Insurance may seem like a natural fit for banks large and small. Consumers and commercial enterprises have trust in their primary financial institutions. Plus, insurance becomes a critical component of our financial lives as we get older, start families, and want to protect ourselves, our loved ones and all that we’ve built through the years.

Franklin Madison Vice President of Corporate Risk Management Vanessa Stanfield said several factors may be in play that could cause a financial institution to hesitate about marketing insurance to end customers. Simply put, the banks may be focused on what they perceive to be a set of onerous regulatory burdens — and they may even harbor concerns about the lack of operational expertise needed to craft those marketing campaigns in the first place.

“Banks play an important role in the overall financial health of their customers, and offering insurance is another way for them to connect in a meaningful way,” Stanfield said.

Misconceptions in the Mix

Although the insurance industry is a regulated field, there’s no real barrier to entry for banks.

“There isn’t a huge regulatory burden,” Stanfield said.

The Gramm-Leach-Bliley Act allows commercial banks to diversify into other areas beyond deposits and credit, including insurance, offering these products through subsidiaries. Rules governing insurance-focused efforts have not changed much in 20 years and may not change much in the future, Stanfield said.

“These rules are relatively easy to follow from the banks’ perspective,” she said, where the laws in place mandate that, among other things, consumer-facing disclosures need to be clear and concise.

Licensing need not be a daunting hurdle, either, as the National Insurance Producer Registry has uniform licensing applications for state licenses in every state with one application. In addition, the National Association of Insurance Commissioners Producer Licensing Model Act has been adopted by 45 states, which makes it relatively easy for banks to manage licensing compliance, she said.

Stanfield also noted that, contrary to some additional misconceptions, there’s no balance sheet risk tied to the banks’ sale of insurance. It’s the insurance carriers who underwrite the products and carry all the risk — so there’s the advantage of generating income without exposing the bank itself to any additional hazard.

Outsourcing in the Mix

As to the operational “lift” required to ensure banks comply with mandates, Stanfield said that embracing a partnership model — outsourcing those functions to providers such as Franklin Madison — can also smooth go-to-market strategies. There’s a natural progression in using the data and analytics tied to the platform model so that banks can forge marketing campaigns, and even personalized insurance products, that resonate on a customer-by-customer basis.

“We’ve got the marketing experts, we’ve got the compliance experts, and we’re able to put in front of the decision-maker a robust proposal, showing end to end what you can expect, what your customers can expect … and it’s a pretty compelling proposition,” she said.

In addition, Franklin Madison’s sales team will calculate the revenue stream that can be garnered by the bank over the years based on historical response rates and conversion rates.

Looking ahead, Stanfield said the regulatory environment has been stable for banks as they mull bringing insurance to their end customers. That stability is likely to be in place for a while.

“We’re not seeing anything that would impact that environment,” she said, and the time is right to consider how to execute those campaigns sooner rather than later, positively impacting the bank and its customers.

The post Beyond Traditional Banking: Insurance Emerges as Key to Diversifying Revenue appeared first on PYMNTS.com.

One of the companies with a stake in the game is One Inc, and CEO Ian Drysdale told PYMNTS for the “What’s Next in Payments: How Do You Do Digital?” series about how his company is driving digital engagement and reimagining the insurance experience for both consumers and providers.

“We’ve learned that only 4% of insureds select and check payment preference; 96% choose some form of digital,” Drysdale told PYMNTS, underscoring the penchant for digital solutions in the insurance industry. One Inc’s approach to digital engagement is rooted in data-driven decision-making. Using Microsoft Power BI, the company tracks and analyzes every transaction, gleaning insights into consumer preferences and behavior.

Perhaps most striking is the surge in mobile wallet use.

“Twenty-two percent use mobile wallets,” he said. “We see that skyrocketing.”

This trend signals what Drysdale said he believes is a clear direction for the future of insurance payments and interactions. The modern consumer, shaped by experiences with tech giants like Amazon and Netflix, now expects the same convenience and speed from all services — including insurance.

“Nobody wants to enter a 16-digit card number, five-digit zip, four-digit expiration date, and so on and an address,” Drysdale said.

