Everything you need know
Embedded insurance allows insurers and non-insurance intermediaries to offer customers tailored and cost-effective insurance products embedded in the purchase journey of non-insurance products. For example, your credit card issuer may provide you with travel insurance as an added benefit to using your card.
While many people are familiar with traditional insurance products, such as life and auto insurance, embedded insurance still needs to be introduced and better understood. In this blog post, we'll explain everything you need to know about embedded insurance.
What is embedded insurance, and how does it work?
Embedded insurance is an innovative way of offering customers tailored and cost-effective insurance products. The core idea behind embedded insurance is that companies can offer this combination of services, analytics and insight at the right moment in the customer journey. Embedded insurance allows business owners to ensure that their customers have appropriate coverage at any given time, seamlessly integrated into existing products and services. By accessing customer analytics, businesses can better understand consumer behavior and habits, providing valuable customer insight. Embedded insurance offers an excellent opportunity for companies and customers alike, allowing goods and services to be more cost-effective while giving customers peace of mind that they are getting the coverage they need.
Some examples of Embedded Insurance. Embedded insurance is any insurance or protection that can be purchased during the purchase journey of another product or service. For example, embedded auto insurance is becoming increasingly popular as it enables drivers to easily and quickly purchase auto insurance coverage with the same provider they used for their car loan. At the same time, embedded home insurance can make it easier for homeowners to purchase coverage at the point of sale when buying a new home. Embedded insurance can be incredibly convenient for those purchasing a home or a car – two large financial transactions that often require coverage or protection against unexpected events. Finally, term life insurance can be included in existing policies which helps customers save time and money while still getting the coverage they need.
What are the benefits of embedded insurance?
Embedded insurance provides many advantages for insurers, non-insurance intermediaries and customers alike.
Insurers. Insurers, for instance, can benefit from having a direct relationship with the customer and access to valuable customer data. This helps insurers become more efficient and better understand their customer's needs.
Non-insurance Intermediaries. For non-insurance intermediaries, such as banks and credit card companies, it allows them to offer value-added services that enhance the customer experience while also gaining insight into customer behavior. By providing embedded insurance, businesses can increase customer loyalty and ensure customers have appropriate coverage at any given time.
Customers. For customers, embedded insurance allows them to take care of their insurance needs without going through long, drawn-out processes and making additional payments. With embedded insurance, valuable customer data can be accessed to understand their behavior better and offer more tailored products and services that meet their needs. Embedded insurance is also often cheaper than buying separate policies from different providers – making it an excellent value for customers.
In addition to the above benefits, embedded insurance can help businesses reduce costs and increase efficiency. By leveraging customer insights and analytics, companies can better understand their customers' needs, leading to improved processes and products that are more cost-effective. This not only helps the business save money in the long run but also allows them to offer more tailored products and services that customers need. Finally, since insurers and non-insurance intermediaries can access valuable customer data, they can create cross-selling opportunities and strengthen customer relationships. These opportunities can also help boost customer loyalty and give businesses a competitive edge in the market. By offering customers convenient access to customized insurance products at the right moment in the customer journey, embedded insurance can help businesses increase customer loyalty, save costs and reduce financial losses. For these reasons, it is no surprise that embedded insurance is becoming increasingly popular amongst consumers and businesses.
Opportunities with Embedded Insurance
Embedded Insurance provides businesses with a platform to access insurance products from trusted providers, allowing them to choose the most appropriate coverage for their business needs. Companies can customize their coverage plans to meet specific requirements and budgets. Embedded Insurance's technology-driven capabilities give businesses greater control over risk management decisions, enabling them to identify risks more effectively and determine appropriate coverages.
Embedded Insurance simplifies obtaining insurance coverage by removing the need to contact multiple insurers. It also helps consumers compare the cost and value of different policies. Embedded Insurance's cutting-edge data analytics can help customers with their risk profiles and make smarter decisions regarding purchasing insurance policies. This could enable customers to tailor their coverage plans to get the most value out of their insurance while staying within budget.
Embedded insurance presents an attractive solution for businesses and customers by offering a convenient platform for obtaining quality coverage at competitive rates.
The Future of Embedded Insurance
Insurance is an integral part of our lives as it helps us to protect ourselves and our loved ones against potential risks. As technology advances, it's only natural that the insurance industry will evolve. Many experts predict that the future of insurance lies in embedded policies due to technology making data more accessible to insurers. Overtime technology will keep making it easier to provide additional protection based on specific data gathered through a customer's lifestyle and activities. Helping create better relationships between consumers and insurers and allowing non-insurance intermediaries to add value while making the process more cost-effective for everyone involved.
For example, as car technology advances, auto insurance providers can use their client's cameras, ultrasonic sensors and radars. This data can be sent directly to the insurer, who then uses it to determine the risk level of each customer and adjust their premiums accordingly. By taking into account real-time information such as this, insurers could become more precise when assessing risk and offer more tailored coverage options for customers.
The Rise of Bancassurance
Bancassurance is an arrangement between a bank and an insurance company that involves selling insurance products by embedding them in a bank’s distribution channels. It is an effective partnership strategy between banks and insurance companies wherein each entity leverages its customer base to expand its reach into new markets. Bancassurance is a great example to speak about when speaking of the future of embedded insurance. In fact, according to reports, 50% of life insurance policies in many European countries are purchased through Banks, and the model is steadily growing in interest in the US market. The global bancassurance market is estimated to have a compound annual growth rate of 6.66% and increase by USD 404.89 billion by 2027. This arrangement also offers cost savings through shared resources and increased cross-selling opportunities for both parties involved. While customers benefit from the convenience of buying insurance customized to their needs directly from their bank.
Bottom Line
Embedded insurance is a beneficial practice for all parties involved, presenting advantages to insurers by facilitating better customer understanding and insights into behavior. Intermediaries also benefit from offering value-added services that improve the customer experience and gain valuable data about customers in real time. Bancassurance serves as an excellent example of how this model works efficiently - with increased technological development, it will only continue to get easier for personalized products embedded in custom journeys to be employed successfully.
If you're interested in learning more about how your business can benefit from embedded insurance, fill out our contact form today!
