Hail a taxi from your phone, order groceries from within the home, do all your banking work without stepping foot in a bank. The way the world gets things done has changed so much. Connectivity has transformed how people get from place to place, shop for everything from groceries to electronics, and access an ever-growing range of services. You can do it all through a connected mobile, tablet, or computer.
In theory, this ease of shopping extends to insurance as well. People have been buying insurance online for years now. But while online policy purchase has speeded up the transaction process, the sheer variety of insurance plans continues to perplex buyers. Policy selection can be exhausting, which is why many shoppers take days and even weeks to choose a policy.
Embedded plans could help ease up the process. When a business offers embedded insurance, buyers get to pick up insurance while purchasing related goods and services. Bundled insurance plans not only simplify policy shopping but also push up revenues and growth for businesses that are willing to embrace the embedded insurance model. It is a win-win scenario for everyone!
Why Insurance matters?
Insurance helps to manage risk. When somebody buys a policy, they pay a premium and transfer the risk of loss to the insurance company. The insurer invests the premium amount to build a corpus that can be used to pay claims when the risk event comes to pass.
Different insurance plans cover different types of risk:
Life insurance covers the risk of death of the insured (usually an earning member of the family). It pays beneficiaries a prespecified sum after the insured’s demise.
Health insurance provides coverage for hospital and other medical bills that may arise due to an illness or an accident.
Home insurance safeguards against repair and replacement costs and other expenditures resulting from unforeseen events such as natural calamities or theft.
Motor insurance helps to cover any financial losses that may result if the insured vehicle is involved in an accident.
Travel insurance covers expenses resulting from flight cancellations or medical costs incurred while travelling abroad.
A good insurance policy acts as a financial safety net. And yet, so many people underestimate the value of insurance and end up either getting inadequate coverage or not buying insurance at all. Non-insurance businesses could step into this space with embedded insurance technology, helping their customers get the right amount of coverage for their needs.
Embedded Insurance: How does it work?
When shopping for a sturdy office chair that offers value for money, customers will browse several options before picking one that they like. The stakes are much higher when shopping for insurance. After all, planning for a contingency where the main income-earner passes away is far more complex than selecting a chair.
The traditional insurance selection typically proceeds like this: Customers sift through offerings from multiple insurers, read the brochures for numerous similar-sounding plans, shortlist a few insurance products, get quotes from the selected insurers, and finally compare the offers. Only after all these steps can a winning policy be selected. But the customer is still not done—there are forms to be filled, paperwork to be submitted, and a premium to be paid. Taken together, it can be a lot.
Embedded insurance makes the whole process simpler. Here is an example to show you how:
Say, you own an electronics store. A customer walks in looking to buy a sturdy and high-performance laptop. You tell the customer about the options available and show him some demo products. Once the customer makes his choice, you bring out the value additions: an extended service warranty and a 30% discount on a set of laptop accessories.
But why stop there? You could also offer embedded electronic equipment insurance on his new purchase. Should the computer break down, the insurance will cover some or all of the repair and replacement costs. It is a good financial safeguard. And since the customer is buying a shiny new gadget, he may be more receptive to paying just a little more for insurance.
Bundled Policies benefit Customers
Embedding insurance into everyday transactions helps customers to get insured from the outset. Car dealerships have been on to this for a while now. All vehicles in India need third-party liability insurance to be deemed road-worthy. So, when selling a vehicle, many dealers will tack on an optional motor insurance plan that the customer can choose to accept or reject. Should the customer agree to buy the policy, the vehicle is insured from the get-go, and the customer has one less thing to worry about.
One big advantage is that embedded insurance tech is powered by artificial intelligence (AI) and machine learning (ML). Thanks to AI and ML capabilities, customers receive premium quotes that are tailored to their needs and preferences based on user data. If a business has a long-standing relationship with a customer, there is more data to consider, which may lead to a more personalized quote.
Plus, there is the icing on the cake! Since the business already has the customer’s information, fields in the insurance forms get filled automatically, thus reducing the headache of paperwork for the customer.
Embedded insurance can boost your business
Bundled policies are expected to drive insurance growth in the near future. If you own or manage a business, embedding insurance in your offerings could be the right way to go. Here are some of the ways embedded insurance can help you power up your business:
1. Increase revenue: By opting for embedded insurance, you can build a new revenue vertical without neglecting your core business. And there’s no need to partner up with individual insurers. Insurtech could bring your customers instant access to numerous policies from well-known insurance companies.
2. Scale-up quickly: Bundled insurance is a tech-driven business. So, there is no need to maintain product inventories or separate stores. Policies can be sold as value additions to products and services that you already provide. This is a one-to-many model, which makes scaling up much simpler.
3. Stand out from the crowd: These are early days for embedded insurance. Sign up quickly and you develop strong differentiation from your competitors. The low entry barriers make this an easy addition for most businesses. 4. Win over customers: Bundling insurance options into standard transactions could enhance the experience of your customers. Besides, if they get their requirements plus insurance from you, the sheer convenience of the transaction will keep them coming back for more.
Remember, India is an emerging insurance market. In 2020, the country notched up a 1.72% share of the global insurance market and took the 11th spot in the worldwide insurance business (Source: IRDAI). We also attracted 35% of USD 3.66 billion in venture capital for the insurtech segment (Sources: CNBC-TV18; S&P Global).
In short: There is plenty going on! And that means businesses that are ready to embrace the embedded revolution could generate big gains.
Embedded Insurance Solutions for Businesses
If you are thinking about embedding insurance in your business model, TurtleFin can help you get on board. We have the expertise to guide you through the integration process and after. We can even help with claims processing should you need the support.
Turtlefin provides you with a comprehensive digital insurance infrastructure through an easy plug-and-play solution. Our insurance API sets you up with essential elements of the insurance value chain. Once we set up the API, you can test and go live within minutes. Your users can immediately start receiving quotes and making payments. Insurance purchase happens in a single click!
Our goal is a two-fold one: to simplify insurance purchase for the modern consumer and to help your business leap to the next level!