Come Together: Converging Goals in P&C and L&A Insurance
When thinking about rivalries, what’s the first thing that comes to mind? Maybe the Hatfields & the McCoys, Civil War-era clans whose land and property feuds spanned generations. Or the New York Yankees and Boston Red Sox, storied baseball teams whose matchups regularly work fans into a fever pitch. In the insurance industry, Property and Casualty (P&C) and Life and Annuities (L&A) sectors’ interests, premium structures, and sales strategies have created serious competition between and within carriers. But as bundling and cross-sell opportunities increase and innovation and technology goals converge, the relationship between P&C and L&A insurers is morphing from a rivalry to a more of (grudging) partnership.
Bottom Dollar = Bottom Line
It’s no surprise that much of the competition between P&C and L&A insurers stems from who can make the sale, but differing premium structures and state regulations add complexity while coloring value proposition and consumer interest. For customers who possess cars and homes, P&C insurance is required for ownership and mortgage financing. And although P&C sales can be a relatively easy and lucrative business for agents and brokers, their commissions are not as profitable as those for L&A, simply because L&A insurance is not mandated and consequently, a much harder sell. Consumers therefore need to be educated about the value of L&A insurance products, especially younger consumers, who often view them as purchases for much later in their lifetimes, if ever.
The L&A premium structure can also be unappealing to potential clients. Since permanent life insurance policies, such as whole life or universal life insurance, frequently do not require explicit renewals and therefore require less customer engagement, a negative perception of agents simply collecting premiums persists, further dissuading potential customers.
The Bundling Breakthrough
What has been changing the game in P&C and L&A sales and partnership is “bundling” policies, where carriers sell combined insurance packages in exchange for cheaper rates. Brokers have been able to facilitate bundling and cross-sales by conveying the symbiotic relationship between P&C and L&A insurance to customers. Case in point: why car purchases make both P&C and L&A policies necessary, in case of a car accident. Another example: why homeowners insurance payouts can prevent beneficiaries from being faced with a mortgage that they would otherwise not be able to pay. A very timely use case is how climate change not only heightens the need for P&C, but also L&A insurance. Damaged homes and property resulting from extreme weather events can directly and indirectly affect consumers’ physical and psychological health, and comprehensive L&A insurance can cover unexpected medical expenses. Among insurance brokers and agents, stressing the symbiotic relationship between P&C and L&A insurance can help facilitate additional L&A sales, whose sizable commissions translate into more profits to spend on user engagement, especially for P&C carriers who require more customer outreach due to annual policy renewals.
It’s All About the Core
The need for core transformation has been a clarion call for both P&C and L&A carriers. Although P&C insurers may have recognized the necessity of a robust core earlier on, both sectors have made strides to move beyond old mainframe systems for faster speed to market, greater operational efficiency, easier product configuration, and better business processes to enable growth. They have also made investments in AI to automate more mundane agent and broker tasks, such as delivering notices of pending policy terminations. Another AI innovation is the use of an ML algorithm to reach out to customers whose policies are up for renewal to suggest new insurance packages tailored to their needs.
The Final Word
“If you want something you have never had, you must be willing to do something you have never done.”  –Thomas Jefferson
P&C and L&A insurers have recognized how partnership, rather than rivalry, can facilitate enriched customer engagement and greater sales for collective, long-term success. Their understanding of how core transformation and AI investment have become table stakes have made them common goals, resulting in the breaking down of silos and enhanced collaboration to achieve them. After all, common sense dictates that the sweetest success will trump the most bitter of rivalries.
 “Life and Annuity Insurers Consider the Path Less Traveled,” Deloitte Insights, June 15, 2023.