In the insurance industry today, embedded insurance is a new buzzword. It is one of the most important innovations bringing about growth and transformation in insurance distribution. The embedded insurance industry is expected to grow steadily over the forecast period, recording a CAGR of 20.7% during 2022-2029.
While embedded insurance is part of a broader movement called embedded finance, it has emerged as a distinct solution that has revolutionized the insurance industry. It can help close the protection gap, provide personalized coverages for consumers, and enable insurers to sell more.
So, what exactly is embedded insurance? Who can benefit from it?
What Is Embedded Insurance?
Embedded insurance is the real-time bundling and sale of insurance policies with a product and/or a service when the customer is making a purchase. Simply put, it offers insurance coverage to the customers right at the point of sale.
A classic example of embedded insurance is —travel insurance infused with the purchase of a flight ticket.
Embedded insurance is also known as On-demand insurance, Bite-sized insurance, Sachet insurance, Micro insurance, Usage-based insurance, Small ticket insurance, and Bundled insurance.
What are the Benefits of Embedded Insurance?
Embedded insurance brings coverage for customers at the time they are most likely to buy it – point of sale. Surely, this comes with numerous benefits for all stakeholders.
- Configure policies with accurate risk information – There’s a wealth of data available from a customer’s online activity. Using this data, insurers can create a customized insurance policy and ensure the risk information is real and not perceived.
- Offer personalized policies – With accurate risk information and real-time date insurers can offer secure affordable, relevant, and personalized policies to customers right when they need them.
- Reach greater number of customers at a faster pace – The personalized polices and reaching customers at the point of sale enable insurers to reach larger number of customers in a short period.
- Create new distribution channels – Embedded insurance allows brokers to create new cost-effective distribution channels that are mutually beneficial to insurers, brands, and other stakeholders and build stronger networks.
- Sell more insurance policies with less effort – With newer distribution channels brokers can sell more policies with less effort and grow their business.
For Brands and Innovators
- Increase the value proposition of their product/service – By bundling affordable and customized insurance policies with existing line of business, brands can increase the value proposition of their product/service.
- Improve brand image – Embedding customized and valuable insurance coverage, brands can move towards a customer-centric approach and improve their brand image.
- Personalized insurance – Embedded insurance makes customizing insurance easy. End customers get policies and premiums that are modeled specifically to suit their requirements.
- Quick and hassle-free insurance coverage – Purchasing a one-off policy can feel burdensome and embedded insurance allows customers to protect themselves against uninsured losses with bundled, convenient to buy insurance policies.
- Reduce the insurance protection gap and increase coverage – Embedded insurance has introduced customers to risks they had not thought of before, example insuring an uber ride. This has helped close the protection gap and increase coverage.
Types of Embedded Insurance
- Soft embedded insurance – Users have a choice to opt-in insurance as a part of the product/service
- Hard embedded insurance – The insurance coverage is automatically included as a part of the product/service
Embedded Insurance and Technology Partners
According to financial experts, the industry has come successfully out of the first innings which is the distribution phase. Now, it is moving towards the second innings which involves integrations with technology partners. Here, the partner ecosystem plays a key role.
How can technology partners like iNube help in embedded insurance?
iNube’s APIsLive Embedded Insurance will help you tap into the embedded insurance market. The highly scalable platform enables the instantaneous launch of byte-sized, usage-based, personalised coverages. The platform enables:
- Quick configuration of new insurance products
- Ease of sharing the product through APIs
- Digital buying journeys that are designed to be responsive
- Instant distribution of pre-integrated insurance products