This push for frictionless experiences is driving One Inc’s strategy. The company is focused on creating a world where insurance interactions are as smooth and effortless as streaming a movie or ordering a product online.

“We’re seeing that people are looking for a frictionless type of experience,” Drysdale said.

Breaking Age Barriers

Contrary to popular belief, the digital revolution in insurance isn’t limited to younger generations. One Inc’s data revealed a surprising trend: Older demographics are embracing digital solutions with enthusiasm.

“We’re seeing that Gen X and baby boomers just love digital,” Drysdale said. “Most PayPal users are over 50 years old. The largest segment is 50 to 64 years old at 29%,” challenging the perception that digital transformation primarily caters to millennials and Generation Z and suggesting a broader, cross-generational shift toward digital preferences in insurance.

One Inc’s strategy for driving digital engagement centers on providing choice and clear communication. When it comes to premium payments, the company employs a proactive approach.

“We send them a text message saying, ‘Hey, it’s time to pay your bill,’” he said. “And that increases throughput by about 20%.”

The company presents consumers with a familiar, user-friendly interface that supports a range of payment options, from Apple Pay and Google Pay to PayPal, Venmo and traditional card types. This variety ensures that consumers can choose the method they’re most comfortable with, fostering trust and encouraging digital adoption. For outbound payments, such as claims, One Inc takes a similar approach. This direct communication style, coupled with a user interface showcasing available payment types, makes the digital claims process more attractive and accessible to consumers.

Becoming the Currency of Insurance

Looking ahead, Drysdale said he envisions One Inc becoming “the currency of insurance.” This goal extends beyond simple premium payments and claims processing. The company is positioning itself to handle a range of insurance-related transactions, from carrier-to-carrier payments to lien-holder payoffs and escrow transactions.

Central to this vision is the concept of account-to-account transactions.

“We believe that all of these are going to be handled on an account-to-account basis, whereby the money moves instantly from the payer to the payee,” Drysdale said.

This instant transfer capability, combined with One Inc’s integration with nearly 50 core systems in the industry, positions the company to provide a unified, efficient payment solution for the entire insurance ecosystem.

“It’s going to be quicker and easier and faster,” Drysdale said, summing up the future of insurance interactions.

He contrasted this streamlined future with the current reality of receiving “pounds of paper in the mail” from insurers, emphasizing that the industry is moving toward a “lighter, more environmentally friendly and faster” model.

The post Insurance Needs to Be as Digital as the Millennials and Gen Zs It Wants as Customers appeared first on PYMNTS.com.

This holds particularly true within the insurance industry, which has long been known for its reliance on paper, manual processes and slow transaction times. But as the sector grapples with rising costs, driven by factors like complex claims and climate change, digitization offers a promising solution.

“There’s been a rise in what the industry calls nuclear verdicts. In other words, huge verdicts for policy holders, whether they be auto or especially home,” Ian Drysdale CEO at One Inc., told PYMNTS.

Such payouts, which can reach tens of millions of dollars, push insurers to increase premiums to remain solvent — and with premiums rising, the need for cost-cutting measures, like finding efficiencies through digitization and automation, has never been more urgent.

As Drysdale explained, the insurance industry has to date lagged behind other industries in terms of digital adoption, particularly when compared to sectors like retail and entertainment. Now, however, the insurance sector is catching up, driven by the demand for both inbound and outbound payments to be handled digitally.

“As the rest of the country was changing, and now we all shop at Amazon or we watch movies on Netflix, that just wasn’t happening in the insurance space,” he said. “What has changed now is that, because of all the cost pressure with the increased cost of claims, insurers are looking for cost reduction.”

Read more: Insurance Industry $500 Billion Digital Shift Driven by Gen Z Expectations

How Digitization Streamlines Premiums and Claims

Ultimately, the days of paper checks and slow-moving insurance processes are numbered. Drysdale said he believes the insurance industry is on the brink of a transformation where it will be as fast and easy as shopping online.

“What we’ve done, with major insurers from around the country, about 250 insurers so far, is completely digitalized both inbound payments, which we call premiums, and outbound payments, which are often claims, so that it’s a fast, easy, digitally driven, mobile driven experience,” said Drysdale. “One that that brings joy to possibly a situation that’s not so joyful.”

