Recently, embedded insurance is gaining a lot more attention within the industry. InsurTechs and insurers are growing embedded insurance. Venture capital firms see this as a possibility to generate high margin and high growth revenue.
If you still don’t know what is embedded insurance, it is the accumulation of protections or coverage within the purchase of a third-party service or product as part of the consumer journey.
Globally, embedded insurance promises to increase in number through the establishment of networks that include multiple partners.
These are the obvious reasons:
- We adapt to the changing customer’s lifestyle and needs.
- Technology improvement.
- Onboarding potentially tech-savvy distribution partners
Which is it? What will the future look like for embedded insurance and what should you do about it? You can find everything here.
Meet the Consumers Demands
Customers have increasingly shifted to purchasing insurance online in recent years, especially after the pandemic. They also appreciate the ease and convenience of buying insurance online from the comfort of their own homes.
You can offer the right coverage at the exact moment consumers are most in need by embedding insurance at different points along the customer journey.
The customer’s lifestyle has also changed, which has led to the rise in the sharing economy. Because of the high operating costs involved in owning a car, people are less inclined to do so.
Short-term rental companies like Zipcar and hiyacar would be preferred, as they include insurance. E-scooters are also popular for short-term rentals. These include insurance embedded in the vehicle, particularly for countries where it is mandatory.
Technology
Connect many modern digital platforms easily using APIs. Insurers can build their own platform, license a platform from Platform-as-a-Service providers such as Salty Insurance or partner with a Managing General Agent (MGA) specializing in embedded insurance. Insurance companies can partner with many MGAs.
Distribution
Amazon, Apple and Google are just a few of the most influential tech ecosystems. They combine services, marketplaces and devices to provide a trustable experience, which can prove especially useful for embedded insurance.
When your online company manages the customer and their data, trust, and communications, it is well-positioned to include embedded insurance in the buyer’s journey.
Challenges
Currently, insurance cannot be embedded in every customer’s journey. This is especially true for different markets.
It is important that insurance products are clear and simple, easy-to-understand, understandable, and have a clearly defined claims process. The balance must be reached between making the purchase process simple and easy while also ensuring all applicable legal regulations are met. KYC checks and fair pricing are just a few examples.
While these issues hinder certain types of insurance from becoming embedded, they’re not an argument for the insurance industry to sit back and relax or let Big Tech firms do all the work and eventually own the relationship with customers.
It is actually a field where insurers have the ability to use their industry knowledge to determine how to expand embedded insurance to cover more complex risks.
Last Word
Although not all types of insurance can be embedded in the current time, consumers’ growing interest in making more complex purchases online suggests that the market will expand to cover complex specialty risks in the future.
MGAs and insurance companies that invest in embedded insurance will reap the benefits as the market grows.
The article Is Embedded Insurance the Future? Find Out More at Entrepreneurship Life.