12 June 2025

Beyond Price: Why Carriers Must Shift from Commodity Selling to Coverage Differentiation

In a price-driven market, it’s critical for insurance carriers not to end up in a race to the bottom, where premiums alone are your sole competitive advantage. Insurance commoditization undermines product value, erodes brand loyalty, and drives risk and loss ratios to unsustainable levels. Coverage differentiation as an insurance product strategy offers a powerful way to counter these effects.

When carriers fail to differentiate on value, they risk their long-term profitability, especially in tough markets, where underwriting precision and strategic positioning are more important than ever before. Competing beyond price in a hard insurance market is possible, especially when using digital strategies for insurance product differentiation. However, a strategic pivot is essential.

Insurance Commoditization: The Cost of the Race to the Bottom

Competition can be healthy in any business. But when that competition makes insurance a commodity in a price war, everyone loses. Risk underpricing and adverse selection are inevitable. Carriers laser-focused only on offering the lowest possible premium can’t help but compromise their underwriting discipline. In short, attracting higher-risk customers while operating on thinner margins. This adverse selection issue then compounds over time, creating portfolios that are increasingly difficult to manage profitably.

Nor is that the only issue. When the “cheapest policy wins” mentality is in play, it can significantly damage brand equity. When carriers only train agents (and customers) to focus on price, they inadvertently devalue the protections and services that make up their coverage differentiation. No one really knows what makes each product different, other than its price tag. This inevitably results in a marketplace where customers have a poor understanding of what they’re buying, just a hyper-focus on price that isn’t always justified. And retaining loyal, talented, and educated agents becomes increasingly harder when the only carrier motto is, “sell, sell, sell!”

In a hard market, where precise underwriting and strategic positioning are essential, insurance commoditization is especially dangerous. Carriers must have adequate pricing to cover their increasing losses and expenses. However, agents and customers now conditioned to the lowest premiums overall will inevitably push back, deepening rifts and lowering market traction. Rising loss margins and shrinking margins become inevitable. In short, no one wins.

Shifting the Focus to Value Through Coverage Differentiation

We don’t have to accept insurance commoditization as inevitable, however. And while value-based insurance pricing is important to develop, the solution isn’t a simple price rise. Instead, it’s time for carriers to fundamentally reorient their insurance distribution strategy around coverage differentiation and communicating its value. This shift requires effort on key fronts, but is totally achievable.

Reframing the Narrative

Firstly, we need a change in how carriers talk about their products. Premium amounts shouldn’t be the be-all, end-all of product communication. Instead, insurance product strategies for marketing and sales should emphasize what’s included in the coverage. For example:

Superior claims handling and customer service
Original equipment manufacturer (OEM) parts versus aftermarket alternatives
Specialized endorsements and coverage extensions
Bundling opportunities that provide comprehensive protection
Risk management services and preventative tools

This ensures that carriers are showcasing the real value of their insurance product, namely protection and service, instead of just its costs. When these features are spotlighted from the first touchpoint, carriers can reshape their customers’ expectations and purchasing criteria. Education is through messaging, not product tables.

Empowering Agents as Value Consultants

Agents are (or rather, should be) critical cornerstones of your insurance product strategy. Yet many are only trained to compete on price. Instead, carriers need to focus on insurance agent education that sells on value across all tools and training. This includes:

Providing comprehensive training on product differentiators.
Creating educational materials that explain coverage benefits in customer-friendly terms.
Developing digital insurance platforms and quoting tools that represent coverage quality, not just price variations, and break through quoting bottlenecks.
Incentivizing value-based insurance pricing and selling through commission structures that reward quality over quantity.

Your agents must be your consultative partners, not just transaction processors. When the right insurance agent education is in place to help them understand and articulate a carrier’s true value propositions, everyone in the distribution chain benefits.

Using Digital Insurance Platforms Strategically

Digital insurance platforms are powerful tools to showcase differentiation – when used correctly. It’s time to move away from the binary “lowest price overall”, which only enforces insurance commoditization. Instead, digital insurance platforms should:

Surface differentiated features prominently in the digital quoting process
Enable multi-tier package comparisons that help customers understand good-better-best options
Implement dynamic product comparison tools based on what matters most to individual customers. This also helps offer better personalization
Integrate educational content directly into the purchasing journey

Digital insurance platforms don’t enforce insurance commoditization by default. In fact, when well-implemented, they significantly enhance value perception and insurance differentiation.

How a Partnership with bolt Will Help Drive Insurance Differentiation

For carriers looking to drive insurance differentiation and value-based insurance pricing, a partnership with a platform like bolt offers significant support. Driven by a single, easily integratable and scalable cloud-based API, your customers gain instant access to a wealth of compatible insurance products and fast, real-time quoting. Not only does this increase your revenue opportunities, it also enhances product visibility, supports insurance agents, and gives customers a simple, easy-to-understand comparative insurance experience. bolt enables carriers to surface their unique product attributes in a smart, digital-first way.

We help carriers highlight their strengths, be it extended device protection, bundled discounts, or superior claims servicing.

With bolt as your partner, you can transform your distribution strategy from transactional to strategic, helping shift your insurance product strategy from insurance commoditization to coverage differentiation.

The Path to Better Coverage Differentiation: Actionable Takeaways

It’s time for insurance product strategies to move away from price messaging alone. Instead, aim to build messaging on coverage differentiation and what your product actually does for the customer. This includes:

Auditing your current messaging: Identify where price-focused language has replaced value communication. Revise external communications to lead with benefits, not just costs.
Reviewing your quoting flows: Both agent-facing and direct-to-consumer messaging must adequately represent your differentiating factors.
Partnering with distribution platforms: Platforms like bolt help make your unique value visible at the point of sale, rather than reducing your offering to a number on a comparison table.
Investing in agent education: Your insurance agent education should position your coverage as it was designed to be sold – as protection, not just an expense.
Considering tiered product offerings: Make value differences explicit and give customers meaningful choices beyond simply the cheapest option.

The transition from price-based selling to value differentiation won’t happen overnight. It requires commitment at every level of the organization and a willingness to sometimes lose on price to win on value. However, the long-term benefits – improved loss ratios, stronger brand equity, and more sustainable growth – far outweigh the short-term challenges.

Build the Future of Profitable Insurance Distribution with Coverage Differentiation and bolt

The future of profitable insurance is not about who can go lowest in price. It’s about showcasing, articulating, and delivering real value to customers. In a hard market, this is more important than ever. When you partner with bolt, carriers stand out and grow smartly. We help you distribute products with real coverage differentiation and value at every step.

Interested in moving beyond price-based selling? Learn how bolt helps carriers stand out with smarter digital distribution. Get in touch to see how we can support your product and insurance distribution strategy today.

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