Insurance has long been a world of brokers, agents, and paperwork. But times are changing. The Direct-to-Consumer (aka D2C or DTC) model is flipping the script, giving insurers a way to connect with customers directly—no intermediaries, no unnecessary steps.

And although DTC insurance can still happen the old-school way—through local offices or retail spots, let’s be real: the future is digital. That’s why we’re going to focus on the digital approach to the direct-to-consumer model in insurance.

People expect fast, seamless online experiences, and insurers who get this right will be the ones who stand out. So, what does it take to succeed in this new landscape? Let’s dive in.

Understanding Direct-to-Consumer Insurance Model

Forget brokers and third-party agents. The Direct-to-Consumer (D2C or DTC for short) insurance model lets you skip the middlemen and sell policies directly to your customers. This approach has taken off with digital technology, making it easier for insurers to reach customers directly through online platforms. By using digital tools, insurance companies can handle the whole sales process themselves while building stronger relationships with policyholders.

Role of Technology in the Direct-to-Consumer Insurance

80% of customer interactions with insurers happen digitally, and 70% of consumers expect seamless experiences across platforms.

Technology is the backbone of DTC insurance models, driving efficiency and offering customers a better experience:

• Artificial Intelligence: AI helps insurers quickly assess risks by looking at individual behaviour, making it possible to issue policies almost instantly in areas like motor and life insurance. A McKinsey & Company survey of 50+ European insurance leaders found that Gen AI could boost productivity by 10–20%, drive premium growth by 1.5–3%, and improve technical results by 1.5–3 percentage points.
• Telematics & IoT: These connected devices make insurance processes easier. Right now, 82% of commercial insurers are using telematics—a significant jump from 65% in 2023. And the numbers back it up: 72% of fleets have seen fewer crashes and claims thanks to telematics-based training initiatives.
• Blockchain Technology: When it comes to blockchain in insurance, it allows companies to implement innovative operational workflows, as well as unconventional ways to cut down on costs, all while enabling quicker and more efficient commercial insurance quotes. Example? In 2022, the Lemonade Foundation launched the Lemonade Crypto Climate Coalition, a blockchain-based system using smart contracts and rain data to automate crop insurance claims, protecting African farmers from droughts and floods.
• Progressive Web Apps (PWAs): These help deliver a consistent experience across both desktop and mobile devices—crucial in a world where 80% of customer interactions with insurers happen digitally, and 70% of consumers expect seamless experiences across platforms. 
• Data Analytics and Machine Learning: These technologies help create tailored pricing and policy suggestions, but they’re only as good as the data behind them. Data is gold, but to make it work, you need the right foundation—a solid data platform that captures all relevant information across your systems. Check out a case study on data mesh if you want to see how it’s done.

DTC Insurance Model vs Traditional Insurance Model

Let’s compare the digital direct-to-consumer insurance model to the traditional one.

Aspect	DTC model	Traditional model
Customer Interaction	Direct through digital platforms	Through agents/brokers
Cost Structure	Lower operational costs, higher marketing	Higher operational costs, lower marketing
Processing Speed	Faster, automated	Slower, manual processes
Personalisation	Data-driven, automated	Agent-dependent
Product Portfolio	Streamlined, focused	Complex, diverse

Benefits of the Direct-to-Consumer Insurance Approach

Adopting a D2C insurance model can bring a range of advantages for insurers and policyholders alike.

Benefits for Insurers

Increased market reach
Advanced market segmentation allows for better target marketing (e.g. niche markets and underserved groups) and sales efforts through online, social, and app-based engagement. By using data analytics, insurers can identify previously unknown market segments and develop tailored marketing campaigns for specific customer groups. Digital platforms make it easier to reach customers in different locations, allowing insurers to quickly enter new markets without needing physical infrastructure and even offer cross-border services.

Cost savings

When it comes to the direct-to-consumer insurance model, there’s a more efficient cost structure to it. By eliminating intermediaries, direct insurers can slash operational costs (with sales and support expenses up to 70% lower than traditional insurers, thanks to more efficient processes—given that was already a few years back, that number is likely to be even higher today) and offer more competitive rates. In addition, automated underwriting and data gathering simplifies the process for small-account policies.

Improved customer experience
With brokers and third-party agents out of the picture, insurers can build stronger relationships with customers and create more personalised journeys thanks to data-driven insights. Having direct access to customer data helps insurers gain a deeper understanding of purchasing behaviours and preferences; ergo, fine-tune products and assess risks more effectively. Since most customer interactions (80%) with insurers happen online these days, insurers can stay agile and quickly adapt to evolving market trends and meet shifting customer expectations.

Operational advantages
By bypassing long negotiations with intermediaries, insurance companies can enjoy faster time to market for new products. What’s more, insurers have full control over the entire purchase journey and customer experience. It all boils down to having your data in the right place from the start—something that’s key to making smart, data-driven decisions along the way and staying in control.

Benefits for Your Customers

Cost savings

• Lower premiums as a result of lower operating costs and no broker fees.
• More competitive rates thanks to direct pricing models.
• Clear and upfront pricing with transparent coverage options.

Enhanced customer experience

• Faster quotes and policy issuance with digital underwriting.
• Smooth claims submission process via online platforms.
• Getting responses quicker thanks to direct communication with insurers.