“Our mobile devices have completely changed our world,” he added, noting that faster and more mobile-friendly experiences are crucial to align with and match the rapidly evolving expectations of today’s digital-first consumers.

For consumers and insurers alike, this shift promises to deliver a better experience at a lower cost — but importantly, embracing the digitization claims and premiums also makes it harder for fraudsters to game the system.

Drysdale said different types of fraud plague the insurance sector, ranging from inflated or falsified claims to more sophisticated tactics like account takeovers during payouts. However, as more transactions move online, data generation increases, allowing insurers to leverage advanced analytics and cutting-edge innovations like artificial intelligence (AI) to identify fraudulent activities.

Digitization offers multiple layers of protection that can help ensure recipients of payouts, whether they are individual policyholders or third-party service providers like autobody shops, are properly validated. This proactive approach to fraud prevention is critical in an era where digital transactions are increasingly targeted by cybercriminals.

“It’s hard for any one insurance company, even some of the largest companies, to stay ahead of all the games that the crooks play,” said Drysdale, stressing the importance of remaining at the forefront of preventing fraud for both premiums and claims by digitalizing them.

See also: One Inc CEO Says Insurance Market Is Ripe for Embedded Payments

Reduced Costs and Improved Customer Satisfaction

The benefits of digitization are not confined to consumers alone. Insurers themselves stand to gain significantly by adopting digital solutions — after all, today’s digitally driven efficiencies are increasingly allowing insurers to reinvest in innovation and offer more competitive pricing to their customers at the same time.

Drysdale gave an example of how insurers have reduced costs by moving away from traditional paper checks, which can cost anywhere from $5 to $20 per transaction when factoring in printing, mailing and management. This shift can save tens of millions of dollars for some companies.

Customer satisfaction also frequently improves in a digital environment. Drysdale noted that AAA experienced a 10-point increase in customer satisfaction after digitizing its claims process. When payments are processed digitally and in real time, customers are less likely to be left wondering where their money is or when it will arrive — meaning insurers need to deal with fewer inbound calls from policyholders inquiring about payment statuses.

And in addition to cost savings and improved satisfaction, digitization can drive higher renewal rates. Drysdale said One Inc.’s system sends automated text messages reminding customers to pay their premiums, a tactic that has resulted in a 20% increase in renewals.

Looking ahead, Drysdale envisions a future where insurance transactions are seamless, instant, and AI-driven. He predicts a scenario where policyholders receive payment notifications on their phones before they even hang up from a call with their insurer. This speed and convenience, powered by AI and real-time payments, will become the norm. Employees may no longer need to intervene in simple claims, as AI will easily handle these processes.

“The laughable slowness of old-time insurance has gone away,” he said.

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PYMNTS Intelligence’s data makes it clear enthusiasm for financial institutions (FIs) as insurance providers is growing. In fact, three-quarters of consumers who have already purchased bank-provided coverage want to buy more. Moreover, these consumers indicate a steadily growing interest.

FIs cannot overlook these customers. Our research shows that these customers state that their FIs’ insurance offerings are important to their relationship with their FI. This suggests that FIs that do not meet consumers expectations here risk losing market share to their competitors.

These are just some of the findings detailed in “Increasing Enthusiasm: The Effects of Purchasing Bank-Provided Insurance,” a PYMNTS Intelligence and Franklin Madison collaboration. This report draws on insights a survey of 2,195 U.S. consumers conducted from March 22 to March 28. This report examines consumers’ growing interest in purchasing coverage provided by their FI and how doing so impacts their satisfaction with their bank, credit union or FinTech.

The report explores consumers’ familiarity and awareness of FI insurance offerings and how that may impact customer adoption.

Inside “Increasing Enthusiasm: The Effects of Purchasing Bank-Provided Insurance”:

• How the interest in bank-provided insurance has changed over the last three years
• Consumers who have purchased bank-provided coverage tend to be more familiar with their FIs’ product offerings
• How much more consumers who already have FI-provided coverage want it compared to those who do not already have it
• How lack of information remains a key barrier to consumers’ purchasing coverage from their primary FI
• Why consumers who use their FI as an insurance provider consider it an important part of their choice of FI
• How frequently consumers say they receive information about their FIs’ insurance offerings

The report features five charts of data as well as crucial insights that FIs need to grow their insurance businesses. Download the report to learn about consumers’ increasing interest in bank-provided insurance.

