As convenience increasingly becomes a driving factor behind so many decisions consumers make, bundled insurance services – a one-stop shop for all your insurance needs – are also gaining traction. Bundled services, often likened to a McDonald’s Value Meal, allow insurance companies to put all your insurance coverage in one package, generally for a reduced rate. This can include insurance for homeowners, life, car and more. Once a customer is locked into a bundled deal, they can often continue to add to the bundle if they get a motorcycle, boat, additional car, rental home or other insurable property. Bundled offerings represent revenue streams that insurers can build on while creating customer loyalty. For customers, bundling insurance plans can mean only one payment to manage and one company to coordinate with for changes or upgrades.
There Are Advantages To Insurance Bundling For Consumers
In a recent study by the University of Chicago Booth School of Business on the benefits of bundling, researcher Franklin Shaddy said, “Knowing that all of your potential issues are taken care of with one company should be compelling. This is akin to selling an insurance solution that takes care of everything, whether it’s home, auto, boat or something else. When it comes to insurance, people probably really value that sense of having a complete solution.”
In addition to saving time, consumers can save money when bundling insurance by choosing multi-policy discounts. In the U.S., consumers can save an average of 25% when they bundle auto and homeowner’s insurance. However, savings vary significantly by region, with New Jersey only averaging a 5% discount and Kansas a 22% discount. Another benefit of bundled plans may include only filing one claim, and having only one deductible, for incidents that involve multiple policies.
Insurance Bundling Creates Brand Loyalty
Bundling is also a good marketing and business tactic for insurance companies, because a customer who is open to a two-product bundled item is much more likely to buy a third policy. Consumers with bundled insurance policies are also less likely to shop around to other vendors because of the ease of staying with the brands they know and trust. However, consumers also like to know they can buy items separately, so they don’t feel forced to bundle and can understand the value of their insurance deals.
Additionally, high customer satisfaction with bundling presents further opportunities to bundle more products like auto and home insurance, which are not as commonly sold together.
Digital And Product Add-Ons Can Help Marketers Promote Insurance Packages
Consumers are increasingly satisfied with their insurance, which a 2018 J.D Power study showed is directly linked to bundling and digital access. According to the study, “Preference for using digital channels for interaction has increased significantly from 2017 across a wide range of interaction types ranging from payment verification and billing inquiries to policy renewals and price quotes.” Competition from insurtech companies – insurance start-ups that use innovative technologies and digital platforms – particularly with younger generations, should be a driving force for insurance marketers to promote additional products and easy digital functionality.
Creating add-ons is another way for insurance bundles to rise to the top and appeal to buyers — this could include adding health, travel or pet insurance to an existing bundle. Promoting the ease of continuing to build the bundle is a way to create brand advocates from customers and scale renewals, which are already high with 46% of customers saying they are more likely to renew a bundled service, versus 28% of non-bundled policy holders.
Convenience and an efficient online user experience, aligned with comprehensive coverage and good rates, makes insurance bundling an effective tool to help bring a traditional industry into the digital age.