Digital Embedded Insurance: The New Imperative for Insurers and Customers

As digital customer journey’s continue to play an increasingly important role in customer acquisition, innovative ways to offer insurance have come about. Embedded insurance is on the rise, already prevalent in some of the most tech savvy industries and continues to chance the landscape of insurance.

Embedded insurance couples a product, platform, or service with coverage or protection as part of the sale. This turns the purchase into a value-added experience for customers where the insurance product is offered as a built-in feature to a separate customer sales flow.

This new paradigm offers many new channels to expose customers to your product at the cost of using a separate products or company’s infrastructure and sales slow.

Digital embedded insurance and other financial products are gaining momentum. Insurance coverage, previously offered as a separately purchased service from third parties, are now shifting to completely embedded insurance.

Embedded insurance model couples a product, platform, or service with coverage or protection as part of the sale. This turns the purchase into a value-added experience for customers where the insured product is not offered on an ad-hoc basis but as a built-in feature. This completely changes how a customer perceives your product. For instance, a car share membership now comes with mobility insurance, or a smartphone purchase protects against theft or any accidental damage.

Embedded Insurance: A Powerful Shift in Consumer Demand

Since COVID-19, business dynamics have changed drastically, and so have consumers’ preferences.  Consumers that favored traditional insurance plans are now more flexible in adopting bank-embedded insurance solutions, resulting in a priority switch between 75% and 98% globally, with India (98%), Indonesia (92%), and Italy (93%) being the top adopters.

Traditional Customer’s Switching to bank-embedded insurance solutions post-pandemic, by country

Source: Cover Genius

Tech Giants Increasing the Digital Bar

The digital experiences provided by high-tech organizations with companies like Apple introducing accidental coverage with AppleCare+ in 2011 and other players such as Amazon, PayPal, Uber, Tesla, etc., have tremendously changed the expectations of insurance customers and clients. However, this did not stop at one industry but was followed by other sectors such as eCommerce, social media, navigation, real estate, and so on. That said, insurers today face a rapidly increasing digital bar.

Angela Strange, the General Partner of Andreessen Horowitz further simplifies this notion by stating.

“In the not-too-distant future…every company, even those that have nothing to do with financial services, will have the opportunity to benefit from fintech for the first time.” Angela Strange, General Partner Andreessen Horowitz

Embedded Insurance as a feature: Unfolds Never-Ending Opportunities for Insurers

Embedded insurance, progressively incorporated into many industries and customer-centric platforms, is now revolutionizing how customers and businesses interact. This leads insurers to pursue profitable innovation and partnerships across different sectors to meet the rising challenges of reducing costs, exploring new revenue streams, and capitalizing on existing platforms, tapping into consumers’ already built brand trust.

Let’s take a look at some of these industries and the emerging platforms below:

Plug and Play Platform: Benefits for Insurers and Ecosystem Partners

Insurance as a Service (IaaS), a value-generating and adaptable service, is becoming increasingly common among insurers. It leverages API technology to allow product and service customization faster. This enables insurers to provide cutting-edge products and customized services at precisely the right time within the customer journey.

This model also lays the foundation for the ‘plug and play’ digital platform. A platform that facilitates smooth integration for the non-insurers, allowing them to integrate the pre-built insurance products into their existing APIs without changing their internal systems making the process extremely hassle-free.

A 6-Dimension Model Every Digital Insurer Must Know of

1. Two-speed technology
2. Adaptive digital strategy
3. Customer-centric digital tools
4. Business process digitization
5. Corporate-wide digital approach
6. Digital analytics for actionable insights

Source: Mckinsey

Digital Embedded Insurance is here to stay!

Digital embedded insurance solutions services have marked their place with the highest CAGR of 21.6% in the Asia Pacific, from the years 2021-2029, growing rapidly at 32.3% on a year-to-year basis. Additionally, as per the prevailing findings, it is safe to say that digital embedded insurance is here to stay for the long run!

Expedite your embedded insurance transition with Evvox

Evvox, with its advanced AI/ML technology and applied analytics, has the power to boost your embedded insurance solutions. Now is the time to extend your insurance capabilities to cater to a broader market segment. Get in touch with one of our experts and learn how you can capitalize on embedded insurance ecosystems!

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