The post Can Banks Crack the Insurance Code? Customers Are Ready appeared first on PYMNTS.com.

However, one sector that seems to have escaped the impact of the event is the cyber insurance industry, as most of the costs were uninsured, the Financial Times’ Vanessa Houlder noted in an opinion piece Tuesday (Aug. 13).

“Had the chaos gone on for longer, it could have been a different story,” Houlder wrote. “Most policies do not kick in for eight hours or so after the incident starts.”

The event happened following a glitch in a software update by the cybersecurity firm CrowdStrike, she added, pointing out that an error is easier to remedy than a cyberattack.

Risk retention and policy limits also protect insurers, who are likely to pay out under 20% of the estimated $5.4 billion losses suffered by Fortune 500 countries, a figure that does not include Microsoft, whose Windows systems were affected by the outage, per the report.

One cyber insurance company, Beazley, “shrugged off” the outage, saying its profit guidance would be unchanged despite a potential loss of $80 million to $120 million, the report said.

“Insurers can’t be confident they’ll come off so lightly in the future,” wrote Houlder. “This is one of the raciest corners of the insurance market. There is limited data on which to form judgments, although the recent outage will provide useful data points. There is no escaping the enormity of the potential risks.”

Last month — before the CrowdStrike outage — specialist insurance broker Howden released a report showing that cyber insurance premiums were falling around the world, despite a surge in ransomware attacks.

“Favorable dynamics have persisted into 2024, with the cost of cyber insurance continuing to fall despite ongoing attacks, heightened geopolitical instability and the proliferation of [generative artificial intelligence],” Sarah Neild, Howden’s head of cyber retail for the United Kingdom, said at the time.

Meanwhile, PYMNTS wrote last week that the aftermath of the outage, which has seen Delta Air Lines threaten to sue CrowdStrike after thousands of its flights were grounded, illustrates the importance of firms having a recovery plan.

“Effective disaster recovery planning requires collaboration between businesses and their B2B partners,” the report said. “This includes sharing information about potential risks, coordinating response strategies, and conducting joint drills and simulations. By working together, businesses and their partners can ensure a more comprehensive and cohesive approach to resilience.”

The post Cyber Insurers Escape Impact of CrowdStrike Outage appeared first on PYMNTS.com.

These tech-driven firms are revolutionizing the way insurance is bought, sold and managed, bringing unprecedented levels of efficiency, customer satisfaction and innovation to the sector and signaling its digital transformation and positioning within the connected economy.

But smaller InsurTech startups are still subject to the same volatile macro events that their policyholders and peers must deal with.

And on Tuesday’s (Aug. 6) second quarter 2024 earnings call, the homeowners insurance and vertical software platform Porch stressed both its nimbleness and the unavoidable occurrence of catastrophic events.

“The team delivered a solid performance this quarter. Despite a May hurricane-like event in Houston with 100 miles per hour sustained winds that caused catastrophic weather claims worse than historic experiences and expectations, our results are still broadly in line with plan and showed solid year-over-year improvement. Our insurance profitability actions continued to result in attritional losses performing better than anticipated and substantial improvement in our gross combined ratio year-over-year,” Matt Ehrlichman, CEO, chairman and founder of Porch, said during the call.

The company reported total revenue of $110.8 million for the most recent quarter, an increase of 12% or $12.1 million compared to the prior year (second quarter 2023: $98.8 million), driven by the insurance segment, including a 28% increase in premium per policy and lower reinsurance ceding.

Porch’s financials flagged that its 21% attritional loss ratio for the quarter, an improvement from 35% in the prior year, was driven by the insurance profitability actions.

Read more: Insurance Industry $500 Billion Digital Shift Driven by Gen Z Expectations 

Data-Driven Operational Leverage

One of the biggest advantages of InsurTech companies is their ability to harness big data and advanced analytics to improve underwriting and pricing accuracy. Traditional insurers often rely on limited datasets and outdated actuarial models, resulting in generalized pricing and risk assessments. InsurTech firms, on the other hand, leverage vast amounts of data from various sources, including social media, telematics and connected devices, to gain a comprehensive understanding of individual risk profiles.

