centric Organization

Insurance companies are typically run as a conglomeration of product-centric units, each with its own P&L and line of sight.  Each unit does its best within its own silo to increase penetration of its product, but has little information, if any, on other products in the household.  Many insurers today still do not have access to a real-time view of all of the products in the household.  Who, besides the agent, handles the process of carrying the customer from one product to another?  Who at the corporate level is following the customer?

Analytical Comfort Zone

Insurers are expert at capturing and using data to predict loss, because it’s key to their survival.  Those that are best at it are able to force adverse selection onto their competitors while growing profitably in their target segments.  Insurers collect terabytes of customer data, however most of it is for the express purpose of predicting loss.  What if this data could be leveraged for predicting customer needs and life events?  How could insurers efficiently capture customer-focused information to augment loss data?

Short-term Profit Mentality

Insurers intuitively know that capturing a renters policy positions them better to capture a condo or homeowners policy when the customer is ready to buy a home.  However, acquisition costs may not differ significantly, while the premium for a homeowners policy is three to four times higher than that of a renters policy.  Lower retention for a renters policy reduces the ROI even more.  Considering all of this, corporate and agencies focus more of their resources on homeowners acquisition than on renters.  This is a situation where logic and pricing actually create sub optimal long-term consequences. 

Suggested Approaches

  • Establish a cross-functional team in charge of a customer household view.  Some insurers have customer experience teams, but they are often focused only on customer service.  We believe there should be a team responsible for managing the household view and anticipating and meeting coverage needs as they evolve over time.  As the household composition changes due to divorce, children reaching adulthood, etc., this team would follow household members and market to their needs as well.  The team should be cross-functional, including not only marketing, but also sales, research, and technology to bring all of the necessary skills to the table. Wouldn’t it be great to anticipate the graduation of a child in a covered household and position a new scooter or motorcycle policy?
  • Devote more analytical resources to customer analysis.  We realize finding good actuaries can be challenging.  Even during the recession, actuaries were still in high demand.  Instead of trying to borrow resources from pricing, consider hiring a dedicated research analyst or team focused on understanding and predicting customer life events and coverage needs.  Often, it helps to hire specific technology firms or consultants who focus on customer-centric tools.  Their expertise can be a jump-start to your organization.
  • Change the ROI calculation to incorporate the value of “entry-level” lines of business, such as renters and motorcycle, in bringing in additional lines.  In order to quantify their value, insurers must track the migration of customers longitudinally from one product to the next over time.  Getting a more accurate picture of the renters ROI, for example, might provide the business case to devote more resources to younger consumers and their coverage needs. 


The insurance business has been particularly challenging over the last few years.  Unusually severe weather has created huge losses, while at the same time, the recession has put pressure on growth. 

Finding ways to “double down” on your current customers, increasing products per household and retention may be the best way to help you weather the storm and grow profitably.  A current customer is the cheapest customer you can have and, if properly engaged, could provide substantial long-term growth.