Traditionally, insurance has been sold through agents, brokers, and underwriters. Brokers bring in risk that needs to be insured. A carrier or insurer analyzes and underwrites this risk and assesses the premium. The client pays, and thus, we establish the insurance ecosystem. In case anything happens (within the agreed terms and conditions), clients make claims, and insurers settle them.
This process is needlessly long and complex, a relic of legacy operations. A single motor insurance claim may involve:
- Managing General Agents
- Original Equipment Manufacturers
Yes, every party involved in this chain creates some value. However, in today's age of digital innovation and tech-first online insurance products, it is time to go beyond the traditional channels of distribution for insurance.
Embedded insurance has made this possible. Let's discuss more how embedded insurance helps in omnichannel insurance sales.
What is embedded insurance?
InsTech London defines embedded insurance as "abstracting insurance functionality into technology in a way that enables any third-party distributor (usually a product or service provider in other sectors) to seamlessly integrate insurance products and solutions into their own customer propositions and journeys."
While that's accurate, it's a bit complicated. We like to think of embedded insurance as helping the right customer at the right time.
Consider a situation in which someone rents a car through an online portal. They've gone through the process and are about to pay. At this precise moment, they are the most concerned about insuring the car. There won't be a better time than that moment when you can sell your insurance. So if you were to offer a meaningful insurance policy, your chances of selling are probably the highest they'll ever be.
Some examples of embedded insurance products are:
- At the check-out pages of an e-commerce store
- Forming partnerships with car manufacturers to sell insurance as an add-on service to the customers (like Tesla and Volvo).
- Offering insurance for short-term rentals of cars or Airbnbs
Why have embedded insurance?
COVID forced most industries to change how they sell their product fundamentally. As customers spend more of their time online, you can tap into their digital journey to offer relevant insurance products at the exact moment they need them most. And, if you can make it easier by providing a smooth, frictionless, intuitive buying experience, all the better.
There's no need for a back-and-forth of documents or forms. You already know what the customer is buying, what the risk looks like, and how to train your underwriting models from historical data. If you really want to make a difference, you can even use insurtech to provide aggregated data of other users of the same product, using AI and machine learning (like we do).
You have the insurance fit for the customer, which you can plug into their digital buying journey. This will prove to be a quick win for you. It's also convenient for the customer—they get to buy something which fits their needs perfectly while also being hassle-free.
How is technology used in embedded insurance?
Embedded insurance can be implemented using webhooks, APIs, and SDKs. It can be integrated with legacy systems, so outdated tech isn't an issue.
Technology enables you to offer a smooth customer experience where customers have the convenience of adding insurance to the cart and completing the purchase.
Embedded insurance is not a new concept. But today—with the advent of digitization, AI, machine learning, and big data—embedded insurance is becoming super-smart and hyper-targeted. You now have access to data on a real-time basis, which can elevate your risk models and create more precise risk pricing. This helps you optimize the loss ratio, thanks to data-driven insights.
How embedded insurance helps in omnichannel insurance sales?
Embedded insurance allows you to pursue an omnichannel strategy and leave no stone unturned. You can find the right customer at the right time and offer them the right insurance product.
It's best to move beyond the conventional ways to distribute insurance. Instead, target the customer best suited for conversion. Embedded insurance opens up new avenues, partnerships, and ecosystems. You can forge alliances and leverage your partnerships to increase market share.
You book a customer with an opportunity to cross-sell other insurance products. It's much easier and cheaper to increase revenue from existing customers than generate revenue from new ones. Once a customer gets used to your products, it becomes recurring revenue. This way, you don't have to sell your insurance—it's just bought automatically.
Indeed, embedded insurance is the way to hyper-scale your insurance sales and distribution while gaining access to new customer bases. Increase brand awareness and cross-selling opportunities with embedded insurance. If you want to know more, we can show you how.