Insurance As a Perfect Match: Embedded, Bancassurance, Affinity

People do not think about insurance as something lovable or desirable. Typically, policies are purchased either due to the persuasive charm of insurance agents or because legal requirements mandate it (e.g., mandatory car insurance). We associate insurance with unpleasant, even tragic events like death, serious illness, accidents, fires, floods, and bankruptcy, which doesn't make it any more appealing. Even in the absence of such misfortunes, many feel that spending money on insurance doesn't offer tangible benefits.

But what if insurance starts "dating" with other industries like banking, telecommunication, retail, automotive? And what if it is additionally powered by technological engagement? That’s a completely different story!

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First Attraction That Elicits Positive Emotions

To challenge the negative perception of insurance, Affinity, Bancassurance, and recently Embedded Insurance emerge as a solution. These policies are integrated with other, more favored products and services offered by companies from other industries like automotive, banking, travel, retail, telco, health, energy, and others. By being connected to more desirable items like dream Caribbean vacations, the latest model of a smartphone, your banking card, or fitness membership, insurance begins to make its first positive impression. And this is just the beginning of a journey towards fostering positive customer experiences. Additional value-added services linked with insurance provide a comprehensive range of benefits, increasing the engagement with customers. In the current era dominated by digitization and the expanding role of the internet and phones in our lives, there are many opportunities for innovation in enriching insurance services. This opportunity is mainly seized by InsurTech companies but also more insurers and brokers are increasingly embracing this innovative approach.

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Traditional Dating versus Technological Engagement

Traditional Bancassurance and Affinity refer to the distribution of insurance products through banks, retailers, automotives, telcos, and other non-insurance companies. In those models, customers can purchase insurance products such as life insurance, health insurance, or property insurance alongside their banking product, leasing contract, telco subscription, or purchase of an electronic device. Traditional Bancassurance and Affinity rely on the partner’s physical distribution channels to sell insurance products, through selected and professionally trained employees of the bank or retail shop.

On the other hand, Embedded Insurance refers to the seamless, digital integration of insurance products directly into the purchase of non-insurance goods or services. This digital match creates a more holistic and streamlined experience for customers, as insurance becomes an inherent feature of the primary product or service, contextually linked with the main purchase, easily understood, and accessed via “one-click shopping".

The rise of advanced technologies like APIs, enable any third-party product or service provider from any sector – either it is a bank, a travel agency, a car manufacturer, or a telecommunication company - to seamlessly integrate innovative insurance solutions into their customers’ journeys. Harnessing Big Data, Internet of Things (IoT), and Artificial Intelligence (AI) helps to create personalized, dynamic insurance solutions, synchronized with your lifestyle, supporting you daily, not just in times of crisis. And it is well-know fact that such regular interactions and rewards are the most effective tools for building customer loyalty.

Good Match, Like What..?

• Bike Insurance embedded within the bike purchase or rental which is popular micromobility service used by delivery couriers or city riders. Beautiful views and the wind in two wheels can distract and lead to loss of balance and a fall. The policy added to a bike is activated automatically when you are cycling. In case of an accident not only it covers the costs of a broken bike, but also provides a real assistance and medical treatment to you and your broken bones. The policy provides also the protection shield against…thieves who are also great bike enthusiasts.
• Event Cancellation Insurance embedded in booking services. It guarantees reimbursement of costs when you must cancel your holidays, hotel, flight, or other event for reasons such as getting sick, losing a job, car accident, theft of passport, or flooding at home.
• Pay-How-You-Drive Insurance embedded in the application for ride-hailing drivers like Uber and Bolt, flagship representants of gig economy. The insurance monitors when a gig driver is” in service” and when not and adjusts premiums accordingly. When he drives less and safer – he pays less for his insurance.
• Pet Insurance embedded into pet food subscriptions. This “four paws” insurance bundled with pet food subscriptions encourages responsible pet ownership and covers veterinary expenses when your Rocky or Milo gets sick and needs special medical treatment.
• Home Insurance bundled with your mortgage loan. It can be additionally paired with smart home devices such as security cameras, smoke detectors, and leak sensors, which allows you to monitor and protect your property more effectively against theft, fire, and water damage.
• Health Insurance embedded into your fitness trackers. It incentivizes you to lead healthier lifestyles by offering premium discounts based on your physical activity levels and encouraging regular exercise.
• Cyber Insurance bundled with your cloud storage subscription. It provides you with comprehensive protection against data breaches, ransomware attacks, and other cyber threats, along with secure storage solutions for sensitive information.
• Gadget Insurance embedded into the online shopping path when you are finalizing your basket and heading towards payment gate. It safeguards your smartphones, laptops, and other electronic devices against accidental damage and theft, complementing the purchase of precious items.

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Insurance "Dating" in Conclusion

The way insurance works is undergoing a major transformation with the introduction of Affinity, Bancassurance, and recently Embedded Insurance. It's not just a simple cross-market affair. And it's not just about offering more. It’s about transforming the entire customer experience. By embracing partnerships with other industries and leveraging technology, insurance providers are strengthening customer connections and loyalty, and opening endless possibilities for innovation. With insurance embedded seamlessly into everyday life, the potential to positively impact consumers' lives is truly boundless.