Embedded insurance is a relatively new term that is transforming the insurance industry and shows no signs of slowing down. In fact, according to an InsTech London report, the embedded insurance market is expected to grow to $722bn in GWP by 2030. This article will dive into this industry phenomenon and explain the benefits it can bring to customers and insurers.
Embedded insurance is offering insurance services alongside other products that customers are purchasing. Think about, for instance, buying a car. Customers can purchase their vehicle and car insurance simultaneously as a bundled deal with embedded insurance. Buying insurance services stops being an ad-hoc task, as it is provided as a native feature included in the website/platform that customers buy their products from.
With more customers turning digital to buy products, e-commerce has boomed drastically, and other industries were forced to meet customers there. Embedded insurance provides the customers with the convenience they are looking for, as it fits seamlessly in their online customer journeys. Embedded insurance is offering insurance services alongside other products that customers are purchasing.
Aside from the e-commerce boom, customers’ lifestyles have changed significantly over the past few years. There are fewer people buying cars, for instance, and more people renting e-scooters. Embedded insurance is an opportunity for insurers to reap the benefits of these lifestyle changes and adapt to their customers’ needs.
There are many examples and use cases for embedded insurance, particularly in the mobility products arena. Aside from purchasing or renting a car, which we mentioned above, you can also:
Most of these use cases fall into the P&C space.
Embedded insurance brings a significant number of advantages to both customers and insurers. Let’s explore how it can benefit both:
For customers, embedded insurance means they can get their insurance policies when it matters the most to them and the products that matter the most to them. Easy access to insurance at the time of purchase means that customers don’t have to look for insurance afterward and get more personalized and affordable deals. It is a two-for-one packaged offer that is more convenient for them.
There is an industry-wide emphasis on personalisation and its benefits in improving customer satisfaction, reaching new customers, and retaining existing ones. Embedded insurance is a part of this journey towards more personalised products, services, and customer experiences. It offers customers an end-to-end, frictionless experience that is likely to make them more satisfied with their customer journey and more willing to purchase insurance services.
As the saying goes, “Insurance is sold, not bought.” Buying insurance products can often be a cumbersome task that many will avoid, either due to complex customer journeys or simply because they think insurance isn’t necessary. Embedded insurance helps close the protection gap between customers and their products.
For insurers, embedded insurance means reaching more customers while having lower-cost distribution and low acquisition costs. While the social media era makes it easier for insurers to know where their customers are, what they are seeing, and what they are interested in, it also comes with its downfalls.
Due to very high competition and high customer demands, getting customers’ attention and engagement is a challenging task. Embedded insurance helps insurers get their products and services to their customers in a much simpler and more effective way when they need it the most.
Insurers can also access more data that can be used to improve existing products, reduce underwriting risks, and explore new revenue streams. Most importantly, embedded insurance is here to stay, so failing to adopt it may make it increasingly difficult for insurers to remain relevant. However, reaping the benefits of embedded insurance isn’t as easy as it may seem.
The most significant barrier to adopting embedded insurance lies with the reliance on decades-old technology stacks. Large insurers that have been around for a long time still entirely rely on their traditional IT infrastructure, which hasn’t been changed or updated. Embedded insurance is a newer phenomenon that requires new and advanced technology. However, insurers struggle to connect to new technologies, as these integrations are highly complex, lengthy, and expensive. Aside from that, they require a lot of resources and expertise.
Embedded insurance’s biggest challenge is an excellent opportunity for collaboration with third parties that offer innovative solutions. For instance, in the payments space, insurers benefit from having a solution like Imburse to connect to the payments world and optimize their payments system. This digital transformation would be incredibly lengthy and costly without a third party. It is also essential to trust the subject matter experts and receive as much guidance as possible for insurers to make sure they make the right business decisions, as these can make or break the success of any product.
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using various payment technologies and providers around the globe.
In a world where consumers’ payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or needs, Imburse will connect you to your choice of technology and provider.
Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.