Why Everyone Wins With IaaS

Insurers and their distribution partners must evolve and convert new customers where they already choose to spend their money, no matter where that is.

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During a 2017 first quarter earnings call, FedEx founder and CEO Fred Smith famously doubted that we would ever do most of our shopping online, saying of e-commerce’s share of retail sales, “It’s about 10% now. It’s certainly going to grow as a percentage. But will it be half? I doubt it.” It took fewer than two years for the U.S. Department of Commerce to issue a report proving him wrong. 

Smith was hardly the first to underestimate consumers’ voracious appetite for convenience, and he’s unlikely to be the last. But a growing body of empirical evidence across sectors paints a picture that shouldn’t come as much of a surprise: Many of us lead impossibly busy lives, and convenience is not just a “nice to have”; it supersedes brand loyalty -- and even cost -- as a deciding factor for a growing majority of modern consumers. 

This desire for convenience translates into a massive opportunity within the insurance sector, and not just for insurance companies. A study conducted by Bindable in 2021 showed that 65% of consumers would be willing to purchase insurance through a non-insurance brand, and, of those respondents, a large majority would actually prefer to do so if they already trusted the brand in question. Placing a complementary insurance product in front of prospective customers at precisely the time and place they need it, and while they’re interacting with a brand they already trust, is not only how insurers will stay relevant but also how brands can improve customer loyalty and retention in a competitive market.

Get Strategic About Selling

Potential insureds generally want to think about insurance as little as possible, which is one of the reasons why customer acquisition costs (CAC) are disproportionately high. This is also why insurers and their distribution partners must evolve and convert new customers where they already choose to spend their money, no matter where that is. To do so, they must strategically cultivate alternative distribution channels, optimize digital environments and provide superior technology and tools to agents, which is exactly where Insurance-as-a-Service (IaaS) offerings come into play. 

What Is IaaS? 

IaaS combines software, a digital marketplace and a full suite of support services to create flexible, market-ready solutions that connect insurance providers, trusted brands and consumers for the benefit of all. 

It’s a mechanism by which insurers can increase visibility and distribution (and potentially reduce CAC) by enabling partners to leverage an established network of insurance companies and introduce fully branded digital insurance propositions into their existing ecosystem -- all while staying in control of their brand story, expanding their value proposition and driving monetization with minimal to no friction, lead time, infrastructural investment or guesswork. IaaS enables carriers and brands to increase their digital delivery capabilities, streamline sales processes and optimize insurance offerings through sponsored channels.

See also: Why SaaS Is Key in Core Systems

Insurance Distribution, Redefined

With some earnings reports looking ominously grim, corporate budgets could potentially be tightening across the country in response to the anticipated downturn, and marketing budgets are often the first to be slashed. As mentioned, customer conversions within the insurance space are already notoriously expensive, but a product you can’t market, no matter how artfully designed, dies an ignoble death – so how can carriers stretch those dollars and minimize financial risk?

Simple: Partner with brands consumers already trust and embed the offer where they’re already shopping, at the moment of peak relevance. This could mean partnering with an employer, a financial institution, a consumer brand or even another insurance carrier; every industry is trying to improve customer acquisition and retention, so there is opportunity everywhere. 

For example, mortgage companies will find that many customers value homeowners insurance offers incorporated into the preexisting purchase flow, especially during what is likely to be a busy time for the homebuyer. Similarly, how many drivers would welcome the opportunity to drive off the lot by getting auto insurance coverage on the spot without having to start a separate process? Insurance might not be a brand’s main product, but, if it’s an adjacent offering, it’s never bad business to create added value for customers (as long as you keep their convenience in mind). 

What’s in It for Insurers?

As any insurance provider can tell you, one carrier does not want every risk, especially in a hardening market. By having a choice environment, even if the customer usually shops with one provider, when the provider doesn’t have an option for that consumer or doesn’t want to take on the risk they can offer an alternative solution through another provider; this is what we like to call “coopetition.” Such an arrangement also gives carriers the ability to present other relevant ancillary products that they might not currently offer. Instead of always trying to say “yes and…”, a provider can do what’s best for their business yet still provide an elevated experience for their customer by saying “no, but…” and still meet their needs through other options while owning the relationship with the customer. 

Leveraging an IaaS-powered marketplace or implementing an embedded insurance offer also enables a provider to control their customer experience. Contrary to using lead generation partnerships or aggregators (which can often be quite expensive), using an IaaS approach enables a brand to not only provide a better branded experience -- from the front end to agent service experience -- the brand can also gather data on their customers, understanding what they’re buying and when. If there is an opportunity to sell differentiated products, that provider can make an informed decision before committing to the heavy lift that entails.

Through IaaS, you can create a seamless online-to-offline experience that leverages your brand to sell insurance through digital channels (including embedded insurance offers) or via licensed agents over the phone, giving customers the choice of products they need, delivered in the manner they prefer, under a name they trust: yours. Enrich relationships with current customers and convert new ones, all while saving time and money and gathering invaluable data; there are no losers in this story. 

A Win-Win-Win

Today, we know one thing to be unequivocally true: Convenience is king. If providers want to stay relevant, they must adapt quickly and think innovatively, especially when it comes to distribution channels and technology, to meet consumers’ evolving needs. Working with brands that consumers already trust can build brand equity and minimize CAC, creating a mutually beneficial, omni-channel solution for insurers, distribution partners and potential insureds. Everyone wants a win – and, with IaaS, everyone gets one. 


Bill Suneson

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Bill Suneson

Bill Suneson is the co-founder and CEO of Bindable, a national leader in digital insurance and alternative distribution technology. He also co-founded and serves on the board of Next Generation Insurance Group, which operates GradGuard.

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