Embedded Insurance -The Game Is On!
Welcome a New King
The agent-based distribution model has been a king in the insurance industry for over three hundred years, however its splendour is starting to fade. Traditional sales channels still work but the market environment has changed dramatically over the past few years, and insurance distribution is also changing. Digital consumption accelerated by the pandemic, new generations of Millennials and Z clients gaining purchasing power, digital platforms integrating more and more economic activities, insurtech challengers emerging - all those trends bring a new energy and innovative approach to the sluggish industry.
Today the crown is put on a head of a new king – Customer - who demands personalisation, simplicity, transparency, and fair value for money, provided in the right place, at the right time, and in the most convenient way - a digital way! Traditionally, insurance policies were sold through agents, brokers, banks, and affinity partners, with the use of a phone, face to face interactions, and piles of paper documents. Today insurance represents tremendous opportunities for growth – but only for those players who are ready to embed it into our digital lives.
One-Click Insurance Worth 3 trillion USD
The hottest word which made its way into the everyday vocabulary of insurance professionals across the world is “Embedded Insurance”. It offers protection and added value relevant to customers at the point of sale when risk is a top priority. Embedded Insurance is becoming the part of a smooth digital process where insurance is bought, not sold, contextually linked to the main purchase of a product or service. We may say it is a shift from "one-stop" shopping to "one-click" shopping. Advanced technologies, mainly APIs, enable any third-party product or service provider in any sector to seamlessly integrate innovative insurance solutions into their customers’ journeys. Embedded Insurance is estimated at 3 trillion USD by 2030, more than 50% of the worldwide gross written premium today.
Win - Win - Win and…Win
All insurance players – insurers, distributors like banks, retailers, product manufacturers, service providers, digital platforms - should look carefully at this fast-emerging opportunity and define strategies of?where to play?and?how to play. Insurers are experts at managing risk, but they are lacking rich, real-time data to be able to create affordable and personalised products that keep pace with market demands, new trends and new risks emerging. Embedded Insurance helps to solve many issues with traditional insurance products which are complicated, inflexible, expensive, difficult to buy, and their benefits are uncertain. Embedded Insurance creates a ”win-win-win-win” situation for the distributor, the insurer, the customer, and the society. The insurance industry is challenged to rethink its business model and deliver greater value to the market, for the benefit of all its stakeholders. Embedded Insurance provides the answer.
Why Has It Started?
Embedded insurance is the result of following broader market trends.
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Insurance Science ‘Dethronized’ by Technology
Insurance sceptics will say it’s too naive to be true – offering customers exactly the insurance they need, at the time they need it, in a way that makes it easy to understand – it is not how insurance works. Insurance is like science! ?It requires scientists - actuaries, brokers, and agents who will explain it. Yet, data and new technologies, like Cloud Computing, Blockchain, Internet of Things, Telematics, and queen of queens Artificial Intelligence - have proved that what was impossible is within reach. There are multiple examples of companies that have pivoted their business models, reimagined their product offerings, and embedded insurance into their clients’ journeys.
Big & Bold Pioneers in Embedded Insurance
Technology players are well positioned to embed insurance into their digital platforms because they are fronting the relationship with the customer and controlling its critical pieces such as customer journey, data, and trust in their brands. The orchestrators of digital ecosystems that bring together services, marketplaces and devices into one trusted experience, are most successful?in embedding insurance into their user experiences.
Let’s look at few examples:
Those companies have been mentioned for a reason. A successful launch and maintenance of Embedded Insurance requires the right mix of companies with large customer databases, digital distribution, relevant products, and technology to make the magic happen.
How Can This Magic Be Turned Into Reality?
In terms of how to win Embedded Insurance opportunity, all players in the market need to consider whether to build things internally or collaborate with others. There are pros and cons of each, depending on levels of ambition and capabilities. However, as Embedded Insurance is a “win-win-win” game, cooperation brings much more value than competition.
So far, digital platforms have not taken full advantage of the data they hold about their customers. They sold standardised, "one-size-fits-all" insurance because such offers were provided by traditional insurers. Insurtechs can help to provide personalized Embedded Insurance which can be, like puzzle, reconfigured in creative and fast ways. Instead of months of designing, testing and launching a new insurance product, insurtechs can do?it in days or even hours. Insurtechs ?play a key role because they can bridge the gap between a long tail of underserved digital platforms, and the insurers who cannot reach them directly because of their technology shortages and legacy issues. Insurtechs armed with APIs, AI, and data from digital platforms guarantee a successful transition of insurance from the analogue "one-size-fits-all" model of yesterday to the digital and customer-oriented model of tomorrow.
London Interaction UX/UI Designer ?? HETT Award Finalist '22 ????┋SystmOne Digital-EPR NHS User-Centric Design Specialist┋MBCS RITTech Member┋Helping busy CEO's & Thought Leaders with Personal Brandings┋AI Entrepreneur.
8 个月Danuta ?ukowska Let your passion be the reason for your season.
IoT | Web3 | Manufacturing | Speaker | Author | Consultant
8 个月Spot on.
Coach | Problem-Solver | Innovation
1 年Great article - thanks for putting it together!
Activate Innovation Ecosystems | Tech Ambassador | Founder of Alchemy Crew Ventures + Scouting for Growth Podcast | Chair, Board Member, Advisor | Honorary Senior Visiting Fellow-Bayes Business School (formerly CASS)
1 年Moving a 335 year insurance market upside down Danuta insurtech speed allows for these absolutely new and uncomfortable business models
former CEO/COO of Insurance Companies
1 年Embedded insurance is with us since already some time. And I believe bancassurance success proves that it is working and might be win-win-win for all parties involved (insurer-bank-end customer). But of course there are new entrants/new categories od clients which can be addressed by insurance in a efficiente and CX oriented way