One of the fastest growing trends in the insurance market today is embedded insurance. Predicted to reach $722bn by 2030, it is definitely something to watch out for.
In a recent post by Cloud Insurance, the company provided its opinions and market insights on how insurers can get into the opportunities created by embedded insurance.
Embedded insurance is a form of insurance that is integrated as a product or service within an offer by a third-party, whereby the third party’s core offering may not be insurance. Unlike traditional insurance, embedded insurance allows consumers to only pay for a specific insurance when they need it.
Cloud Insurance said, “The very nature of embedded insurance gives consumers a better user experience. And we all know that a better customer experience often leads to returning customers and business growth—clearly a win-win situation for all parties.”
The company added that in essence, embedded insurance offers a level of personalised insurance that is more relevant to consumers, cheaper for them, and meets them where they are.
Cloud Insurance head of sales UK Alex Astengo remarked, “Insurance is being pushed to purchase at point of need, and embedded insurance makes this possible by minimizing friction in the purchase and enrollment.”
With the move from insurance – which is traditionally distributed through insurance intermediaries – going to embedded insurance, ancillary insurance intermediaries whose core business isn’t insurance are able to distribute insurance as a value-add service to their primary offer.
Why is embedded insurance trending now? While embedded insurance isn’t new to the industry, Cloud Insurance believes its popularity is swelling due to a number of current market factors. Firstly, millennials are now the largest buying market in the insurance industry – and many of these ‘digital natives’ are used to firms using technology to meet their needs through embedded touch points in the consumer journey – and expect this in insurance too.
Secondly, there has been a rise in investments in InsurTech. With this, many innovative startups and insurers have had the funds to use cloud computing for a competitive advantage and spearhead a shift in the insurance space.
However, these two factors together needed a ‘nudge’ to push it over the line – enter the pandemic. This pushed embedded insurance into the mainstream, with the need for digitally-delivered insurance no longer just a wish for a customer base, but a necessity for all insurance consumers.
According to Mariia Shvets – head of marketing for Cloud Insurance – finding the right partnerships are key to expanding the coustomer base and distribution of insurers and InsurTechs.
She said, “More and more insurers are teaming up with P2P platforms to provide cover for assets or services. Through such partnerships, insurance providers gain access to new target groups and business lines as digital platforms are well positioned to connect insurers with customers. This is enabling insurers to distribute their products through marketplace platforms, reassuring sharers that the policies they take out are relevant to the cover they need.”
Astengo added, “In most embedded offerings, the non-insurers will not want to take on regulatory and compliance requirements of insurers, so partnerships could benefit them in this way also.”
“Collaboration is typical in insurance and embedded offerings have been provided before. What’s different now is the ability of the partners to use data to offer more personalized and appropriate options to customers.”
How can insurers prepare for embedded insurance? The company cited the examples of focusing on customer-centricity, investing in digital transformation and being transparent with consumers as the three key steps for any company wanting to succeed in this area.
Cloud Insurance summarised, “Embedded insurance is going to be one of the primary channels of insurance distribution. To make sure they don’t miss out on this trend, insurers need to put on their creative thinking caps and create innovative partnerships to offer personalized insurance through embedded insurance packages.”
Read the full post here.
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