How Embedded Insurance can create a more personalized insurance industry

Written by Farhan Abdulbari, Director of International Business Development, Vivy

If Netflix can personalize what I watch on TV, why can’t my insurer quote based on me as an individual rather than a simple line item? Currently, health insurances are sold by traditional insurers who follow traditional routes to quotation. However, if Tesla can sell car insurance and a maker of HR software can sell group health policies, why can't my local gym sell me health insurance? By leveraging data insights from non-traditional sources, insurers are able to provide customized insurance that is as individual as your netflix playlist!

While embedded insurance is still in its early stages, it has massive growth potential. As noted in the?embedded insurance 2.0 report, $5 trillion of insurance could be distributed by non-insurance brands worldwide over the next decade, making up roughly 16 percent of the forecasted global insurance spend—up from 1 percent sold in embedded today. Embedded insurance is currently just a small part of the global gross written premium (GWP) at less than $150 billion, it is forecasted to grow by six times to over $700 billion by 2030. The potential of embedded insurance is even more significant in developing markets such as South Asia and Latin America where insurance coverage has historically lagged behind other markets.

Opening the door to distributors outside of traditional channels and tapping into their existing ecosystem presents a significant opportunity to insurers to expand their product distribution to where their customers actually are, ensuring more people around the world are protected. With the potential to capture their customer’s health data, motivations and goals through their ecosystem, this serves as an opportunity to enable insurers' with more detailed risk insights for entry into new risk pools that were previously under served– an important step towards closing the health protection gap.?

To enable the creation of these new products and delivery channels, data becomes an even more valuable commodity. Companies can leverage multi-dimensional insights to personalize their offerings and provide a customized experience for their customers. Embedded insurance as a concept involves integrating insurance products into the customer journey of other products or services. For example, Tesla offers car insurance to their customers as part of the purchase process. Another example includes a home security company offering home insurance. Both approaches allow for a more seamless and personalized insurance experience, with customers receiving coverage tailored to their specific needs without having to go through a separate insurer.?

An example of a company successfully utilizing embedded insurance is Lemonade, a digital insurance company that offers renters, homeowners, and pet insurance. Lemonade has integrated its insurance products into a variety of platforms, such as booking and listing services for vacation rentals and travel insurance for airlines. By embedding its insurance products into these platforms, Lemonade has been able to provide a more personalized insurance experience to its customers, as they can easily purchase coverage that is tailored to their specific needs.

Another example is Trōv, a platform that allows users to create a digital inventory of their possessions and insure them on-demand. Trōv has partnered with a variety of companies, such as Samsung and Wayfair, to embed its insurance products into their platforms. By doing so, Trōv has been able to offer personalized insurance coverage to users based on their possessions and usage patterns, rather than relying on traditional insurance categories.

A key factor to note at this point would be that embedded insurance is not just limited to startups. Traditional insurers are also starting to explore this approach. For example, Allstate has partnered with Openbay, a platform for finding and booking auto repair services, to offer on-demand accident repair services and insurance claims processing. This allows customers to easily receive repairs and file claims without having to navigate a separate insurer.

Similarly, Vivy by seamlessly integrating into an individual’s health journey, harnesses a vast range of data, including historical information. This empowers insurers with a wealth of invaluable insights, enabling them to be more of a partner to their insured policy holders. But to also craft personalized life and health policies that are tailored to the individual.

So, what does this all mean for the future of insurance? I believe that embedded insurance has the potential to revolutionize the insurance industry by providing a more personalized and seamless experience for customers. Customers in the era of Netflix and Spotify expect customisation and are increasingly demanding it from their service providers.. By integrating insurance products into the lifestyle of their customers, insurers can provide products & coverage that is tailored to the specific needs of each individual, rather than relying on broad categories.

However, as with any new concept, there are challenges to overcome. We at Vivy learned early on that Data Privacy and Security is of utmost importance when it comes to health data. For any model to be successful it has to?not only meet the standards of regulators and insurers, but protect the core interest of the customer at all times.?

As we continue to navigate the challenges and opportunities of the digital age, it is important that we embrace new ideas and approaches. Despite these challenges, I am quietly optimistic about the potential of embedded insurance to create a more personalized and efficient insurance industry.