Embedded insurance is steadily becoming a transformational concept across industries like insurance, finance, e-commerce, and a wider scope of transactions. It is steadily becoming a major insurance sales channel while ensuring access to a higher number of customers. Based on reports, the market for embedded insurance is slated to touch $700 billion in GWP (gross written premiums) by the year 2030, which is six times the present market size and more.
A Closer Look at Embedded Insurance
This concept is enabling better insurance integration and industry-specific insurance alike. Embedded insurance means the bundling of insurance with any service or product. This means that customers do not have to purchase any insurance coverage directly. Whenever they purchase any product or service, there comes an option to obtain insurance at a comparatively lower cost. The easy availability of the same and reasonable cost make it a better option for customers. This is steadily gaining popularity since several areas are not readily covered under insurance policies.
Embedded insurance solutions can offer coverage at reasonable costs for transactions like buying bus tickets or railway tickets, for example. There are also options to obtain insurance while purchasing electronic goods and other devices.
How it Works and Major Benefits
Based on recent embedded insurance trends, here are some points worth noting.
Challenges and Steps to Follow for Insurance Companies
There are a few challenges for insurers while some inputs will help insurance companies successfully venture into embedded insurance.
Insurance companies will increasingly require technology-enabled embedded insurance solutions to successfully foray into this space. A strong PAS should be built for launching and creating newer products and integrating partnerships along with rating engines for simpler policies with lower terms and conditions. Joint branding initiatives like white labeling of the front-end portal will be crucial along with integrations with partner systems and simpler claims systems. Embedded insurance offers several advantages for customers as well.
How Customers Benefit
Customers benefit from embedded insurance solutions in the following ways:
Going forward, it is evident that insurance companies will rely more on embedded insurance and partnerships with a wider spectrum of entities and brands. The industry will adopt this concept to offer a differentiator and higher personalization for customers along with evolving in tandem with the latest market trends.
FAQs
What is embedded insurance, and how does it differ from traditional insurance models?
Embedded insurance refers to the bundling of non-insurance products/services with insurance plans at the point of sale at nominal costs. It is different from traditional insurance models which cover only specific categories and have to be separately purchased by applying and completing documentation.
How can embedded insurance benefit consumers in various industries?
Embedded insurance can be beneficial for customers since they can quickly get access to insurance with their products/services at the point of sale without leaving the application or website. This coverage is available at a lower price and often tailored to their specific needs. This will ultimately boost convenience and save time as far as customers are concerned.
What industries are currently embracing embedded insurance, and what are some notable examples?
Several industries like e-commerce, travel, hospitality, automobiles and consumer goods are already adopting embedded insurance. Some examples include Airbnb’s partnership with Generali, AON, and Europe Assistance for its travel insurance plans.
What challenges and regulatory considerations are associated with the adoption of embedded insurance in different sectors?
There are a few challenges including adherence to regulatory policies regarding data usage, security, and consent. Other challenges include creating 360-degree customer views, movement of data across geographies and regulatory mechanisms for the same, and ensuring a smooth claims processing system in sync with the non-insurance partner’s processes.
