For decades, insurance was a well-established market, characterized by mature business models and predictable, recurrent revenue streams. Growth occurred primarily in the form of new customer acquisition.

However, as existing players increasingly consolidate their positions and asset-light digital insurance startups enter the market, insurers need to re-evaluate their value propositions to guarantee their future profitability and sustainability.

Tips on How to Grow an Insurance Agency in 2024

Today, many insurance companies are considering ways to expand and diversify their business from within their traditional core – and beyond. Some notable trends sweeping the insurance industry include:

  • Reinventing existing policies and products to introduce more flexibility in terms of coverage, premiums, and payment triggers
  • Initiating efforts to grow the company’s overall share of the insurance pie by introducing new policies that cover emerging exposures; for example, cyber and climate risk, cryptocurrency usage, and remote working scenarios
  • Digitally enhancing and automating processes
  • Bundling coverages to deliver more convenience to customers and lower insurance costs
  • Exploring and entering alliances with companies from other markets
  • Introducing added-value services and niche products

Here are some major moves into these areas we can expect to see insurers making in the years to come:

1. Focus on Customer Retention 

When focusing on growth, insurers shouldn’t just set their sights on attracting new customers. Retaining existing policyholders can be more profitable for the business over the long term, helping them spend less on acquiring new customers and increasing their lifetime value. 

Insurers can boost policyholder retention by offering more relevant, convenient service that’s tailored to their needs. However, there are some additional strategies directly focused on driving retention that insurance companies can try out, such as implementing loyalty programs. Insurers may consider offering rewards, discounts, or exclusive benefits to thank policyholders for their loyalty, helping to boost renewals and reduce churn. 

2. Use More Flexible Products

According to a recent Deloitte study, more business insurance customers are looking for greater levels of flexibility in their insurance products and policies.

Many say that annual reviews and one-time coverage adjustments are no longer feasible models. Nearly two-thirds feel they should be able to alter coverage and premium charges throughout the year as business conditions change.

Interestingly, the top reasons for seeking such flexibility aren’t cost-focused, as only about one in five say they’re simply looking “to pay less.” Instead, respondents are more interested in optimizing their coverage.

One example that’s growing in popularity is having the ability to “turn off” insurance coverage during periods of inactivity, such as pay-as-you-go workers’ compensation policies. With this approach, coverage can be adjusted when a company has to lay off workers or when the business is experiencing a seasonal lull. The company can opt to pay a variable monthly fee based on the actual usage of their insured asset(s).

3. Expand Product Offerings 

Insurers who expand product offerings to cover emerging risks can grow their market share in the coming years. Insurance companies are generally known for being slow-moving; however, insurers who are quick to adapt can win more customers because they uniquely address policyholder needs in the modern landscape. Not only can this help them attract new customers, but also bring in more business from existing policyholders. 

Some examples of new types of coverage insurers can offer include cyber insurance policies, which are becoming more attractive as the world moves increasingly online. In fact, current estimates show direct written premiums for cyber insurance worldwide could hit $23 billion by 2025. Offering both personal and business cyber coverage could prove to be an attractive strategy for growth-minded insurers. 

In general, expanding insurance offerings helps insurers diversify their revenue streams. In turn, insurers can be less dependent on any one market or geographic region, which is especially beneficial amid market volatility, customer demand fluctuations, and regulatory changes. 

4. Develop Partnerships with Fintechs 

Entering into strategic partnerships and alliances with emerging fintech solutions helps insurers access advanced technology solutions to help them be more efficient. In turn, they’re able to dedicate their resources to more strategic, revenue-driving initiatives. 

The goal of many fintech solutions is to reduce or eliminate the inefficiencies that have historically plagued the insurance industry. So, a strategic partnership with the right fintech solution can help insurers streamline the processes and enhance the policyholder experience, which can improve satisfaction, loyalty, and retention, all of which are good for the bottom line. 

5. Enhance Mobile and Online Platforms

In 2024, it’s all about the mobile experience. Policyholders are drawn to the quick and convenient service they can get from their mobile devices, with critical policy information and documents available at their fingertips 24/7. While it would have been a foreign concept 10 years ago to research policies, request a quote, submit an application, or initiate a claim from your phone, today this is a preferred method for a certain portion of consumers. 

Even still, the focus should be on complementing the policyholder experience with mobile as opposed to totally replacing the traditional face-to-face approach. Nearly half, or 44% of consumers, still prefer to interact with a human when purchasing insurance. By offering an omnichannel strategy, policyholders are able to contact the insurer through their preferred method, enhancing satisfaction levels and making them more likely to renew. 

6. Implement AI for Efficient Claims Processing and Fraud Detection

Processing claims manually is protracted and painful for both insurers and customers alike. Today, the use of artificial intelligence (AI) can cut the time it takes to evaluate and process claims exponentially.

As the use of telematics and sensor devices for homes, vehicles, and wearables proliferates, insurers have more real-time data about customers at their disposal. The best of them are using this functionality to create instant risk profiles and offer customers appropriately priced premiums.

AI-driven robo-advisors are also being used to explain basic coverage terms and conditions to customers, review the adequacy of deductibles and limits, and verify a claim’s status. Increasingly, they’re also being used to help smaller insurers identify any exposures that may require endorsements to strengthen existing policies or suggest additional coverage options.

AI can also assist insurance companies in spotting incidents of fraud that the human eye could easily miss and even pick up on potential threats before they cause unwelcome impact.

7. Focus on the Emerging Risk of Climate Change

Climate change is making an impact on insurance companies’ revenues (losses from natural catastrophes have increased 250% in the last 30 years), yet only 8% of insurers are preparing adequately for its impact.

This area of insurance brings challenges but also opportunities to build customer trust and loyalty. Introducing parametric triggers to policies is an innovative approach being explored by forward-looking firms. Here, the insurer automatically pays out when a major event such as a flood or storm occurs in a specific area. One example is Zurich North America’s Construction Weather Parametric Insurance for project owners and contractors. Claims are paid based on predetermined weather events without requiring proof of physical loss.

8. Leverage Outsourced Services to Enhance Operations

To stay competitive and power ahead in today’s market, insurers can benefit from outsourcing key workflows to an expert provider. This allows the company to focus on growth and innovation while ensuring policyholders receive top-of-the-line service that drives satisfaction and retention. 

Insurance business process outsourcing (BPO) providers often specialize in certain aspects of operations based on the hands-on industry experience their team has–whether that’s first notice of loss (FNOL) and claims support, customer support services, underwriting support, or other areas. Choosing the right BPO provider can help insurers become more efficient and agile, key characteristics of forward-thinking insurance companies. 

The Expansion and Diversification Imperative

The maturity and saturation of the core insurance industry are pushing firms to explore new ways to generate profitable growth and gain a competitive advantage beyond traditional insurance.

To guarantee the success of your diversification strategy, you need to carefully select which opportunities fit best with your ambitions and capabilities. You’ll also want to ensure you assign your best and brightest resources to the tasks at hand.

If you don’t have the proper resources in-house, consider partnering with Covenir. Our team of subject matter experts brings their years of experience in the insurance niche to bear so you can turn your eye to innovation while still giving your customers the service they expect and deserve.

Collaborate with Covenir today – let’s talk!