https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3APolicy_acquisitionDefinition:Policy acquisition - Revision history2026-06-17T13:05:54ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Policy_acquisition&diff=13606&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-13T13:07:23Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>📋 '''Policy acquisition''' refers to the full set of activities and associated costs involved in originating and issuing a new [[Definition:Insurance policy | insurance policy]], encompassing everything from marketing and lead generation through [[Definition:Underwriting | underwriting]] evaluation to the binding of [[Definition:Insurance coverage | coverage]]. In insurance accounting and financial reporting, acquisition costs represent one of the largest expense categories on an insurer's income statement, directly influencing profitability metrics such as the [[Definition:Combined ratio | combined ratio]] and [[Definition:Expense ratio | expense ratio]].<br />
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🔄 The process typically begins with a prospective [[Definition:Policyholder | policyholder]] engaging with a distribution channel — whether a [[Definition:Insurance broker | broker]], [[Definition:Insurance agent | agent]], [[Definition:Managing general agent (MGA) | MGA]], direct-to-consumer platform, or [[Definition:Embedded insurance | embedded]] partner. The insurer evaluates the risk, prices the [[Definition:Insurance premium | premium]], and, upon acceptance, issues the policy. Costs incurred along this chain — [[Definition:Commission | commissions]], brokerage fees, underwriting salaries, medical examinations in [[Definition:Life insurance | life insurance]], and system processing expenses — collectively form the [[Definition:Deferred acquisition cost (DAC) | deferred acquisition costs]] that insurers capitalize and amortize over the policy's life. Under [[Definition:IFRS 17 | IFRS 17]], these costs are incorporated into the [[Definition:Contractual service margin (CSM) | contractual service margin]], while [[Definition:US GAAP | US GAAP]] continues to apply traditional DAC amortization rules, and [[Definition:Solvency II | Solvency II]] treats them within the best-estimate liability calculation.<br />
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💡 Getting acquisition economics right is fundamental to an insurer's competitive position. Carriers that can originate high-quality business at lower acquisition costs — through efficient digital platforms, strong [[Definition:Affinity insurance | affinity]] partnerships, or proprietary distribution networks — enjoy a structural advantage in pricing and margin. Conversely, excessive acquisition spending relative to [[Definition:Premium income | premium income]] erodes underwriting profitability regardless of how well the underlying risk performs. As [[Definition:Insurtech | insurtech]] ventures introduce automation and data-driven targeting into the acquisition funnel, incumbents face pressure to modernize their own origination workflows or risk ceding profitable segments to more efficient competitors.<br />
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'''Related concepts:'''<br />
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* [[Definition:Deferred acquisition cost (DAC)]]<br />
* [[Definition:Expense ratio]]<br />
* [[Definition:Commission]]<br />
* [[Definition:Combined ratio]]<br />
* [[Definition:Underwriting]]<br />
* [[Definition:Customer acquisition cost (CAC)]]<br />
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