Top 5 reasons everyone wins with embedded insurance
Updated: Jun 29, 2022
A win-win scenario is hard to come by in the world of insurance sales. But digital technology is helping reshape the insurance landscape and create solutions that benefit everyone. One such solution, embedded insurance, is transforming the operating model for insurers. Insurance plans can now be bundled into the digital purchase flow, enabling users to buy coverage while shopping for insurance-adjacent products and services.
For customers, buying an embedded policy is convenient. For businesses that embed insurance in their sales channels, bundled plans create an additional source of revenue. Everybody stands to gain.
Insurance is a financial safeguard
Financial uncertainty is part and parcel of life. One never knows when an emergency might strike and what its financial impact would be. Insurance helps build a financial safeguard against such contingencies.
Should the insured event come to pass, the insurance plan pays out the sum assured, as per the policy terms. With the insurance plan taking care of the financial fallout, the policyholder does not need to empty their bank balance or seek loans. The coverage ensures risk protection and peace of mind.
Insurance products cover a wide range of contingencies. Some common insurance plans are outlined below:
Life insurance pays a sum assured to beneficiaries if the policyholder passes away.
Health insurance covers hospital bills if the insured requires medical treatment.
Car insurance takes care of vehicle damage and medical bills following an accident.
Home insurance covers losses to a home and its belongings after a theft, a fire, or a natural disaster.
Why people remain uninsured
Many are reluctant to pay a hefty annual premium since there is no guarantee of returns. But insurance does not work like that. It does not bring investment returns in the way that bank deposits or stocks do. The value of insurance becomes clear only when the risk scenario occurs and the policy pays out many times the annual premium.
Unfortunately, people often underestimate their potential for financial risk. Some will assume that they don’t need insurance at all. Others will scrimp on a cheap option that provides inadequate coverage.
It does not help that the traditional mode of policy purchase is unintuitive. Consumers can buy insurance online, but they have to spend time browsing and comparing insurance plans. While price comparison websites display the available options, they aren’t much help in the policy selection process.
Furthermore, laypersons may struggle to understand insurance jargon and the fine print on policy exclusions. One could consult a financial advisor or speak with an insurance company executive. However, there is no guarantee of finding a tailored insurance plan. Even though each buyer has unique needs, traditional insurance products offer hardly any room for customization.
Insurance geared to digital users
Embedded insurance involves the bundling of policies into the digital sales channels of non-insurance products and services. A common use case is that of embedded travel insurance.
When buying flight tickets on a travel e-commerce site, users may receive a travel insurance offer that covers the costs of flight delay and cancellation. For domestic travel, the premium is often just a few hundred rupees. Hardly a pocket pinch.
The user is free to add the offer to their cart or ignore it completely. Should the user accept the bundled insurance offer, they can pay for the policy and the flight tickets in a single digital transaction during checkout.
What could be some other examples of embedded insurance? Damage protection when buying smartphones and laptops is one. Health insurance bundled with gym subscriptions is another. Some digital payment apps have even started to offer cheap term life insurance plans.
Why embedded insurance is a win-win for all
Embedding policies into the digital flow of other products and services leads to gains for businesses and customers. Here are the top five reasons why embedded insurance is good news for everyone!
- User-centric approach
The customer is at the heart of embedded insurance. Bundling insurance with non-insurance products and services that the user may already be buying is clever. Insurance occupies the user’s mind space because of this. The user might be persuaded to buy the policy simply because it is there. Payment can be completed in one swift move at the checkout queue.
The digital sales platform will already have collected some of the customer’s data. So, any insurance forms come auto-filled, which reduces the dreaded paperwork. From add-on offer to final payment, everything happens seamlessly and in a few clicks. The improved transaction experience leads to customer satisfaction and brand loyalty, which is always good for business.
- Convenience for all
Buying embedded insurance is convenient for the customer. Since the offer is made where the customer is already shopping, taking that extra step to buy a policy feels easy. But customers are not the only gainers here.
Businesses can embed insurance into their digital menu and create a new revenue stream without much hassle. They simply need to ally with an insurtech partner like Turtlefin. The entry barriers to embedded insurance are low and investments are minimal. In theory, any business that sells digitally and has a large client base could benefit from the embedded model.
- Cross-selling opportunity
Product sellers and service providers have a lucrative opportunity to cross-sell insurance without even trying. Online furniture retailers could offer home and asset protection to buyers. Movers-and-packers could include asset insurance in home relocation packages. Auto service centres could add niche car insurance products in their servicing deals. So many possibilities!
By cross-selling policies to their client base, businesses can earn insurance commissions. Here, insurance becomes a nifty value addition too. A user may drop in to buy one item and leave with that item plus insurance coverage. Policy embedding gives users yet another reason to shop on the sales channels of businesses that they already trust.
- Big data advantage
Embedded insurance technology is supported by big data, artificial intelligence (AI), and machine learning (ML). The application programming interfaces (APIs) running in the background use their AI and ML capabilities to create personalized offers for each user.
For example, while shopping for a fitness tracker, a user could receive an offer for total damage protection of the new gadget. Later, when renewing the subscription for a fitness app, data from the fitness tracker could be used to underwrite an add-on health insurance plan.
Such personalization on a granular level is made possible by embedded insurance tech's AI and ML powers. And it is a good use of customer data that the business already holds.
- Growing ecosystem
The eCommerce market in India is expected to be worth USD 200 billion in 2027 (Source: Statista). With over 140 million digital shoppers, India has the third-largest online consumer base in the world. This number is sure to increase, as the country has more than 625 million internet users (Source: Bain & Company).
For digital businesses that embed insurance, this could lead to massive revenue growth. As sales of their core offerings increase, so too could policy sales and the resulting commissions. Once the API has been integrated, it supports the scaling up of views and sales without extra investment.
Growth in this segment could also prove helpful for rural audiences with limited insurer presence. As embedded insurance becomes widespread, rural customers could get coverage online when shopping with trusted brands.
Come aboard with Turtlefin
The insurance ecosystem is moving away from outdated distribution models and towards more digital-forward modes like embedded insurance. This marketplace is set to grow rapidly and generate healthy revenues for all partner businesses. If your business has a steady following and a web store or app, embedded insurance could be an option worth exploring. All you need to get involved is to join hands with Turtlefin.
Being an insurtech company, Turtlefin has the knowledge and expertise to steer you through the insurance landscape. We provide you with the infrastructure and tools to create a frictionless embedded insurance experience for your customers. By integrating Turtlefin OneAPI into your digital sales channels, we bring you access to insurance products from over 30 leading insurers.
Our plug-and-play approach ensures speedy integration. Turtlefin takes over the setup phase so that you never have to look away from business-critical tasks. Post API integration and successful testing, the software goes live. Your customers can instantly start viewing, adding, and purchasing embedded insurance offers.
The customer experience is seamless, and you earn a commission every time somebody buys a policy. Turtlefin provides your business with tech support and guidance every step of the way.
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Embedded insurance represents a digital-first model of insurance distribution. Policy bundling is an excellent way to drive online insurance sales and encourage digital users to buy more coverage. While convenience is the top benefit for shoppers, businesses get to earn revenues, delight customers and generate brand loyalty. It truly is a win-win scenario for businesses and customers.