Drafting March 21, 2022By Martin Fagioli, partner of FoliumeWe decided to comment in depth on insurance cross-selling, with an emphasis on brokerages.For this reason we will be publishing a series of 3 articles to address this topic that is so relevant to the sector.During the series we will address the definition, impact on the business, the correct way to calculate it, factors to take into account to manage it, advanced cross-selling analytics and associated technologies.Below is the first episode of the series.We hope you find it useful and entertaining 😄In various industries, the concept of cross-selling, known as cross-selling in English, is used.Formally, it is defined as the complementary or additional sale of products or services to an existing customer.Put another way, cross-selling is an existing customer purchasing an additional add-on product from our product offering.Although they are similar terms, it is important not to confuse cross-selling with upselling.While cross-selling is the additional purchase of a product, upselling is the increased purchase of an existing product.In insurance terms, cross-selling occurs when a client of our company who has a home policy buys a health policy from us.On the other hand, upselling is that our client with a home policy decides to increase the home insurance premium, by insuring a greater part of his house.As a complement to the definition, we propose below examples of cross-selling in industries other than insurance:‍In the financial sector, in addition to the insurance sector, there are also a lot of examples of cross-selling:As we have seen, cross-selling is a widely used technique in multiple industries.This is because making a new sale to existing customers has between 60 and 70% probability, while making a new sale to a non-customer is between 5 and 20%, according to studies.In insurance and particularly in insurance brokerages, cross-selling becomes a very important aspect for two main reasons:Additionally, and a central component in the importance of cross-selling for insurance mediation, is that the insurance client tends to keep a policy for several years, as explained by the consulting firm McKinsey in this article.This indicates that a well-executed cross-selling with good loyalty and retention management will not only achieve income from sales, but will also generate new income year after year.In other words, the value of insurance cross-selling should not be measured solely by the premium (or commission) of the sale made, but by the flow of funds discounted from commissions that said policy generates.In other words, generating a good cross-sell in insurance has an extremely high potential future value, compared to other single-purchase industries (retail, fashion, food).For brokerages, having an effective cross-selling strategy will generate:At a macro level, Spain has a high potential for cross-selling if we compare it with other countries in the world and Europe.According to the Swiss Re Institute report released in November 2021, Spain is ranked 14th in the world and 5th in Europe in premium volume – with a total value of €58,103 million in 2020.However, looking at the ranking of premium volume per capita, Spain drops to 28th in the world and 16th in Europe.In a first analysis, this means that Spain, in comparison with other countries in the world and the region, has great potential to increase the density of insurance per capita.In other words, although there is surely a great potential to incorporate uninsured clients, the great opportunity lies in achieving integral clients through cross-selling.You can subscribe here to receive chapter two of the series in your mailbox.Despite what has been explained, the fact that there is a great opportunity for cross-selling does not mean that we as a brokerage or insurer should be bothersome in approaching our client.On the contrary, we know very well that our clients seek us out because of the trust they place in our recommendations and therefore, we must make an offer at the right times, with the right product and to the right customer.It is not about selling for the sake of selling, but about offering an even more comprehensive service, improving the benefits of the client, our brokerage and the entire ecosystem.Due to this, in chapter 2 of the series we will be addressing what particularities we must take into account as brokerages when carrying out systematic and effective cross-selling management.