How can insurers break out of this cycle, reduce the cost per acquisition and use the savings to remain competitive? Here are a few ideas:

Insurers should consider a cloud solution for core systems / back office administration.UK insurers have been unfortunately slow to adopt shared services and technologies, when they are proving themselves in other industries and geographies. Now is the time to consider cloud solutions if they fit with cost reduction objectives and if they can sustain or improve service levels.
The industry should use a permission-based consumer data storehouse. Churning policyholders benefits no one and costs all of us a great deal of time and effort. What is needed is a true permission-based marketing model, where consumers grasp the benefit of letting insurers see relevant profile information. This would enable the direct-to-consumer or small business framework where insurers would provide a digital front-end that "pre-fills" the quote with existing data on the customer or other third party data, streamlining the process. It would also enable insurers to better match tailored products to prospects, instead of having to offer standardized products.
Insurers should hone data-driven target marketing. Today's data sources and analytics allow for much more granularity and fine-tuning in the marketing process. With the right tools, insurers can now use consumer-provided data and detailed third party data to provide qualified offers to only those consumers and small businesses that fit a certain product's risk profile. This would reduce CPA and improve risk selection.

Increase customer retention

With a high cost per acquisition, customer retention becomes an increasingly critical metric for insurers, particularly since initial acquisition costs are recouped over multiple years. The increasingly price sensitive market has reduced the number of multi-year policyholders. Industry studies have shown a clear correlation between a customer having multiple policies with a single insurer and their retention rate.

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