“Our focus remains on deepening our long-term competitive moat by expanding our data platform, monetizing data products such as Home Factors in the market, and executing the reciprocal exchange to structure our insurance operation in a way we believe scales rapidly and profitability with lower volatility,” Ehrlichman explained to investors.

Porch has been approved in 13 states to use its own unique property data to improve underwriting risk accuracy for the 29,000 companies it serves.

“Our unique data is core to our insurance profitability,” said Porch executives on Tuesday’s call.  “There are tons of valuable insights.”

See also: New Data: Insurance Industry Adopts Instant Payments Amid Rising Consumer Demand  

By using artificial intelligence (AI) and machine learning (ML), InsurTech companies can analyze data in real-time, enabling personalized pricing and more accurate risk assessments. This not only allows insurers to offer competitive premiums but also reduces the likelihood of adverse selection and fraudulent claims.

“Our data platform team is innovating at an impressive pace … allowing us to continually bring impactful products to market,” said Michelle Taves, VP and group GM, data and marketing.

InsurTech companies are inherently technology-focused, allowing them to rapidly innovate and adapt to changing market dynamics. Unlike traditional insurers burdened by legacy systems and bureaucratic structures, InsurTech firms can quickly develop and deploy new solutions. This agility enables them to stay ahead of customer expectations and regulatory requirements, continuously improving their offerings.

And the customer-centric approach of InsurTech companies is a differentiator. By prioritizing user experience and leveraging digital tools, they create seamless interactions that resonate with modern consumers. This focus on convenience, transparency and personalized service fosters customer loyalty and attracts tech-savvy individuals who seek hassle-free insurance experiences.

“Any kind of insurance that is completely online and seamless is hyper-attractive to an insurance company,” One Inc CEO Ian Drysdale told PYMNTS, adding that “the future of insurance is ‘instant.’”

The post Competitive Data Builds Competitive Moats for InsurTech Porch appeared first on PYMNTS.com.

The insurance sector is so large and complicated that it’s hard to get a read on how big it is. Some estimates put it at $12 trillion cutting across health ($1.3 trillion), property and casualty ($1.5 trillion) and auto ($652 billion). And that’s just three categories.

In terms of “pay and get paid,” take a simple auto accident. Funds flow as consumers pay premiums to insurance companies. Funds flow as insurance companies pay one another. Lien holders must be paid off in order to satisfy the terms of car loans. Adjusters, brokers and suppliers are all stakeholders, too. Things get even more complicated when there are multiple vehicles involved in a crash or multiple payment modalities in the mix.

“Insurance is one of the most complex markets on the planet,” One Inc CEO Ian Drysdale told PYMNTS, adding it is sorely in need of a digital overhaul — and there are still $500 million worth of paper checks flowing in the United States alone.

The goal is for providers such as One Inc to turn those paper payments into electronic ones, automatically reconciled in various back offices. In the meantime, the emergence of the company’s digital payments network, linking far-flung stakeholders, also improves the user experience, he said.

The industry has made some strides. Drysdale said that five years ago, insurers were 20 years behind any other verticals in terms of moving toward an eCommerce, mobile-focused and modern world. Now, with the emergence of InsurTechs, many of the leading and mid-market insurance companies are becoming more digital. But we’re still far from the Amazon or Netflix-like experience that so many people expect from the activities of everyday life.

Payments at the Center of It All

The digital shift has a significant touch point: payments. Embedded payments can help improve the overall user experience while helping to improve corporate margins, he said.

“You might pay your auto insurance 12 times a year, or you might pay for other insurance several times a year,” he said. “That’s when you really ‘experience’ your insurance company.”

One Inc provides client firms with the ability to remind people that it’s time to make a payment for their insurance.

And with a nod to payments, he said, “We make sure that modern wallets are there, we make sure it’s completely embedded in their core system” and that claims submissions and sign-offs are done digitally.

For the insurance companies, he said, “we’ve been able to reduce the cost of payouts by 60%.” That boost to margins comes as firms like Ernst and Young have estimated that by the end of the decade, 30% of insurance transactions will be done through embedded channels.

