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Guide

How to build an affinity insurance program

Are you overwhelmed by the complexities of providing insurance to your customers or members? Are you currently offering an affinity or embedded insurance program that is not performing well? Use this guide to help build or enhance your affinity insurance program.

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07/06/2024

How to build an affinity insurance program

This is your comprehensive guide to establishing or enhancing an affinity insurance program. Gain an understanding of the benefits of an affinity insurance program, including embedded insurance. Learn about the roles of a broker, insurer, and insurtech in evaluating partners for a program.

In our guide How to build an affinity insurance program, we outline the key considerations at each step of the process and the potential impact on your program performance. By taking an open and pragmatic approach, we break down the challenges and complexities in setting up an affinity insurance program. 

Use this guide to:

  • Discover the benefits of affinity insurance, including embedded insurance.
  • Evaluate whether affinity insurance is the right fit for your organization.
  • Explore a detailed, step-by-step process for building or enhancing a program.
  • Determine the resources and partners required to implement a successful program. 

This guide is not intended for use in the US. A separate guide for the US will be published soon.

Guide

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  • Do you have a large customer or member base?
  • Is your brand trusted by your customers or members?
  • Does insurance complement your current product offering?

In a successful affinity insurance program, your customers or members should perceive the insurance purchase as an added-value product within your brand ecosystem, without compromising the purchase of the primary product or service. Ideally, they should be able to buy it quickly and easily — or have it fully embedded.

How much does your core audience know about insurance, and the level of coverage they need?

This is the basis on how you will develop the customer journey. You will need to identify the various touchpoints for offering insurance in order to acquire customers or members effectively or manage the first notice of loss (claims) journey. 

  • Who can carry the risk?
  • Do you want to participate in the risk?
  • What is the role of a broker?

Placement is the process of securing and arranging insurance coverage for your affinity insurance program — where you decide who is going to take care of the insurance part of the offering. Unsurprisingly, then, selecting a risk partner to support your placement is a crucial step on your affinity journey. Get it right, and you’ll have a partnership that can help you achieve your goals. Get it wrong, and your affinity insurance program will struggle from day one.

Through an affinity insurance program, you may have the opportunity to earn a commission on the sales of insurance (subject to relevant laws and regulations). If the program is profitable, there may be an underwriting revenue available for the party that takes the risk. Chances are, you’ll want to utilize the expertise of the insurance market to transfer some level of risk to a third party but you may also wish to assume some of this risk yourself. The placement process involves deciding how that decision will be made.

  • How can you create a seamless digital journey?
  • How can you bridge your customer’s physical and digital sales journeys?
  • How many systems require integration as part of the digital solution?

A digital solution in an affinity insurance program involves building a single process that governs how different disciplines interact with each other. A good first step is to evaluate the internal processes that you already follow, and how an affinity insurance program can be implemented without causing disruption.

It may be, for example, that you decide to deliver insurance via a digital platform that connects via APIs to a selected list of ecosystem partners. Or you may use a mobile app that’s delivered straight to buyers.

Your affinity insurance program will be unique to your business, so there’s no single correct answer here. But with a deep understanding of your processes, you can distribute your program to your customers/members at the right time during the sales journey.

  • Do you have a strong brand awareness?
  • How can your insurance partner support your marketing?
  • What are the local legal and compliance requirements for promoting insurance?                  

Insurance is highly regulated, so there are rules that govern how you can market your affinity insurance program. Those rules will change from region to region, so you will need to understand which ones specifically apply. In general, any marketing relating to the insurance offering must be developed by your chosen insurance partner.

However, that doesn’t mean you can’t control your marketing strategy or have any involvement in the process. You can decide on how you want your program to be marketed — you may take a light-touch approach or form an active partnership, in this regard, with your insurance partner.

Since marketing is a key ingredient of any successful collaboration, you should consider your partner’s expertise in building a robust marketing strategy, using a combination of tried and trusted, and innovative techniques to promote your program, engage your members or customers, and drive sales.

  • What factors affect access to your customer’s insurance data?
  • What type of insights can you gain from your affinity program?
  • What can you achieve with these data insights?

Harnessing the power of an affinity insurance program for your company means you may be able to access much more information than you could previously — and with insights you derive from the data, you can help drive greater customer lifetime value and satisfaction.

