Embedded insurance has been a hot topic in insurance in recent years, and interest in it is further encouraged by estimates that by 2030, this type of insurance will generate more than $700 billion in gross premiums written in non-life insurance.
Therefore, embedded insurance is opportunity, both for insurance companies from the commercial side, as well as for clients and distribution partners. Risks are becoming more complex, needs are becoming greater and it is necessary to provide the right level of protection in the right place.
The concept of embedded insurance
In addition to the unquestionable digital support of existing sales channels, such as agencies and brokers, insurers must research and monitor technologies that will open up new opportunities for accessing clients.
Namely, on local and global markets, there are numerous organizations, brands, platforms with which consumers and companies communicate more frequently than with insurance, very often on a daily basis. Consumers often interact with insurance once a year and realistically don’t really think about it. Therefore, why shouldn’t insurance companies cooperate with other organizations that are closer to consumers and create solutions that are more relevant and adapted to consumer habits and thus follow them in their regular activities. Such an approach is the essence of embedded insurance.
After all, some brands and organizations have more data about the consumer, and insurance is at its core based on data and designing an offer for the individual. An additional benefit is that in the new paradigm, the right insurance solution is offered to the client at the very moment when he is thinking about it or a related service.
Companies that integrate an insurance service into their offer want and have the right to design the user experience of their clients. When it comes to the desire to integrate the insurance service into one’s own product as intuitively as possible, there is no difference between large global players such as Amazon or Uber and local distributors and manufacturers.
Ultimately, the proximity to the consumer and the credibility provided by the joint appearance of the insurance brand and the selected organization result in the insurance price being less relevant for the customer, than is the case with some other digital sales channels such as Internet aggregators, which encourage price competition. In such a “B2B2C” business model, two business organizations provide a service to the client through an integrated channel. The first business organization (insurance) offers the second business organization access to insurance services that can increase its income, provide access to a larger number of clients or increase efficiency. At the same time, another organization sells the insurance service directly to the client using its own services.
Technology as a success factor
The development of technology and digitalization of insurance is a key factor when it comes to embedded insurance. It is estimated that in the next 4,5 years, embedded insurance will be even more digitally oriented, targeting will be more efficient, as will the simplicity of contracting. Existing strategic alliances, affinity insurance, bancassurance and other special partnerships will eventually become increasingly digitized.
It is up to the insurers themselves and the responsible persons in the companies to recognize the opportunity and create a new niche taking into account the technology available. Business partners can be auto distributors, airlines, electrical equipment distributors, banks, logistics companies, hotel chains, e-commerce platforms, pet product distributors and numerous other organizations.
We at In Cubis d.o.o. contribute to such strategy in terms of software and offer solutions that can turn embedded insurance into a profitable business model. It is a collection of web services, “CUBIS API”, which enable the integration of the insurance service during the purchase of any other related product.
With the right solutions, distribution partners can implement different types of insurance products in their services, from motor vehicle insurance, assistance, property insurance, health insurance, travel insurance, accident insurance, etc. From the perspective of the insurance company, regardless of which product, partner or brand, it is a necessary prerequisite to establish a flexible and modern architecture of the information system that enables the simplest possible implementation of insurance with each related service.
