Updated: Jul 17
Running a business is no walk in the park. Competition is fierce across sectors, which is why founders and managers have to stay ahead of the curve. How can they achieve this goal? By innovating, hiring the best talent, and delighting customers, none of which comes cheap.
Businesses across the board have budgetary constraints, and there is no easy way to find capital. But embedded insurance could help businesses gather the capital they need. Of course, with embedded insurance being a burgeoning sector, partner businesses are sure to have concerns:
Will embedded insurance really bring revenue?
Isn’t it expensive and time-consuming?
Could it hamper productivity?
What if my customers hate the offers?
Do we need to hire new people?
… and so on. There are misconceptions aplenty. But before we start bringing out the facts, let’s figure out what embedded insurance really is.
Embedded insurance is a digital-forward means of distributing insurance products. Here, insurance plans are bundled and sold with other non-insurance products or services. The embedding happens in real-time, while the digital customer is already buying something at the point of sale.
How would this work in real life? Consider the following scenarios:
While purchasing flight tickets online, the buyer is offered risk protection against flight cancellation and delay.
When shopping for a laptop via an e-commerce site, the shopper gets a suggestion to add on total damage protection for the device.
While hiring a moving company for home relocation, the customer receives a bundled offer for asset insurance.
All of these embedded offers are optional, digital, and offered when the user has finalized the purchase. If the user accepts the offer, the premium gets added to the total bill. The customer can pay for all items in their cart through a single transaction at checkout.
Embedded insurance for businesses: Separating myth from fact
Insurance bundling can be an interesting opportunity for many businesses. But there are so many misconceptions about embedded insurance. Time to cut through the noise and bust some myths!
Myth #1: Embedded insurance verticals are costly propositions.
Developing a new business vertical can be expensive. Businesses must carry out preliminary research, hire people with relevant expertise, and invest in the necessary equipment. And that’s just the beginning.
Thankfully, embedded insurance eliminates many of these steps. Partner businesses do not have to build a vertical market from scratch. These businesses simply need to pay for the application programming interfaces (APIs) that embed insurance plans directly into their sales channels. No need for any new hires, equipment, or inventory maintenance.
Myth #2: Embedded insurance could hamper productivity.
Managers may worry that embedded insurance will distract from core business tasks and reduce productivity. While this is a valid concern for most new verticals, the embedded insurance business works differently.
APIs ensure that the insurance distribution process is completely automated. The software assesses user data and pushes out an embedded offer without any intervention from your team. If the customer accepts the offer, the premium gets added to the total bill in time for checkout. Your core workers don’t get involved at any stage.
Myth #3: Bundled policy offers may annoy my customers.
Too many advertisements can indeed be irritating. But embedded insurance is far from overwhelming. A user receives a policy quote only when adding a product or service to their online shopping cart. And customers can always choose to accept or reject the insurance offer.
Besides, these bundled plans are usually hyper-relevant. For example, a moving company may provide an embedded policy quote based on the actual assets being transported. Consumers are more likely to appreciate such personalized offerings than getting annoyed by them.
Myth #4: Tie-ups with insurers are essential for embedding insurance.
Any tie-up with an insurance company could require multiple meetings and negotiations. More tie-ups would spell more meetings. Talk about laborious and time-consuming. But embedded insurance eliminates this step altogether.
All you need to embed insurance into your digital sales channels is the technology. An experienced insurtech company can set you up with the necessary infrastructure. Your digital customers would get instant access to products from multiple insurers.
Myth #5: Embedded insurance calls for technological expertise.
You will require people who understand the tech, but you do not need to hire them. To enter the world of embedded insurance, a business can simply partner with an insurtech company like Turtlefin. We have a clear picture of what it takes to survive in the digital insurance landscape. And we can guide you through it.
Any business with a digital sales channel—like a website or an app—can climb aboard. The insurtech partner provides the infrastructure and tech support.
Myth #6: Insurance know-how is essential for players in the embedded space.
Again, not really. All a business needs to operate an embedded insurance vertical is the backend technology. Once the software is integrated across sales channels, it carries out all insurance functions automatically.
For example, APIs and micro services access the user data, underwrite a policy, and make an offer to the customer in real-time. They continue to work when adding the premium amount to the customer’s bill and ensuring a frictionless payment transaction. The third-party business plays no part here.
Myth #7: There is limited scope for growth in embedded insurance.
Far from it! Embedded insurance is currently on the growth path and could be worth USD 3 trillion by 2030 (Source: Simon Torrance). Digitally-savvy millennial and Gen Z users will be driving much of the growth in the coming decades. Growing smartphone use and data connectivity will also open up the untapped insurance market that is rural India.
Besides, when you adopt embedded insurance, every transaction becomes an opportunity to sell a policy. Accepting a bundled offer is easy for the customer. And the one-to-many model of embedded insurance allows you to scale up policy sales quickly.
Myth #8: Embedded insurance does not fit my business model.
It does not have to be an exact fit. For example, furniture retailers are embedding home insurance into their customer journey, and eCommerce travel agents have long offered baggage protection plans. Today, even an aerobics studio could get in on the action by providing bundled health plans to members.
Just remember that everybody needs insurance—and that includes your customers. If you have an insurance-adjacent product, consider embedding insurance coverage at your point of sale. It would add value for customers and set you apart from the competition.
Embedding insurance in your business model
In the next 20 years, over 40% of the insurance business could be embedded (Source: IBM). And now is the time to get in on the ground floor.
There are so many benefits for your business. By offering embedded coverage to your users, you:
enrich the customer journey and earn brand loyalty,
create a valuable differentiator for your business, and
earn valuable revenue through commissions.
If you are ready to dive in, Turtlefin can show you the way. We have an in-depth understanding of how insurance companies operate, and we have the technological know-how to induct your business into the embedded insurance ecosystem.
As your insurtech partner, we provide the backend technology and take over the integration process. We recognize that your expertise lies elsewhere, and therefore we leave you free to focus on your core tasks and clients. Our job is simply to create a side business that functions seamlessly.
Turtlefin values your time. We ensure a speedy API integration and take full charge of all your technology issues. Once our insurance API is set up and working well, we take the setup live. Your customers gain immediate access to a host of insurance products from over 30 leading insurers. They can start viewing and shopping for add-on policies right away.
To know more about Turtlefin:
Embedding insurance into your digital transactions could delight your customers. Since they already trust you, they may more willing to shop for add-on policies on your sales channels. This makes insurance shopping so very convenient.
With the minimal investment of funds and resources, the barriers to entry are low. And given the one-to-many model, as embedded sales grow, so does your revenue stream. Funds—or the lack thereof—may not be such a problem anymore.