Strategizing for the future of embedded insurance

STRATEGIZING
FOR THE FUTURE
OF EMBEDDED INSURANCE

The possibilities of embedded insurance are enormous: it can help carriers to capture new market segments, to generate new business, target underinsurance and deliver excellent customer experiences. But building an effective embedded insurance strategy is not always straightforward.

Embarking on an embedded insurance strategy can prove to be a brand reality check. Without a human agent in the loop, a carrier’s brand reputation has to do a lot more heavy lifting to bind the quote.

‘You cannot have embedded insurance unless you bridge the trust gap,’ said Nathan DauSchmidt, AVP, Strategy and Innovation at Great American Insurance Group, pointing out that only one insurer makes the top 100 brands in the US – USAA coming in at number 70 – while in global rankings only ‘Allianz shows up occasionally’.

Make sure you know your brand value because if you are in an e-commerce environment and a customer is looking to make a purchase, your brand may not be additive to that experience.

NATHAN DAUSCHMIDT

AVP, STRATEGY AND INNOVATION, GREAT AMERICAN INSURANCE GROUP

For some carriers, this will be an uncomfortable wake-up call. Brand partners – be they host platforms like QuickBooks, looking to offer work comp packages, or e-retailers, offering product protection at point of sale - will not tolerate their customers being exposed to sub-par CX.

‘Partners have very high standards on customer experience and they want to make sure you are treating their customers as well as they are,’ said Akhil Aniff, Director of Business Development at Pattern Insurance.

This matters not just in the onboarding – which needs to be as seamless as possible in the context of a regulated industry – but also post-purchase, when customers may have additional questions or need support to make a claim. This creates a challenge for insurers, who must square the expectation of a low-friction experience with the demands of regulatory compliance. Getting this right will, according to Adam Fischer, Chief Product & Innovation Officer at Clearcover, be a key differentiator.

A good embedded partner is one that can offer the emotional intelligence, the technology and the regulatory expertise to make sure the solution is both compliant and offers a good CX. You cannot get the growth unless you can eliminate some of the regulatory risks that brands get skittish about.

ADAM FISCHER

CHIEF PRODUCT & INNOVATION OFFICER,
CLEARCOVER

In addition to balancing the CX and compliance challenges, there’s also the issue of pricing. Some markets are very price sensitive, which can leave little margin for the insurance partner. This is offset, of course, by opening up a channel to a new pool of ready customers, and with that access to lots more data.

Pairing up with OEMs, for example, can yield huge volumes of data. According to Trenholm Palmer, Director of Insurance Services & Solutions at Volvo Financial Services, a Volvo truck generates six data points every second.

‘We have more data than we know what to do with, and some of it is useful and some may be useful in the future,’ he said, pointing out there are real opportunities to bring together data scientists, underwriters and actuaries to forge new value-added propositions. ‘Embedded insurance generates additional revenue streams for everyone but the real reason we are doing this is to make life easier for the customer in ways that add value.’

The possibilities for genuinely value-adding product innovation is huge, according to Akhil Aniff, Director of Business Development, Pattern Insurance:

Embedded insurance may not make insurance brands household names, but it may yet open up distribution channels and data streams that can be leveraged to create personalized value-add products, reach new markets and generate valuable new income streams.

https://www.eisgroup.com/resources/embedded-insurance-a-new-route-to-growth-and-value/