Let’s face it, selling insurance is hard enough at the best of times. Add in the fact that consumers in the digital age basically have the attention span of a millisecond, and the odds are not in the insurer's favour. So how can you attract the millions of customers in today’s metaverse to buy insurance when they are constantly bombarded with thousands of ads every minute they’re online? Especially when those ads are for products and services that are much more appealing and glamorous than insurance (even though they are less useful when disaster strikes).
One answer to this is embedded insurance.
Embedded insurance is the future of this industry. It is the only sensible way of selling insurance in this current digital age to the 4 billion people and 110 million plus businesses who are not served by the current models.
Embedded insurance is set to be huge – a $3 trillion market opportunity, where those that are connected, innovative, and focused will prevail.
What is embedded insurance?
Put simply, embedded insurance is coverage or protection of a product or service offered in real-time or at the point of sale. Let’s examine these two broad areas:
- Embedded insurance as part of a service
- Embedded Insurance as part of an event, sale, or a process.
Embedded Insurance as part of a service
Internet of Things (IoT) devices are becoming more prolific and being used in homes, rental properties, offices, supply chains, and factories. This provides a new opportunity to offer embedded insurance specific to the technology at hand, as these smart devices can collect data and provide a roadmap to the kind of protection needed. This includes covering buildings, supply chain risks, property damage (such as a floor, fire, and theft), and enabling new risk management services to be offered.
Embedded insurance as part of an event, sale, or process
One obvious example is when airlines offer trip or flight delay insurance before the customer finishes paying for their flight. Or the purchase of an item online where coverage is included against the package being stolen, arriving damaged, or being delayed. Another example relates to gig economy workers who need access to insurance cover specific to their needs on the job. A good example of this is a food delivery person who uses a motorbike to make deliveries and wants to have coverage for each trip they make.
All of these insurance examples have a high purchase rate because they cover real needs that are specific to the particular event and risk at hand. The risks they cover can be traced with data, which generally makes the claims process fast and simple. Embedding insurance into a process or event allows for wider distribution.
In today’s virtual world, everything is about experience. The customer journey is critical to the process - it has to be quick, easy, and seamless for both onboarding and payment of claims. The more complicated the sign-up process, the higher the likelihood of customers exiting out before completion.
The challenge for insurers and brokers is managing the high levels of data that are associated with embedded policies and processes. Insurers that develop these policies need to be full-stack – meaning they need to have the capabilities in tech, product design, and distribution together with underwriting. They need to have the ability not only to innovate the cover and policy, but to deliver the onboarding and customer journey through fully digital processes at scale.
