The Rise and Fall of Affiliate Marketing in Insurance Leads

By Tom CarolanMay 7, 2014

Affiliate marketing is not the final act in the play of insurance leads generation. What’s next?

If you can’t find it on Amazon, it doesn’t exist. With customers counting on the retail giant to provide everything, it makes sense that online marketing strategy would be included. After Amazon implemented its affiliate program in 1996, other companies followed the leader. They discovered being paid by commission wasn’t so bad. By 2006, affiliate commissions totaled $6.5 billion worldwide [1]. Music file sharing services, gambling sites, and mobile phone providers were not the only industries to jump on the affiliate train. Insurance lead generation companies also entered the fray, and thickened the plot.

In a perfect world, affiliate-style lead generation would work beautifully to benefit all the players. Trusted affiliates would provide ethically-gathered referrals for lead generation companies. The lead generation companies would deliver referrals that were ripe, and eager to hear from hungry insurance agents who’d bend over backward to win long-term customers. The whole process would culminate in an encore performance as word of mouth from delighted customers netted even more business for the agent.

Consider this case of profit generating affiliate marketing harmony.


  • The insurance lead generation company “Leads 4 You” plays the merchant.
  • The owner of an insurance niche website “Sam Saving” plays the affiliate.
  • An independent contractor looking for health insurance for his family “Liam Looking” plays the customer.


Sam Saving posts an article about saving money on health insurance with an affiliate link to obtain a health insurance quote. Liam Looking clicks the link. It directs him to a form where he enters his personal data.

Leads 4 You takes care of data collection and storage. The merchant filters real time data and funnels it to a subscribing insurance agent in the customer’s community. The agent calls the contractor. The quick customer service pleases Liam Looking, and he refers his business associates.

The agent profits from the insurance business, Leads 4 You deducts a fee from the agent’s account for providing the lead, and Sam Saving receives a pay per submit commission.

This world could be turned upside down with an unethical affiliate.

Plot Twist:

What if the affiliate took care of data collection and storage? The website owner may violate privacy by collecting and selling sensitive data in a way the consumer never intended. The affiliate could feed the data to multiple insurance lead generation companies or even repackage leads for the same merchant.

In the new plot, it’s difficult for lead generation companies to provide their agents with exclusive real time leads. The affiliate makes a fraudulent profit and the other parties suffer. Agents chasing bad leads complain to the merchant and customer data is not secure.

Mid-90s Fraudulence

The plot twist and other fraudulent affiliate methods became a reality in the mid-90s. Up to 70% of leads were reported as fraudulent. The agent demand was greater than the lead supply. Lead generation companies struggled to keep up and affiliates worked the shortage to their advantage.

Worse than selling to multiple companies for the wrong types of insurance, affiliates provided fictitious leads from the phone book. Some work was outsourced to a foreign country, where large amounts of false data could be entered cheaply. The volcano that erupted was consumer bombardment, agent dissatisfaction, distrust of lead generation companies, and lack of confidence in affiliates.

A Band-Aid for the Problem

The industry adopted scrubbing tools to post only the credible leads. One tool is comparing the IP address of the quote request to the physical address of the consumer. Like caller ID, this tool can prove the call (ping) should be answered (posted).

Can Affiliate Marketing Rise Again?

Many companies guarantee their leads will have an accurate name and phone number to a person in the agent’s filters, expecting insurance information in the agent’s industry. If the agent pays for exclusive leads, leads are not shared.

Can we offer this guarantee using affiliate leads? There’s a lack of industry standards. An ethical code of conduct and certification for affiliates doesn’t exist. We could use the scrubbing tools or vet our affiliates based on website size, traffic, and previous successes. Or we could follow an Internet giant who has mastered the rules of cyberspace engagement: Google.

Following the Google Model

Google keeps it real and wants consumers to have a great experience. So Google is going local. A verification process through Google can help your company appear at the top of search engine results. The process includes registration with Google and local business listing sites. Your physical address is checked against your IP address. You verify that address by entering the verification code of a postcard received in the mail. Like magic, your business now appears in the primary search results for customers to find.

The physical verification is less susceptible to fraud, more controllable, and definitely real. The whole process takes up to 3 weeks to complete. It’s quite a departure from the fast, automated, and non-human pings and postings happening in cyberspace. Instead, you’ll appear at the top of search results and generate your own organic leads.

Lead Generation Companies Write the Final Act as the New Affiliate

Taking a cue from Google, lead generation companies need to evolve into a new online marketing partner for local insurance agencies. The partnership can help local companies get verified. More importantly, it can help agencies drive high quality, high conversion, and organic traffic to their websites.

The partnership would help agencies build a five star local reputation that works great to attract local customers. Reaching the right audience through an agent’s own online marketing funnel is better than putting them last in line in a game of affiliate telephone. Focusing on real people by providing them online marketing tools achieves real results.




[1] MarketingSherpa

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