Amazingly, the agent-to-customer business model was tolerated by insurance buyers for 300 years before they had enough. The early 2000s brought new hope for insurance customers that, in contrast to the centuries before, have evolved greatly in the last 20 years. Now a customer can own the insurance buying process and even customize it to meet their needs.
The latest contribution to this new age model is embedded insurance, which has quickly made its way into the everyday vocabulary of professionals across the insurance industry. When done right, embedded insurance offers added value relevant to the consumer and their needs at the point of sale; a frictionless purchase process where insurance is bought, not sold; and an insurance value proposition that is easily understood and accessed by the consumer.
While its quick pickup resembles what we’ve seen in the past from temporary trends, it’s proving to be just the opposite. Embedded insurance solutions have become a key strategy that both insurance carriers and brands are turning to in order to stay competitive and provide a simple, high-value, high-quality customer experience.
It’s understandable if you’re thinking this seems too good to be true – offering consumers exactly the insurance they need, at the time they need it, in a way that makes it easy to understand – that’s just not how insurance works. Yet, if there’s one thing technology has proven, it’s that what seems to be impossible is only an innovative idea away. There are a number of companies that have reimagined their product offerings to include embedded insurance, thus transforming the insurance distribution model to provide customers with relevant value-add offered in real-time at the point of sale:
- Tesla: Auto insurance is offered at the point-of-sale online and when making a car purchase at a Tesla showroom.
- Walmart: Pet insurance is available for purchase in the same place customers buy their pet food and fill their pet’s prescriptions.
- Carvana: Auto insurance is offered at the point-of-sale online at the same time as vehicle purchase.
- Betterment: Betterment Checking customers that pay their cell phone bill with their checking debit card receive cell phone coverage for damage or theft.
- General Motors: Auto insurance for customers who have subscribed to OnStar.
To launch and maintain a successful embedded insurance program, it requires the right mix of partners with large distribution, relevant insurance products, and technology to make the insurance magic happen. This creates an experience that meets the modern consumer’s expectations and needs holistically.
Embedded insurance strategies break down the barriers commonly tied to insurance by flipping the paradigm that insurance is sold, not bought, on its head. Embedded insurance makes it possible for consumers to easily buy insurance during the purchase process. By offering coverage at the product’s point of sale, you save the customer the added burden of researching, selecting, and purchasing an often overly complicated insurance plan through an outside provider. It also streamlines the customer experience by utilizing previously collected customer data within the application process to hasten quote turnaround times and coverage purchase. Natively embedded insurance products enable protection with the minimal effort of a mouse click.
How do you incorporate this lasting strategy? Find an insurtech partner that understands the complex ecosystem of digital distribution. Armed with cloud-based insurance platforms that offer advanced digital capabilities, data from third-party services, and much more, finding the right technology partner will ensure a successful market entrance and/or transition from antiquated, traditional insurance models of the 1700s to the streamlined, modern insurance products of today.