Race-to-the-bottom pricing is never pretty, but it’s become rampant in the protection market.
Rising consumer awareness for financial protection is making the protection market increasingly consumer-driven as individuals expect their employers to provide these benefits.
That, paired with employers’ desires to keep talent without breaking the bank, means lower rates for protection products are more top-of-mind than ever before.
Fortunately, participating in race-to-the-bottom pricing isn’t an inevitable outcome for all protection insurers. By adopting future-forward tools and processes, providers can change their fate and opt out of a price-driven market.
There’s Another Way to Be Customers’ Go-To Insurer
Price competition has been ever-present — particularly among group protection products — to win business with employers offering large group policies. But now, that competition is heating up and protection insurers are already doing the “how low can we go” maths.
Though price competition is fierce, there are ways besides race-to-the-bottom pricing that can help you become the go-to insurer for both employers and individual customers. You can instead combine competitive — but not necessarily the lowest — prices with truly unique value propositions.
In fact, a recent report showed that if an insurer provides the technological capabilities to easily integrate with HR administration systems, customers will happily pay more to partner with them over other providers, assuming everything else is equal.
The Power of Offering Interconnectedness
Individuals love when policies — whether purchased individually or through a group — interconnect with one another and with ecosystem technologies.
For instance, if an employee opts to walk to work every day instead of driving, why not reward that healthy behaviour with lower life insurance or critical illness rates? Thinking about the big picture, if said employee has an auto policy under your company’s corporate umbrella, why not find a way to discount their car insurance rates since they’re driving less during rush hour, therefore significantly lowering the risk of a car accident? That might feel a bit “out there” right now, but with the right core technology driving things, it could be the customer loyalty boost and churn prevention tactic you’ve been looking for.
Turning Market Challenges Into Opportunities
The key to tackling the above challenges is taking advantage of their inherent opportunities. In this case, having the right technological architecture underpinning all your operations makes all the difference.
For example, insurers who adopt a truly modern, open core system can also achieve:
- Better service offerings and unique value propositions to customers, whether they’re on group or individual plans
- Superior data processing, automations, and protection ecosystem connections that result in a lower cost per policy, bringing down total cost of ownership (TCO) significantly
A core platform like EIS that’s scalable and supports smart data use gives you the opportunity to become one of the most ambitious, market-transforming insurers of our time.
Read our comprehensive market overview to learn how you can remain competitive without having to match industry-low prices.