Consumers already have some experience with embedded channels, said Drysdale, who noted that in many commerce transactions, the opportunity is there to buy insurance along with a purchase (think electronics or airline tickets).

“If you’re in some digital portal, whether it’s buying a car or getting a lease on an apartment, more and more you’ll see that insurance is offered during that transaction,” said Drysdale.

Younger consumers, especially, are drawn to these options and find them convenient.

In the years ahead, One Inc estimates that $70 billion in premiums will be embedded — fast, easy and with no agent to be paid, Drysdale said. The promise of embedded insurance, too, is that data can be shared seamlessly between parties, and insurers can gain some top-line growth and momentum.

We’re headed toward a future where, rather than waiting for the check to arrive in the mail, a payment can be disbursed before the claims adjuster is even off the phone — deposited digitally into an account.

“Any kind of insurance that is completely online and seamless is hyper-attractive to an insurance company,” said Drysdale, who added that “the future of insurance is ‘instant.’”

The post One Inc CEO Says Insurance Market Is Ripe for Embedded Payments appeared first on PYMNTS.com.

With this expansion of its offering, Simply Business can digitally quote and bind workers’ compensation policies for more than 300 different types of small businesses across all eligible states, the companies said in a Wednesday (July 17) press release.

“Employers is known for delivering comprehensive workers’ compensation solutions that help small business owners safeguard their businesses and employees,” Samantha Roady, U.S. CEO at Simply Business, said in the release. “Through their extensive appetite and national footprint, we’ll be able to effectively serve more small business customers across various industries.”

The addition of Employers expands Simply Business’ panel of workers’ compensation providers, according to the release.

By working with these providers to offer tailored and affordable solutions for small business owners, Simply Business aims to help those who don’t know where to purchase the coverage they need or find the coverage prohibitively expensive, the release said.

The company’s technology platform, which can be complemented by guidance from licensed insurance agents, allows small business owners to compare quotes from more than 20 carriers, customize their coverage, and purchase and access their policies online, per the release.

“We’re excited to partner with Simply Business, which shares our mission to provide cost-effective insurance to America’s small businesses,” Chris Champlin, vice president of digital sales at Employers, said in the release. “Simply Business’ intuitive platform will enable us to meet more customers where they are and help them secure the workers’ compensation coverage they need.”

The insurance sector is undergoing a digital makeover, with InsurTech startups leveraging artificial intelligence (AI), big data, and other advanced tools and technologies to transform how people choose and purchase insurance, PYMNTS reported in April.

Between 2022 and 2023, the proportion of consumers shopping online for insurance surged from 22% to 27%, while those turning to agents dropped from 42% to 35%, according to a research report from TransUnion.

The insurance industry has also been fast to leverage AI, as the industry already operates in a technology sophisticated sector with deep libraries of operating data.

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Harris said this in a press release announcing the DFS’s adoption of guidance for insurers that use AI in underwriting and pricing.

“New York has a strong track record of supporting responsible innovation while protecting consumers from financial harm,” Harris said. “Today’s guidance builds on that legacy, ensuring that the implementation of AI in insurance does not perpetuate or amplify systemic biases that have resulted in unlawful or unfair discrimination, while safeguarding the stability of the marketplace.”

The DFS’s guidance outlines its expectations for how insurers that write insurers in the state will use external consumer data and information sources (ECDIS), artificial intelligence systems (AIS) and other predictive models, according to the release.

When developing and managing ECDIS and AIS, insurers are expected to analyze them for unfair and unlawful discrimination, demonstrate their actuarial validity and provide appropriate oversight of the overall outcome of their use, the release said.

Insurers are also expected to maintain appropriate transparency, risk management and internal controls over both their own operations and those of third-party vendors, per the release.

The adoption of this guidance builds upon a statewide policy governing AI that was announced in January by New York Governor Kathy Hochul, according to the release.

That policy aims to ensure that state government agencies understand how to “responsibly harness the opportunity of AI technology,” according to a press release issued at the time.

“The establishment of the first-ever statewide policy governing AI will serve as a roadmap to leverage this rapidly emerging technology to find maximum benefit while mitigating risk, and complement the extraordinary work our employees are already doing to benefit the people of New York,” Dru Rai, chief information officer and director of the New York State Office of Information Technology Services, said in the release.

