The embedded insurance revolution is underway, becoming the preferred way for many consumers to purchase their cover.
It’s now common to be offered insurance when you buy a car, book a hotel, purchase event tickets, and beyond, with leading brands such as Amazon, Uber, Airbnb, and Revolut already in on the act. As a result, EY has predicted that by 2030, more than 30% of insurance transactions will take place through embedded channels.
For insurance companies, this represents a timely opportunity. With the insurance market softening, achieving growth in core product areas such as automotive, travel, home, and contents insurance is only possible by reaching new customer segments through new distribution channels.
Insurers can innovate how they package and sell products, but persuading customers they need them remains a challenge in an increasingly noisy, competitive world. Capturing them at the point of sale when buying a car, house, or flight tickets is a simple way of making that connection.
From opportunistic to strategic – driven by tech
Yet for many insurers, partnering with non-insurance businesses is a relatively unexplored avenue, with many taking an opportunistic rather than a strategic approach to building these relationships.
But as the market expands and potential partners become more demanding, insurers must ensure their offering matches up. Technology is a big part of doing this successfully.
“Every partner wants their own flavour of insurance based on what customers want and need, yet many insurers try to squeeze them into a box of what they already offer,” says Christian Bangsgaard Pedersen, Non-Executive Board Member at Insly.
“Historically, a more bespoke approach hasn’t been possible as insurers haven’t been able to build the products fast enough. Now the technology is there to do it, and attitudes towards those channels will see a big shift, and some surprising new winners.”
Building collaborative partnerships through technology
Building embedded insurance partnerships today demands a collaborative approach, with insurers listening to partner and customer needs, mining the data, and developing products, pricing, and customer experiences to match.
Yet, with research showing that 74% of insurance companies still rely on legacy technology for critical functions, such as pricing, rating, and underwriting, this is hindering their ability to build the kind of embedded insurance offerings partners are looking for.
Upgrading to a modern platform ensures insurers have the functionality to create flexible and responsive embedded offerings. The following elements are non-negotiable:
- Flexible product builder: A highly responsive product engine enables insurers to build and launch tailored products at speed and then adjust them quickly, as and when required. A Deloitte study found that new insurance products can take between 12 and 18 months to launch, but a modern, dynamic product builder can reduce this down to a matter of weeks by removing the need for extensive coding knowledge or IT development time. With modern platforms, product managers can rapidly prototype, test, and launch new products or product variations to meet the timescales of embedded partners.
- Powerful data and analytics capabilities: Embedded partnerships require insurers to collect, store, and analyse huge volumes of data to track product performance and customer behaviour in real time. Yet, many insurance companies still rely on data warehouses, which limit data accessibility and reporting to specific information and time periods. In contrast, with a modern insurance platform, tailored reports are accessible in real time, at the click of a button, so product managers and partners can drill into the information they need, when they need it, to inform strategies and decision-making in real time.
- Back-end automation: Embedded insurance partnerships rely on a slick and fast customer experience that integrates seamlessly into the wider buying journey. For insurers, this means core insurance processes across underwriting, policy administration, and claims must be automated as much as possible, with human input and oversight on hand as and when required. Insurers must therefore ensure their software maximises the latest AI and machine learning tools to minimise manual input, and be flexible enough to integrate new tools as and when they emerge.
- Scalable infrastructure: Highly scalable insurance software is also critical, with standardised, well-documented APIs to link to partner systems and support every element of the insurance lifecycle via the partner front-end. Watertight service availability and reliability are also non-negotiable, so systems can handle high transaction volumes while remaining compliant with relevant regulations, including data protection, consumer duty, and product governance laws.
Maximising the embedded opportunity
For insurance companies, the growth in embedded insurance is an opportunity not to be ignored, providing a way to connect with customers who may not otherwise consider insurance while building valuable new revenue streams.
But insurers still using slow, cumbersome legacy technology need not apply. As competition for distribution partnerships heats up, those with slick, scalable, and data-friendly systems will win.
For many insurers, this should be the incentive they need to upgrade legacy systems before it’s too late. And with modern systems, such as Insly, it doesn’t have to be as costly or time-consuming as in the past. Insly offers a low-risk system that can be implemented in a matter of weeks, along with low upfront costs and pricing aligned to growth. So, catching the embedded insurance wave could be easier than you think.
