Sometimes, it pays to be direct. As the direct-to-consumer insurance sales model continues to thrive, carriers that embrace it are reaping the benefits. If you’re not one of these carriers yet, it’s time to figure out your D2C strategy.

The D2C Advantage

The J.D. Power 2020 U.S. Insurance Shopping Study, the direct-to-consumer model got a boost during the pandemic, which caused consumers to focus on convenience and value. From a cost perspective, direct-to-consumer carriers perform 10 percentage points better than carriers that only use agents, and they’ve taken seven percentage points of market share from traditional insurers in the last decade. Consumer sentiment is also in their favor; 90% of consumers say they’re open to purchasing auto insurance online.

The writing is on the wall. Insurers need to embrace the direct-to-consumer insurance sales model. The only real question is whether they should do it all in-house or outsource part of all of the administration. It’s a big decision, and before you make it, you should consider the pros and cons of outsourcing.

Outsourcing: The Cons

If you’re not sure about outsourcing your direct-to-consumer administration, it’s probably because you’re worried about possible downsides. It’s a real concern. Depending on the partner you choose for collaboration, you could see some major issues.

Here are a few things you might be worried about:

  • Control. It’s your company, your brand, your reputation. You want things done a certain way, and you need to make sure that your high standards are upheld. You’re also worried about possible brand confusion if customers don’t know who they’re buying insurance from. If you work with a D2C partner that doesn’t adhere to your brand promise, this could be an issue.
  • Efficiency. The entire point of the direct-to-consumer sales model is that it cuts out the middleman and connects the insurance customer and insurance carrier directly. If you’re creating a direct-to-consumer sales program, you may be thinking that adding a middleman will decrease efficiency and increase costs. However, if you choose a partner that knows how to implement the model well, it’s possible to increase efficiency and decrease costs.
  • Compliance. When you’re dealing with payments and insurance, regulations are a big deal. You absolutely can’t work with a D2C partner you don’t trust to stay compliant.

Outsourcing: The Pros

Now that we’ve looked at the potential downsides, let’s look at the advantages that outsourcing your D2C insurance program can deliver. It’s true that working with a less-than-stellar D2C partner can deliver less-than-stellar results. But with the right partner, you stand to gain a lot.

  • Speed to Market. When you’re trying to stay nimble in a rapidly changing market, speed is crucial. A direct-to-consumer partner can help you implement a program fast. That means you can achieve growth now instead of years from now.
  • Better Resource Allocation. Your company has limited resources. Implementing a D2C program in-house can put a major strain on those resources. By working with a partner, you free up your team to focus on other things.
  • Best Practices. You don’t have to reinvent the wheel. A good D2C partner already has the model figured out. They know what pitfalls to avoid and how to squeeze value from the model. When you work with them, you benefit from their experience and expertise.

What Should You Do?

The direct-to-consumer sales model is the way of the future. There’s no question that it should be part of your go-to-market strategy. The only question is whether you should outsource or manage it in-house. In the end, it boils down to two questions:

  • Do you have the resources to handle a D2C transition on your own without it being a major burden? You’ll need money, time and expertise. If you’re a huge insurance company, this probably isn’t much of a concern. One the other hand, if you’re a startup or even a small or medium-sized insurer that’s been around for a while, doing everything in-house may be more trouble than it’s worth.
  • Can you find a partner you can trust? Outsourcing can be a great option – if you can find a great partner. Unfortunately, a bad partner can be worse than no partner at all. You need a D2C sales partner you can trust to provide efficient, compliant, cost-effective services that live up to your company’s standards. You’ll find all that and more when you partner with Covenir.

Covenir delivers the support you need to scale your insurance company. Are you ready to collaborate with Covenir? Contact us to learn more.