Hyper Personalisation

• Insurance offerings tailored to individual needs.
• The freedom to independently compare and tailor coverage options.
• Easy access to digital tools for managing and updating policies.

Challenges of the DTC Insurance Model

Given what you just learned, it may seem like going direct-to-consumer in insurance offers nothing but perks. So, insurers who are already looking to cut out the middleman—hate to rain on your parade, but there are some key obstacles that might come your way.

One of the biggest hurdles to adopting the D2C insurance model is building customer trust and retention. Many consumers are used to working with agents who guide them through the insurance process. Because of that, customers might feel uneasy about buying insurance directly. Convincing them to do so might turn out to be difficult. Not impossible, though. But it’ll require a strong brand, clear communication, and top-notch customer support.

Regulations can also be a headache. Selling insurance straight to customers means navigating a maze of rules that vary from one region to another. Insurers must stay up to date with evolving legal requirements to ensure compliance and avoid potential penalties.

Then there’s the competition. Traditional insurers are adapting their models, while insurtech startups continue to emerge with innovative offerings. Standing out in this crowded market takes smart marketing, a great customer experience, and a clear value proposition.

Tech and cybersecurity risks are another big concern. Handling sensitive customer data comes with serious responsibility. Insurers need to invest in secure platforms and strong data protection measures to keep customer trust intact.

Risk assessment and underwriting also become trickier without agents in the mix. Pricing policies accurately and evaluating risk calls for advanced data analytics and AI-driven tools to make up for the missing human insight.

On top of that, launching a successful DTC model takes a major financial investment. Developing smooth, user-friendly digital platforms and running effective marketing campaigns don’t come cheap. Companies need to be ready to put in the time and resources to deliver a smooth, glitch-free customer experience, generate leads and build their brand online.

Lastly (wait, there’s more?), operational hurdles can slow things down. Quoting, binding, and issuing policies often involve multiple departments, making it difficult to streamline workflows. Only a few insurers have cracked the code on this, showing that solid, integrated and efficient systems are key.

It’s crucial to bear these potential challenges in mind when thinking of adopting the D2C insurance model in your business. With the right strategy and smart execution, insurers can create a modern, customer-friendly insurance experience that sets them apart.

Alternative Take on Mobile-First Insurance—Why Less Can Be More

71% of apps are abandoned within the first three months, and a quarter of them are never even opened again.

As we mentioned, using digital platforms is a big part of a successful direct-to-consumer insurance approach. Insurers that are going all-in on digital give customers a seamless way to browse, customise, and buy policies online. Additionally, chatbots and automated systems make customer support faster and more convenient. On top of that, with tools like Progressive Web Apps (PWAs), the experience stays smooth across devices, whether it’s a phone or a computer.

In other words, digital is the way to go. More specifically—mobile. But here’s the thing: we live in a world already flooded with countless mobile apps. In fact, 71% of apps are abandoned within the first three months, and a quarter of them are never even opened again. It’s clear that people don’t want yet another app to clutter their phones with. What they do want is simplicity. Ideally, something that doesn’t add to their mental load. OK, but if a new app is a no-go, what else is there for you to stand out?

Glad you asked! A possible alternative is InsurancePass.

InsurancePass by Shaped Thoughts

Think of it as a bridge between insurers (or brokers and agents) and their clients—a digital wallet solution that enhances the policyholder experience without adding friction. It gives your customer instant access to their insurance details, claims, and key documents, all from their phone’s native wallet.

With InsurancePass, insurers can keep policyholders in the loop through push notifications, deliver micro-apps and workflows, such as a streamlined First Notice of Loss (FNOL) process, and much more. No need for a separate app, no clutter, just seamless digital engagement. This allows insurers to cut through the noise of traditional mobile apps, offering a solution that directly addresses the challenges of the DTC model we mentioned earlier. It offers flexibility, scalability, and a smoother customer experience while supporting insurers in overcoming the hurdles of digital transformation.

With 91% of consumers frustrated by having to install apps just to do business, offering a no-app solution is a welcome relief. It not only boosts user satisfaction but also supports eco-friendly practices by cutting down on paper and promoting sustainability.

It’s a simple yet powerful tool to strengthen customer relationships, improve retention, and reduce operational costs—all in a mobile-first world. It’s not a magic fix for everything, but it’s a promising approach worth exploring.

Sound good? Then go ahead and learn more about InsurancePass!

Summary

The direct-to-consumer insurance model (also referred to as D2C or DTC) offers a wealth of opportunities—lower costs, better customer experiences, and the agility to adapt to changing market needs. Presented data trends show that going digital is inevitable, but it comes with challenges, too, such as building trust, ensuring compliance, and standing out in a crowded space.

Enhancing the mobile experience in a lightweight way that enables customers’ engagement growth is not an easy task. But the right tools can help with that. One you might want to consider is the aforementioned InsurancePass. Instead of adding another mobile app to the mix, it integrates directly into policyholders’ mobile wallets—keeping your clients connected and engaged, and their policies, claims, and key documents right at their fingertips. We hope we showed you just that.

So, if you’re looking to embrace digital-first insurance and make life easier for your clients, InsurancePass might be the way to do it. Want to see how it can transform your customer experience? Let’s talk!