81% of financial execs agree: why embedded insurance is more than just a trend
In a digital age where convenience is king, financial institutions are sprinting towards innovation to meet evolving consumer demands. A major player in this race towards digital transformation is embedded insurance. A recent survey by Chubb revealed a staggering 81% of financial executives believe that embedded insurance is transitioning from a 'nice-to-have' to a 'must-have' offering.
What is embedded insurance?
Embedded insurance is a strategy where insurance products are seamlessly integrated into the customer journey, whether it be through a financial platform, e-commerce site, or mobile app. Traditionally, insurance has been sold as a standalone product by insurers through agents or brokers. However, with embedded insurance, it becomes an embedded feature within another product or service:
- When purchasing a flight ticket online, customers are often given the option to add travel insurance at checkout.
- When buying a new car, customers can opt for an insurance package offered by the dealership.
- Some credit cards now come with built-in travel or purchase protection insurance.
The possibilities are endless and can be tailored to fit the needs of the specific industry and customer base.
Why is embedded insurance gaining popularity?
- Convenience: The main driver behind embedded insurance is convenience. By offering insurance at the point of sale, customers can easily add it to their purchase without having to go through a separate process and potentially abandoning the sale altogether.
- Personalization: Embedded insurance allows for personalized offers based on a customer's specific needs and behavior. This not only enhances the overall customer experience but also increases the likelihood of conversion.
- Cost savings: For insurers, embedded insurance means lower customer acquisition costs as they are piggybacking off the distribution channels of another company. This also leads to increased efficiency and scalability for both parties.
- Increased revenue streams: By partnering with other industries, such as fintech or e-commerce companies, insurers can tap into new customer segments and generate additional revenue streams.
- No-code/low-code development:Thanks to no-code platforms and APIs, it is now easier than ever for companies to integrate insurance into their existing products or services. This has lowered the barrier to entry for non-insurance players, allowing them to offer insurance without having to become an insurance company themselves.
- Meeting customer needs: With embedded insurance, customers have access to immediate coverage when they need it most. For example, travel insurance can be added to a flight booking, providing peace of mind for unexpected events.
- Seamless experience: By integrating insurance into their products or services, companies are able to offer a seamless and streamlined experience for customers, removing the need for multiple interactions and paperwork.
By integrating insurance within digital financial services, institutions can enhance trust, meet customer demands for digital solutions, and tap into a significant growth opportunity. The transition towards embedded insurance is driven by digital disruption, competition, and the rise of digital platforms offering multiple services seamlessly.
The significance of this integration is manifold. Firstly, it's about building trust. 74% of executives from banks and fintechs acknowledge that offering embedded insurance helps in building trust with customers. In a competitive landscape, trust is a currency that banks and fintechs can't afford to overlook.
Moreover, consumers are on board with this shift. The survey found that 56% of consumers are interested in purchasing more insurance, especially when it’s seamlessly integrated into their banking journey. The appetite for digital insurance solutions is evident, and financial institutions that capitalize on this trend are likely to stay ahead in the game.
Additionally, the embedded insurance approach aligns with the global movement towards digital wallets and super apps, which are reshaping the way consumers interact with financial services. The digital disruption ushered in by technology is blurring the lines between different sectors, making integrated service offerings a logical step forward.
This trend also reflects a broader industry acknowledgment of the benefits of digital transformation. It's not just about selling insurance but creating a seamless, value-added customer experience that caters to the modern-day consumer’s expectations.
Embedded insurance, the integration of insurance services within digital financial platforms, is not just a fleeting trend but a strategic move. It's about delivering value at the intersection of finance and insurance right when the customer needs it. For instance, offering insurance at the point of taking out a loan or making a bill payment tailored to the customer's unique situation.
The insights from the Chubb survey underscore the fact that embedded insurance is a strategic growth avenue. As financial institutions look to expand their digital product portfolio, the inclusion of contextual, easily accessible insurance offerings is a smart move. It's clear that embedded insurance is here to stay, providing a win-win scenario for both financial institutions and their customers.
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