Consumers encounter bundled product offerings nearly every day. Telecommunications companies offer cable and internet bundles. Fast food restaurants sell bundled value meals. Even Amazon joined in last April with a uniquely modern take on a “Beginner Pet Bundle” service, promising to help new pet owners avoid unnecessary spending and stress with a convenient one-stop shopping experience. This strategy has become increasingly common over the past two decades as companies seek to overcome the costs of acquisition. The insurance industry is especially well-known for marketing bundled products. Overall, it is touted as a win-win. Customers gain convenience while saving money. Meanwhile, insurance companies earn more revenue per member, develop robust consumer profiles and hopefully, foster loyalty over time. Progressive Insurance, for example, has been particularly bundle-bullish over the last several years, going so far as to develop a comprehensive consumer persona, “The Robinsons”, to better position and grow bundled accounts. While strategies like this have yielded strong returns for insurance companies, an analysis of industry trends and consumer data suggests bundling strategies might need an update. Price vs value Most insurers specifically focus on cost savings when advertising bundling programs. While monetary messaging surely draws attention and even yields new business, it encourages customers to differentiate insurance companies solely based on price rather than brand-enhancing features. This is a risky tactic as nearly a third of consumers already consider all insurance companies to be the same, according to Mintel’s US report on the insurance purchase decision. Moreover, two in five consumers say innovative product offerings are more important than a long history of experience when choosing an insurance provider, according to Mintel’s report on insurance innovations in the US. While bundling still presents an immense opportunity to attract and retain customers, the writing is on the wall for tenured insurance carriers: focus on value-added services and capabilities. As digital disruption continues to permeate the insurance marketplace, this once-quiet industry is ripe for innovation and improved consumer engagement. Tenured insurers will need to evolve accordingly. Strategic Un-bundling While traditional insurance companies have long enjoyed profits from bundling policies together, many start-ups in the insurance industry (also known as Insurtechs) have discovered a wealth of opportunity in doing the exact opposite. Rather than adding to policies, these nimble, mobile- first companies are trimming them down by scope, time and even the customer groups they serve. Insurance start-up Slice, for example, offers digital, on-demand homeshare insurance for customers posting their homes on sites like Airbnb. Coverage is episodic in nature, with the ability to turn it on & off, in sync with bookings. Instead of purchasing an expensive commercial insurance policy that would better fit a hotel or bed and breakfast, homesharing entrepreneurs pay as little as $4 per night. Bought By Many is another Insurtech taking an inventive, unbundled approach. The UK company specializes in offering policies to niche consumer sectors that have been ignored or avoided by mainstream suppliers (e.g. exotic pets, diabetic travelers, scuba divers, etc.). In a Kickstarter-like model, once a group of people with unique needs reaches a certain participant threshold on their website, the company then uses the group’s collective purchasing power to negotiate better rates on the group’s behalf. To date, members save nearly 20% on premiums. Digital disruption is empowering customers and emboldening competitors. As the insurance industry continues to transform, so too will its strategic product packaging. Insurance companies—new and old—will be challenged to differentiate themselves on consumer experience, better technology and innovative service models. In the new age of insurance, consumers will enjoy greater choice and successful carriers will be known for their strong brands rather than price. Caitlin Moling is the Director of Insights, Insurance for Mintel Comperemedia. She combines her deep knowledge of the complex insurance industry with consumer research, industry trends and competitive marketing intelligence to build timely and meaningful stories for Mintel’s insurance clients. As a part of her role as a thought leader for insurance, Caitlin travels throughout the US and Canada to present insurance marketing trends and insights to major industry stakeholders. You might also be interested in: Insurers go above and beyond for hurricane victims CVS plans to buy Aetna, addressing 3 core tenets of the digital age Insurance agents seek digital pivot Insurance Marketing Trends 2017: How’d we do?