Sales & Marketing | 07.09.25
Your Customers Have Insurance Gaps — Are You Letting Someone Else Fill Them?
by: Dawn Goldbacher
Did you know that roughly 50% of Americans are underinsured or completely lack essential coverage? That means half of your customer base could face financial devastation due to an unexpected event — whether it’s a medical emergency, a car accident or identity theft.
Here’s the paradox: Banks are in the business of financial security, yet many don’t offer the very protections that safeguard their customers’ savings. Meanwhile, fintech startups, big tech companies and direct-to-consumer insurers are stepping in to fill the gap. If you’re not providing insurance solutions, someone else is.
The Hidden Insurance Gaps in Your Customer Base
Most customers assume they have enough protection — until they need it. The reality? Many are dangerously exposed.
- Accident and Illness Coverage: Many customers assume their health insurance will cover unexpected medical events—but gaps often remain. High deductibles, out-of-pocket costs and exclusions leave individuals financially vulnerable when accidents or serious illnesses strike. Without supplemental coverage, medical bills can quickly become unmanageable, adding financial stress to an already difficult situation.
- Life and Disability Insurance: More than 40% of U.S. households would struggle financially within six months if the primary earner died. And with LIMRA’s findings that 100 million Americans say they don’t have enough life insurance, there is definitely a gap in the market.
- Auto and Home Insurance: As costs rise, many customers are unknowingly underinsured — or overpaying for unnecessary coverage.
- Cyber and Identity Theft Protection: The Sage Advice U.S. blog states that cyber-attacks targeting insurers are rising due to their vast data stores, with losses quadrupling between 2019 and 2023. With fraud cases skyrocketing, most consumers lack robust protection against identity theft.
- Pet Insurance: More customers are prioritizing these protections, yet few financial institutions offer them. Vet bills are rising (up 7.6% from August 2023 to August 2024), and customers are struggling to keep up.
- Home Warranty Coverage: As home prices go up, more people are choosing to stay in their homes or buy older homes. If a big repair hits that is not covered by homeowners’ insurance, a home warranty may be the difference between a couple hundred dollars and a couple thousand.
These coverage gaps create financial vulnerabilities for your consumers — and an untapped revenue opportunity for you.
Who’s Filling the Gap? (Hint: It Might Not Be You — Yet)
While banks hesitate, other players are rapidly capturing the insurance market:
- Fintech and Insurtech Startups: Companies like Lemonade, Root and Haven Life offer digital-first insurance experiences.
- Direct-to-Consumer Insurers: Traditional insurance providers are bypassing financial institutions and marketing directly to consumers.
- Retailers and Membership Programs: Costco, AAA and even Walmart bundle insurance with memberships, increasing customer stickiness.
Without an insurance strategy, you risk losing not just an opportunity, but also deeper engagement with your customers. Plus, 44% of consumers are interested in buying insurance from a financial institution, especially younger generations who are twice as likely to want a one-stop shopping experience for banking and insurance. By not filling this gap, you could lose a financial customer and a chance to engage with more products.
Why Banks Are Perfectly Positioned to Win
The good news? You already have what these competitors are trying to build:
- Built-in Trust: Customers already rely on you for their financial well-being. Insurance is a natural extension of that trust.
- Access to Customer Data: You have insights that enable personalized insurance recommendations based on real financial behaviors.
- Seamless Integration: Embedded insurance solutions allow you to offer protection at key moments with ease — like when customers open accounts, take out loans or bank online.
- Non-Interest Revenue Growth: Insurance creates a steady revenue stream without adding risk to your balance sheet.
How to Close the Gap and Take Back the Relationship
Banks don’t have to build an insurance arm from scratch. Here’s how to start offering the right solutions today:
- Identify the Right Insurance Mix: A broad selection of insurance options lets you tailor offerings to match each customer’s needs.
- Leverage Embedded and White-Label Solutions: Partner with third-party insurance providers to seamlessly integrate coverage into your banking experience.
- Educate and Engage: Use email, digital banking platforms and branch visits to highlight insurance needs at key life moments.
- Make Enrollment Easy: Enable frictionless sign-ups with pre-filled forms and one-click enrollment.
The Opportunity Banks Can’t Afford to Ignore
Your customers already need these products. Life insurance alone has a $25 trillion mortality protection gap, leaving many of your customers unprotected when hardship hits. If you don’t offer them, someone else will. By integrating insurance into your offerings, you’re not just filling a gap — you’re strengthening relationships, increasing customer lifetime value and securing a new revenue stream.
Dawn Goldbacher serves as vice president, head of insurance services sales, at Franklin Madison, and is also a member of the BISA Content Advisory Committee.