One of the most popular topics captivating the insurance industry is embedded insurance. As insurers look to provide a better Customer Experience and deliver the right coverage to their customers, embedded insurance offers a unique way to meet consumers where they shop.
Businesses should consider how they can integrate insurance products with their customer journey to deliver a better shopping experience for consumers and offer protection for their products and services.
This post will explain everything your business should know about embedded insurance and how it can help you offer an unparalleled Customer Experience.
What Is Embedded Insurance?
Businesses have begun offering several embedded products to their customers, from banking services to lending. Embedded insurance is similar to the other types of embedded services.
Embedded insurance is the bundling or offer of an insurance product at the point of sale as a customer pays for products or services. This is not exactly a new way of selling insurance, but it has recently become more popular with businesses and customers.
One of the most popular examples of embedded insurance is the travel insurance most airlines offer as customers purchase their plane tickets. While this type of insurance product has been around for some time, it has become more popular with the uncertainty of modern travel thanks to COVID-19 and other factors.
Embedded insurance is also commonly offered by original equipment manufacturers when customers buy expensive items. For example, during the primary purchase of a new iPhone, Apple offers an embedded insurance product that covers the protection gap of the extended warranty.
Embedded insurance must make it easy for customers to purchase coverage where they shop. It is integrated into the purchase process so consumers don’t have to shop around for coverage after the fact or make a separate protection purchase.
How Does Embedded Insurance Differ from the Traditional Insurance Products?
Consumers want to ensure they have the proper protections when it comes to insurance coverage. While specific coverages will vary based on the policy being offered, embedded insurance can offer the same protections as traditional insurance.
However, embedded insurance differs from traditional options in several important ways that benefit consumers, businesses, and insurers. Let’s explore how embedded insurance differs from the typical insurance product offering.
Convenient Buying Experience
The primary way embedded insurance differs from traditional insurance is convenience. Embedded insurance is integrated directly into the purchase as an add-on. It delivers direct value to a purchase and is sold through the primary seller.
This makes the purchasing process far more convenient, and if the policy must be used, it is simpler for consumers to make claims directly to the company that sold them the initial product.
Compare this convenience to the process of traditional insurance. When buying a car, you must purchase a car insurance policy separately. Instead of being offered coverage at the point of sale, consumers must actively seek out insurance coverage.
This is far less convenient and requires more work from consumers after they make a purchase.
Embedded insurance grants more people access to coverage and protection. In the example of car buying, people are mandated by law to carry car insurance. As a result, they must go out and shop for insurance coverage.
However, in most other cases, people are not required to carry insurance, and as a result, people might not get protection or even realize that protection is available. For example, if Apple didn’t offer embedded insurance at checkout, most people would not have insurance on their devices.
Embedded insurance is far more customizable than traditional insurance options. Generally, insurance is sold as one-size-fits-all. There will be a few different options for people to choose from, but there is typically little room for customization.
Embedded insurance can be customized to meet a customer’s specific needs based on the purchase they are making, their history of purchases, etc. Customization delivers a better, more satisfying experience for customers and enables brands to bolster their reputation.
In the traditional insurance market, there is not a lot of creative collaboration. Embedded insurance allows a new type of collaborative partnerships between insurers and businesses.
Businesses are not becoming insurance companies; insurance companies are not suddenly selling iPhones and other products and services. As a result, insurers and businesses must collaborate to deliver embedded products, leading to innovative services and products for consumers.
Embedded products like insurance are making a lot of progress. More and more consumers turn to these innovative services every day. If you want to learn more about embedded insurance and other embedded finance products, contact an experienced FinTech development partner like Koombea.