What is generally more costly for an insurance provider?

Obtaining a new account is generally more costly for an insurance provider due to several factors associated with the process of acquiring new customers. First, the expenses tied to marketing and advertising efforts aimed at attracting potential clients can be substantial. This includes costs related to campaigns, promotions, and the effort involved in reaching new audiences.

Additionally, insurance companies often invest resources into the sales process when bringing in new accounts. This may encompass underwriting costs, agent commissions, and other related expenses that are incurred during the acquisition phase. The process of establishing new relationships also often requires time and effort that translates into additional costs for the company.

On the other hand, maintaining an existing account typically involves lower expenses as existing customers usually require less marketing and promotional push. The relationship has already been established, thus reducing the effort required to retain them compared to the initial acquisition of new clients. This understanding reflects the common industry principle that retaining customers is generally less expensive than acquiring new ones, making it clear why obtaining a new account tends to be seen as more costly.