What is insurtech: Definition, examples, tips
Learn about insurtech, how it's transforming the industry, and how insurance companies can reap the benefits.
People know they need insurance — and yet, traditionally, it’s often been seen as a cumbersome afterthought or legal necessity that can feel overwhelming and confusing. However, as the customer experience becomes more important and more purchases are made digitally, the insurance industry is moving from selling insurance to helping consumers buy insurance that’s best for them.
Perhaps that’s why embedded insurance is forecasted to grow more than six times larger by 2030 – to $722BN in GWP, with most of the growth in North America and China, according to InsTech London.
What is embedded insurance?
Embedded insurance is the real-time bundling and sale of insurance coverage or protection while a consumer is purchasing a product or service, bringing the coverage directly to the consumer at the point of sale.
As a result, the customer doesn’t have to go looking for coverage – and they may not even know they need it until they’re offered the opportunity.
Embedded insurance is about offering affordable, relevant, and customized insurance to customers when they need it most.
Examples of embedded insurance
As part of a larger move toward embedded finances, embedded insurance is growing in popularity. It’s a familiar model in industries like the airline sector, but is catching on across a broad range of industries.
Here are some examples:- Opting for extended protections on a new cellular device
- Travel insurance when you book a flight
- Coverage for new appliances while checking out – either online or in-store
- Airbnb offering Host Protection and Host Guarantee insurance
- Car rental companies offering coverage while renting a vehicle
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Better coverage, smooth CX: A win-win for consumers
Why is embedded insurance taking off? Simply put, it puts customers in control.
Consider this scenario: A customer researches a product online, compares prices, and then purchases a product. At the point of sale, they’re offered coverage for their new product.
It’s an easy option — something they can secure with just a few clicks from their mobile device, so they opt for the coverage. There’s no need to hunt elsewhere and make a separate purchase. They get immediate peace of mind.
Flexible, fast, and convenient, embedded insurance provides the kind of customer experience consumers today expect.
Seamless customer experience: CX can make or break a brand
A seamless customer experience is a priority for brands today, with 84% of companies that improve their CX seeing increased revenue.
New opportunities, broader reach for insurers
For insurers, embedded insurance offers new ways to reach customers online. By partnering with digital brands that have a broad reach, insurers can offer protection to consumers exactly when they need it.
Other benefits of embedded insurance include:- The protection gap – the difference between insured losses and uninsured losses — is growing wider every year. Offering coverage at the point of sale can help narrow that gap by making it easy for customers to purchase coverage.
- An embedded insurance solution can be integrated into an existing system through an open application program interface (API). APIs can help insurers analyze data and offer the right policy at the point of sale. APIs also enable them to meet customers on the channel of their choice, whether that’s a computer, laptop, mobile device, or call center.
- Online shopping produces a wealth of data, including transaction and browsing history and expenditures. Using this data to create a customized insurance policy ensures risk information is accurate and updated in real-time.
- Two separate systems are linked via an API into a single shopping experience for the customer. With pre-built, production-ready mobile and web apps, an insurer can offer policies and services to prospective customers directly.
Embedded insurance could prove a gamechanger for the insurance industry by helping insurers reach the right customers at the right time with the right coverage.
