Embedded insurance’s cultural shift redefining brand-customer relationships
Embedded insurance market was valued at $63B in 2022 and is expected to reach $482B in 2032.
Embedded insurance, an innovative approach integrating risk protection into customer purchase journeys, is gaining popularity as businesses offer coverage alongside their products or services.
According to DataHorizzon Research, the embedded insurance market was valued at $63 billion in 2022 and is expected to reach $482 billion in 2032.
While the economics behind embedded insurance for many brands are opportunistic, its rise also represents a significant transition in how consumers interact with insurance products. This naturally necessitates a cultural transformation for both brands and end users, a shift that involves brands integrating insurance into their core value proposition, in addition to an opportunity to make insurance a feature and not a standalone product.
How did we get here?
Traditionally, insurance has been purchased as a separate product, often viewed as a necessary evil rather than an integral part of the customer experience. However, the rise of industries like the sharing economy have changed the proverbial game for insurance.
For example, AirBnB’s introduction of AirCover provides hosts with liability insurance and property damage protection, exemplifying how companies can integrate insurance into their core offerings. This approach allows customers to access relevant coverage directly through a familiar brand, simplifying the process and potentially increasing loyalty.
As consumers increasingly prefer such streamlined experiences, businesses across various sectors have an opportunity to enhance their value proposition through embedded insurance solutions.
These trends ultimately allow brands to leverage their intimate understanding of customer needs and behaviors and make sure that any required or specialized insurance is seamlessly offered as part of their core experience. While some market segments may prefer to offer a range of insurance options, including embedded and traditional choices, the key lies in convincing stakeholders of the positive impact on customer loyalty and conversion rates that embedded insurance can bring.
Brands as insurance providers
Integrating insurance into a brand’s core value proposition is a powerful way to enhance the customer experience. Rather than viewing insurance as a standalone product, savvy companies are repositioning it as a valuable feature that complements their offerings. This shift transforms insurance from a transactional purchase to an essential component of the brand’s overall value.
By making insurance an integral part of the customer journey, brands can strengthen relationships and build trust. Customers are more likely to engage with a brand that anticipates and fulfills their insurance needs, rather than forcing them to seek out coverage separately. This level of integration allows brands to leverage their deep understanding of customer behaviors and preferences to deliver tailored, relevant insurance solutions.
Brands have access to unparalleled data; data that can guide them to find the insurance products that align most closely with the needs and wants of their user base. When they do, it means that insurers and Insurtechs will also benefit by creating a more compelling insurance product propelled by underwriting driven on their unique data, in combination with outside data sources.
This ultimately leads to better pricing and program economics for everyone involved – including the consumer. Additionally, embedded insurance opens up new opportunities for cross-selling and upselling. When insurance is seamlessly woven into the customer experience, brands can identify specific protection needs and present relevant offerings at the optimal moment. This not only enhances the customer’s experience but also drives incremental revenue and loyalty.
Embedded insurance benefits for consumers
The shift towards embedded insurance offers significant benefits for consumers. Although ironically if executed correctly, it’s not a trend they would actually take note of. By integrating insurance into the core of a brand’s offerings, customers can enjoy a more seamless and efficient purchasing experience. Rather than navigating the complexities of standalone insurance policies, they can easily access the coverage they need as part of their overall brand engagement.
Embedded insurance allows for greater personalization and tailored solutions. Brands that deeply understand their customers’ needs and behaviors can leverage this knowledge, in combination with their proprietary data to transform the purchasing experience. In some cases even pre-populated relevant data to reduce friction during the quoting and binding process.
Embedded insurance challenges and considerations
While the benefits of embedded insurance are compelling, there are a few unique challenges and considerations that brands must navigate. Striking the right balance between embedded and traditional insurance options is crucial, as some customers may still prefer the flexibility and choice of standalone insurance products.
Additionally, educating stakeholders, including internal teams and customers, on the value of embedded insurance is essential. Demonstrating the positive impact on customer loyalty, conversion rates, and overall profitability can be key to securing buy-in and driving adoption.
Regulatory and compliance concerns should also be carefully considered. While the brands are the ones creating the insurance opportunity in their platform, unless they are licensed, they will need to rely on an embedded insurance partner to provide and service their insurance offerings.
Brands can go through the process of becoming licensed to reap the benefits; which will necessitate hiring teams to ensure all relevant laws and regulations are adhered to. Alternatively, brands can work with a licensed partner who can make this process not only seamless but cost effective.
The future is bright, thankfully
As these shifts continue, brands and insurers will need to rethink the role that technology plays in insurance and how they tap into the potential of the unique and profitable risks present in consumers’ day to day transactions.
Across various sectors, from e-commerce and mobility to healthcare and financial services, we
can expect to see a growing adoption of embedded insurance. As customers become more accustomed to this integrated approach, the demand for embedded insurance is likely to increase, further cementing its place as a critical component of the modern customer experience.
Matheus Riolfi is the Co-founder and CEO of Tint. Before this, he was the director of international expansion at Turo and launched the company in Canada, the U.K., and Germany. He pioneered operations, including designing risk management in different company stages and sourcing insurance in various countries. He is a licensed insurance broker in all 50 U.S. states, and holds an MBA from Harvard Business School and a dual degree in business from the University of São Paulo and Kedge Business School.
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