Lately, embedded insurance has become the industry buzzword. More than mere jargon, the concept is changing the dynamics of the insurance landscape around the world.
In the financial market in general, there is a high demand for embedded finance and the insurance industry has also caught up. Insurtech companies are increasingly tuning into embedded insurance since the e-commerce market is meeting with the insurance market.
For instance, an online purchase of say, a mobile phone will give customers the ability to opt-in for insurance. Within only a couple of clicks, they will be able to purchase an insurance policy for the new mobile phone.
According to a study by Bain & Co, there is a rise in the number of insurance companies exploring embedded insurance. Furthermore, insurtech companies offering embedded insurance services are doing well among venture capitalists.
With the help of modern technologies, insurtechs, insurance companies, and businesses are able to streamline the insurance journey of customers.
Now, it’s time to take a look how the embedded insurance is all set to transform the insurance industry.
1.Painless Purchase with Embedded Insurance
Understanding an insurance policy and purchasing has always been considered a cumbersome process. From filling in the details for application forms to the claims processes, insurance has been a hassle for people, especially busy people. With embedded insurance, the entire process becomes a lot simpler.
In this process, insurance is offered when the company already has all the relevant information. In fact, the policies are tailored after accumulating a huge amount of data. Hence, the process is streamlined and similarly, the claims processes are also simple.
As opposed to traditional insurance channels, embedded insurance products are offered when the customers are most likely to purchase it. For example, a travel insurance is offered when booking a flight. The timing, context, and convenience plays a major role and encourages the customer to purchase it. This model overturns the whole, insurance is sold and not bought idea entirely.
2. The Embedded Insurance Partnerships
In the embedded insurance space that is picking up speed, non-insurance organizations have already made their way into the ecosystem. They are also actively capitalizing upon the high degree of influence they have on their customers.
For example, Shopify, a Canadian multinational e-commerce company has Shipsurance, a shipping insurance company offering coverage for shipments sent via the major shipping carriers worldwide. Traditional insurance companies are leveraging the right technology to create partnerships with the non-insurance organizations. Insurance companies are revisiting their business models and strategy to fit into the new embedded ecosystem.
3. One-Size-Fits All Concept is Getting Outdated
A customer leaves a massive footprint of digital data online. Businesses use this to market and sell their products. With this data, insurance companies in partnership with e-commerce companies can understand the specific requirements and risks of an individual.
Insurance companies working with older IT systems may find it difficult to cope with these changes. However, by partnering with insurtechs and e-commerce, traditional insurance companies can use the data to create contextual policies that are perfectly in line with a customer’s risk factors.
When insurance companies are able to build packages that offer highly relevant covers, it will significantly improve customer satisfaction. This way, personalized coverage will be more preferred by all the parties over the previous one-size-fits-all model.
4. The Protection Gap
What’s Embedded Insurance got to do with protection gap? Protection gap, it is the split between the amount of insurance that is beneficial economically as well as socially. This gap has been widening globally. According to research by the Swiss Re Institute, the gap doubled in the past twenty years which can be harmful to society as well as individuals.
Embedded insurance will play a major role in closing this gap. When customers find valuable insurance cover included in their purchase at the point of sale, it results in customers gravitating more towards making an insurance purchase thereby, contributing towards closing the gap.
Closing Lines
Embedded Insurance, in its modern form, is set to transform the insurance sector worldwide significantly since it benefits all the parties involved.
For customers, insurance policy purchase becomes super convenient and fast. For businesses that partner with insurance companies, they can gain additional income by selling risk protection and improving customer experience.
Most importantly, embedded insurance allows insurance companies to facilitate large-scale insurance distribution to a large customer base.
To make the perfect use of this opportunity and enable more innovation, insurance companies need a platform that can empower them with all the right tools and technologies. Check out iNube’s EMBEDLive, a smart embedded insurance platform that enables insurance companies to take their innovations to customers.