With an affinity insurance program, you can get much more insight, such as:

  • The risks and issues your customers are facing most.
  • Whether there are specific types of incidents impacting your customers’ risk ratings.
  • Which types of customers are having the most incidents.
  • And much more — the list goes on.

In general, you’ll use customer data from your affinity insurance program to improve the program performance, develop products and services, and enhance customer experience.

  • Who will handle your customer’s claims process?
  • What is the customer expectation from the claims process?
  • Will a fully digital claims process be acceptable?

The claims process is where your affinity insurance program will be put to the test for your customers or members — with potentially significant ramifications for your brand.

You’ll also want to ensure you can monitor the claim from the first notification to the end. That way, you can identify any bottlenecks as soon as they arise, ensuring efficiencies.

If you choose to build your affinity insurance program without involving a broker, then you may not get sufficient visibility over the process — claims will probably be handled entirely by the insurer.

A broker like Marsh will document all the processes, information, stakeholders, and create a range of different scenarios to test your claims scripting before the program is live. That way, you can identify issues before they impact your end customers.

Is your organization looking to boost brand loyalty, customer satisfaction, and revenue?

 An affinity or embedded insurance program might be the solution you've been searching for.
To help you decide, we've compiled a 10-point checklist.

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An affinity insurance program provides insurance coverage to meet the specific needs of a group — made up of either individuals or businesses. This can apply to members or customers of an organization like yours.

Your organization becomes the “sponsor” of the affinity program, enabling you to offer an insurance solution that is specific and relevant to your members or customers — including specific coverage areas which generic insurance policies are unlikely to address.

Embedded insurance is one specific type of affinity insurance, where you offer insurance within the commercial transaction of another product or service. The aim is to reach customers at the right place, at the right time, and with the right offer. By integrating the insurance during the sales process, you can offer protection at the moment a customer purchases a product and with cover that meets their specific needs.

We tend to find there are five key benefits you can achieve with an affinity insurance program.

  1. Revenue diversification: Add new revenue streams to your business and grow your bottom line.
  2. Differentiate your offer: Stand out from the competition with a product that delivers more for customers.
  3. Increase sales: Enhance the value proposition of your products and unlock new opportunities.
  4. Strengthen brand loyalty: Deliver products and services that keep customers coming back.
  5. Improve customer retention: Get more data on your services and improve retention.

Not every product or service will work as the basis for an affinity insurance program. If you sell a product or service that your customers/members do not see a value in insuring, trying to promote insurance coverage will not create the desired benefit.

However, you may be surprised at the wide breadth of sectors in which an affinity insurance program is a strong fit. If you operate in any of these industries, we strongly suggest reaching out to Marsh to discuss a potential affinity opportunity (please note that this is not an exhaustive list):

  • Automotive
  • Associations (trade, professional, and general)
  • Building and construction
  • Education providers
  • Equipment and consumer electronics
  • Estate agents/property managers
  • Financial institutions
  • Franchises
  • Logistics
  • Sharing economy and mobility
  • Small and medium-sized enterprises (SMEs) and micro businesses
  • Sports, entertainment, and media
  • Telecommunications 

Setting up an affinity insurance program can be challenging due to various factors. We have outlined the five main factors below.

  1. There’s no one-size-fits-all approach when it comes to developing an affinity insurance program. Each program is customized to the unique characteristics and needs of your customer or member base and organizational structure.
  2. Navigating the regulatory landscape can be daunting, as insurance regulations vary across jurisdictions and can be subject to change.
  3. Establishing partnerships with insurers, negotiating contracts, and ensuring compliance with legal and regulatory requirements can add further complexity to the process.
  4. Understanding your customer or member base to identify the type of insurance product that will meet their needs and developing the distribution strategy adds an additional layer of complexity.
  5. Without a high degree of digital expertise, achieving a seamless digital experience and integrating current technology systems without an expensive overhaul represents a challenge.

At Marsh, we have demystified the process of setting up an affinity insurance program. We take you through each step of the process from evaluating whether affinity is a right fit for you, understanding your customer base and sales journey, evaluating risk partners, assessing your digital capabilities, leveraging marketing and data insights, considering the claims process, and highlighting the regulatory issues for expanding across borders.

We apply methods and techniques that we have learned from decades of offering affinity programs. These form the basis of an iterative process by which we constantly look to improve the affinity client experience based on our deep understanding of the market and the impact of the latest innovation. Our expert team provide an end-to-end solution to create a compelling affinity offering.

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