Hand on heart: where is the insurance industry really at today? The user experience is mediocre and insufficient across the board. Most processes are complicated and lengthy. Cost efficiency is lacking. Digitalistion is fragile.
Embedded insurance is changing all this! In combination with Open Finance, it has the potential to become the driving force that ushers in a new era in the insurance industry. In the following, you’ll discover what embedded insurance is, how you can use it, and how it will overcome many of the insurance industry’s future challenges
What Is Embedded Insurance and What Can it Do Today?
Embedded insurance is a modern, data-driven and customer-centric form of insurance. With embedded insurance, a company that is not itself an insurer offers its customers products or services as a package with insurance. This way, the insurance offer is made directly and immediately when the purchase is made online, i.e. in real time and at the point of sale, in both a seamless and completely digital manner.
Embedded insurance has many faces: Tesla, which includes car insurance with its vehicles; Revolut, which offers travel insurance directly with its bank accounts; the Lieferando driver, whose accident insurance is part of their job; or the Kangaroo Home Security Cam with package theft insurance included. The end result? An utterly convenient, relevant and thus successful customer experience! This is demonstrated by the already very high conversion rate of embedded insurance offers.
However, the majority of products are still a long way off from the data-driven, end-to-end embedded insurance that is sold within the ecosystem. In addition to being offered as a package, embedded insurance will also find its way to customers as part of a platform ecosystem, where it’s offered as an add-on. An example of this would be Shopify’s cooperation with Stripe Treasury. These are relevant additional offers that customers will not reject if they’re offered at the right time and in the right place.
What Are the Benefits of Embedded Insurance?
The buzzword digitalisation is echoing loudly in all industries and should actually no longer frighten anyone, but rather make them look forward to new opportunities. However, the reality is that it can seem threatening at times. Embedded insurance, however, is a way for insurers to play a leading role in this area with a smart, data-driven insurance offering. In short, insurance management at the push of a button. The principle of embedded insurance is worthwhile for all parties involved:
Embedded insurance for end customers: tailored, simple and convenient
Customers not only get their desired product; they also benefit from greater security thanks to the insurance – and it all happens online in a convenient and seamless manner either as part of the purchasing process or on the platform. This stands in total contrast to the previously widespread experience of many customers, where taking out insurance was usually a complicated, time-consuming and cumbersome task.
In addition, the insurance offer is optimally personalised and adapted to the current needs of the respective customer. If this embedded insurance experience is taken a step further, it will also make handling easier. With Open Finance, insurance becomes part of the ecosystem, enabling end customers to do everything in one single frontend.
Embedded insurance for insurers: in the right place at the right time
When it comes to current embedded insurance products, insurers already benefit from the fact that their policy is not a standalone product, but an integrated component of an attractive package. This way, it has a very short sales funnel and addresses the target group at exactly the right time and place. The middle end customer segment in particular, i.e. individuals, families and smaller companies, can be easily reached in this way – representing a billion-dollar opportunity for insurers.
The success rate of this form of insurance sales is correspondingly high. By digitalising the customer experience, insurers also gain access to new markets and customer groups. After all, more and more customers are opting for products that offer them the same level of convenience to which they have become accustomed from GAFA. In short, they want everything to be in one place, easily accessible and to enjoy an intuitive user experience.
Embedded insurance for insurers: optimised process costs
Another advantage is the reduced workload for sales and office staff thanks to the consistent digitalisation of sales. Offer preparation is digitalised. Processing is digital and convenient. Customer data recorded during the purchasing process can be transferred automatically. All in all, this results in a significant reduction in sales and administrative costs.
Imagine no longer being inundated with documents! No more manual data entry! What’s more, the resulting high level of data intelligence ensures accurate customer profiles. This is digitalisation at its best – and it directly translates into lower process costs.
How Are Insurance Providers Taking Advantage of Embedded Insurance Today?
To get started with embedded insurance, insurance providers can make their products available via an API or as a white label product. This enables third parties to integrate insurance offers as a relevant add-on for their customers in the checkout process. The barrier to entry is comparatively low, there is minimal implementation effort required and the financial investment is manageable.
As an insurance provider, aligning yourself this way today is an excellent strategy to protect yourself against a dwindling customer base. Adopting a personalised customer approach promises an increase in sales and optimal utilisation of customer potential. Ultimately, however, this journey into embedded insurance just marks the beginning.