In October 2023, New York City Mayor Eric Adams and Chief Technology Officer Matthew Fraser announced the release of the city’s Artificial Intelligence (AI) Action Plan, saying it will help protect against the potential risks of AI while developing tools and knowledge to help city government employees use the technology.

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1. Young Consumers Are Driving the Trend

Younger consumers are particularly keen on shopping for these services from a financial institution. For example, Generation Z consumers are 43% more likely than average to consider getting their insurance from an FI. “Gen Z consumers specifically are four times more likely than baby boomers to think that insurance offerings are important part of the decision-making process in choosing a financial institution,” Mahoney told PYMNTS. This shift in consumer preferences is likely to continue, he said, making insurance products an essential part of attracting and retaining younger customers. Banks that fail to recognize this trend may find themselves at a competitive disadvantage in the future as these younger consumers become a larger part of the market.

2. Convenience and Trust Are Key Selling Points

Consumers are drawn to the idea of purchasing insurance from their banks due to existing relationships and trust. In fact, consumers are more than twice as likely to name trust as a deciding factor on where they get their insurance, at 39%, than cost, at 19%. “I wasn’t surprised to see and learn that consumers are interested in buying insurance from their primary financial institution. That just makes a lot of sense to me to have a relationship there,” Mahoney said. “It’s convenient and they trust them.” This trust factor gives banks a significant advantage over traditional insurance providers. By leveraging their existing customer relationships and data, Mahoney believes, banks can offer personalized insurance products that meet their customers’ specific needs, further enhancing convenience and strengthening trust.

3. There’s a Gap in Specialized Insurance Offerings

While many financial institutions offer property and casualty insurance, there is an opportunity to expand into specialized products. The report shows that the average consumer has 3.7 different insurance types. Wealthier consumers carry a bit more, averaging 4.4 different types. Most consumers have health (78%) and auto coverage (75%). Beyond the must-haves, consumers’ need for specific types of insurance — such as life, pet or travel— varies. As Mahoney said, “More and more consumers are recognizing the importance of specialized insurance coverages, such as pet, long-term care, travel insurance, personal cyber insurance, maybe supplemental accident plans. So, there’s really … definitely a lot of opportunity for financial institutions to offer and expand a set of products to meet these growing needs from consumers.” By diversifying their insurance offerings, banks can tap into new revenue streams and position themselves as one-stop shops for all their customers’ financial needs. This comprehensive approach can lead to increased customer loyalty and higher lifetime value per customer.

4. Embedded Offers Can Boost Engagement

Banks can increase insurance sales by offering relevant products at key moments. “Embedded offers can be included in a new loan or maybe a refi car loan, new credit card opening, or even a line of credit college education loans,” Mahoney said. “There are all sorts of transactions or even just opening a savings and checking account for the first time at the financial institution. All of those are excellent opportunities to bring forward, timely and relevant offers to that consumer.” This strategy of contextual offering not only increases the likelihood of insurance uptake but also enhances the customer experience by providing relevant products at the right time. Mahoney believes banks can leverage their wealth of customer data to create highly targeted and personalized insurance offers, increasing conversion rates and customer satisfaction.

5. Awareness Is a Major Hurdle

Over half of consumers don’t know if their bank offers insurance products. Addressing this issue, Mahoney emphasized the opportunity for financial institutions to meet customer needs for coverage and win a greater share of that consumer’s wallet — and increase retention — at the same time. To overcome this awareness gap, Mahoney recommends banks implement comprehensive marketing strategies that educate their customers about available insurance options. This can include targeted email campaigns, in-app notifications, branch promotions and even traditional direct mail. “Having a balanced omnichannel approach I think is still important,” Mahoney said.

As the insurance landscape evolves, banks that successfully integrate these products into their offerings stand to benefit from increased customer loyalty, additional revenue streams and a competitive edge in attracting younger consumers. By addressing these five key areas — catering to young consumers, leveraging trust, expanding into specialized offerings, using embedded offers and increasing awareness — banks can position themselves to capitalize on the growing trend of consumers seeking insurance products from their financial institutions.

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