Importance of Embedded Commercial Vehicle Insurance
Operating in the commercial vehicles space can be a good business, but there are risks. In 2020 alone, India recorded 3,54,796 road accidents, resulting in 3,35,050 persons being injured and 1,33,201 deaths (Source: National Crime Records Bureau). While commercial vehicle owners can ensure traffic rules are followed, they cannot steer clear of accidents altogether. That’s where commercial vehicle insurance comes in. Adequate insurance can provide a safeguard against the financial losses that arise due to accidents.
Unfortunately, commercial vehicle operators often struggle with policy selection, and the insurance-buying process is not always quick. But there is a new-age solution to these concerns - embedded commercial vehicle insurance.
Operators can now buy bundled policies while booking servicing appointments or adding new four-wheelers to their fleet. Embedded insurance cuts through the hassle, bringing insurance straight to customers in their time of need!
Insurance as a Safety Belt for Commercial Vehicles
Commercial vehicle insurance provides financial coverage to vehicles used for commercial purposes. Commercial vehicles come under three broad categories:
Passenger vehicles that ferry people in return for a fare. These include auto-rickshaws, taxis, rental cars, school buses, and tour buses.
Goods vehicles that are hired out for the transport of goods. These include tempos, trucks, and lorries, for example.
Other commercial vehicles do not ferry passengers or goods but have specialized functions. Some examples are cargo/ container trucks, cranes, and bulldozers.
All these vehicles spend many hours on the road, which increases the risk of accidents, breakdowns, and exposure to the elements. This makes commercial vehicle insurance all the more necessary for them.
There are two types of commercial vehicle insurance:
Third-party liability insurance provides coverage only if the insured vehicle damages the property or vehicle of a third party. It also pays out if an accident results in the death, disablement, or injury of a third party.
Comprehensive insurance provides third-party liability insurance and covers the cost of damage to the insured vehicle. It also pays out in the event of injury, death, or disablement of the owner-driver or a hired driver. These policies can be upgraded with add-on covers for loss or damage due to fire, natural calamities, theft, riots, or terrorism, among other things.
All vehicles must have third-party liability insurance, as mandated by the Motor Vehicles Act. However, these plans are limited in scope. Here’s why:
When a commercial vehicle is in an accident, the costs add up. Drivers and passengers who sustain injuries need medical care. Damage to goods being transported is another cost, as are the repair bills of any damaged vehicles and property. Should the commercial vehicle need extensive repairs, it may be out of action for a while, resulting in revenue loss for the owner.
A comprehensive commercial vehicle insurance policy can serve as a cushion against all these expenses. The policyholder simply needs to file a claim to get the assured pay-out.
Embedded Commercial Vehicle Insurance: How does it work?
While shopping for electronics like a washing machine or a refrigerator, you might be offered an extended warranty as an add-on at the time of sale. Embedded insurance is sold in a similar fashion.
When an operator buys a new commercial vehicle, the dealer could offer bundled insurance as an add-on during the moment of purchase. The owner is already in the right frame of mind to safeguard the brand-new vehicle. By bundling the policy, the dealer makes insurance purchases easier and more seamless for the customer.
Bundled insurance can also be provided by service centres or garages when users book servicing appointments or send their cars in for repairs. Such businesses get repeat customers and therefore have access to a wealth of user data. The embedded insurance software can parse through the data and provide tailored premium quotes to each customer.
When policies are bundled with a complementary product, insurance purchase becomes easy and quick. The buyer gets a product or service along with insurance coverage in just a few clicks.
Bundled Insurance benefits your business
If you deal in new and used commercial vehicles, provide auto loans, rent out parking spaces, or offer vehicle servicing and repair, embedded insurance could be a gamechanger for you. Bundling commercial vehicle insurance policies with your regular offerings could open up a new and lucrative revenue stream.
Bundled plans would enable you to leverage user information to great effect. For example, a repair business will already have basic information about the vehicles of repeat customers, such as the vehicle’s age, mileage, current condition, and repair history. These details can be used to quote customized policy premiums.
Tailored quotes are also important in the context of value-driven insurance buyers, many of whom settle for the cheapest policy and end up underinsured. When the low-cost policy does not cover their expenses, these buyers could lose faith in insurance altogether. Tailored policy offerings could fill this gap and create a better user experience.
Since your business already has a wealth of user information (often about vehicles owned), you could provide ultra-personalized quotes at competitive rates. This may give you a price advantage over traditional sellers of insurance. Your users already trust your products and services. Now, by cross-selling insurance, you get to extend your relationship with them.
Bundled insurance benefits your customers
By integrating insurance with complimentary services like vehicle purchase and maintenance, you can make policy buying more seamless for the customer. The customer gets multiple jobs done with just one transaction.
Not only that, the policy purchase is simpler too. Since the business already holds customer data, your clients don’t have to fill out detailed forms to get the add-on product. The technology running in the background fills in the details automatically.
The software also provides personalized quotes based on your customer data. This increases the chances of your clients getting good coverage at a more competitive price.
The road ahead for commercial vehicle insurance
The Indian car insurance market is expected to grow at a CAGR of 8% over 2022–2028 (Source: BlueWeave Consulting). Digitization and InsurTech are poised to play a major role in this growth story.
As online shopping becomes more common, how people buy insurance could change. Rather than approach insurers directly, people might pick up bundled insurance while shopping with brands that they trust. This means any brand that offers a complimentary service has the potential to sell insurance products.
In the coming years, usage-based insurance is expected to gain traction, through pay-per-mile plans or with coverage switching on and off according to the driver’s shift. The global usage-based insurance market could be valued at USD 77.25 billion by 2026 (Source: PR Newswire).
Policy customization may well be the future of vehicle insurance. And a future gamechanger might be embedded telematics, where connected cars communicate with other connected devices. Embedded telematics provides a range of timely details: location, odometer reading, fuel tank level, tire pressure, and more. Such data would go a long way towards ensuring hyper-personalized insurance quotes.
Get the show on the road with TurtleFin
Prime your business to be future-ready by embedding commercial vehicle insurance into your digital platforms. No need to worry about the infrastructure and resources required to achieve this. When you partner with TurtleFin, we provide the infrastructure you need to enter the embedded insurance space.
The integration process is easy and quick. The TurtleFin API uses a simple plug-and-play approach to turn your business into a seller of commercial vehicle insurance. We do the integration, test the software, and voila! You can start selling insurance in just minutes. Plus, you get full control over how information is collected from your users. We guide you through the integration process and after. Anytime you need tech support, we are happy to help.
When you offer embedded insurance, your users get another reason to smile as well. They now gain access to commercial vehicle insurance policies from multiple insurers. They can view insurance quotes, select the right product, and make payments, all from within your online platform.
Bundled insurance adds value for your users, and that bodes well for your business. Because you provide an essential and targeted product at the right time and place, those users may keep coming back to you.