Updated: Jul 25
Brick-and-mortar stores are still around, but the shopping spree is moving online. In 2021, e-commerce retail generated global sales of USD 4.9 trillion. By 2025, that sales figure could surge to USD 7.4 trillion (Source: Statista).
Online sales witnessed a growth spurt during the pandemic lockdowns. But even with the world opening up and restrictions lifting, people are continuing to shop online. The trend bodes well for digital sellers of all kinds—even insurance companies and their partners.
Many businesses have started embedding policies into the digital shopping experience. Why? Because embedded insurance enriches the customer experience, eases distribution challenges, and drives insurance sales. Innovation is the name of the game, and insurtech companies like Turtlefin are here to help!
Everyone needs insurance
Insurance is a hedge against financial hazards. The policyholder pays an annual premium to create a financial cushion for certain events. Here are some examples of insured events:
The death of a policyholder in case of life insurance
Hospitalization in case of medical insurance
An accident in case of motor insurance
Crop failure due to drought in case of crop insurance
Fire damage to a residential property in case of home insurance
In each scenario, when the insured event comes to pass, the insurance kicks into gear. The insurance plan pays out the sum assured or reimburses the incurred costs as per the policy terms. As a result, the policyholder does not have to dip into and potentially empty their savings.
For example, a health insurance plan allows the policyholder to access funds worth many times the yearly premium. High hospital bills are known to drive many uninsured families into bankruptcy. Insurance helps to safeguard against that risk.
Where insurance lags
Despite the obvious benefits of insurance, penetration in India is still low. Insurance premiums represented only 4.2% of the gross domestic product in 2020-21 (Source: IRDAI).
Also concerning is the risk protection gap of 83% to 92% (Source: Economic Times, SBI). If the protection gap is at 83%, the average Indian has insurance to cover only 17% of losses. If the gap increases to 92%, the available coverage shrinks to just 8%.
What’s going wrong? One major issue is the confusion around what insurance is and how it works. People often underestimate the extent to which insurance can protect against financial risk. Many Indians also cannot justify paying a hefty premium and getting no returns.
The lack of flexibility is another sticking point. Buyers have to pick from a fixed set of insurance products that vary only slightly across insurers. Given the similarities, one must go through multiple policy brochures and check price comparison sites. Insurer websites have simplified the transaction process but selecting the right policy is far from easy.
Getting insurance is even more challenging for rural Indians. Sellers of insurance have expanded into Tier 2 and Tier 3 cities, but many villages and other remote areas remain outside their purview. With no local insurer branches nearby, those living in the hinterland are largely uninsured.
The embedded insurance solution
Embedded insurance turns up where the customer already is. Policies are bundled with other products and services on digital sales platforms. Thus, insurance becomes a part of the online shopping experience.
Suppose you are shopping for a tablet in an eCommerce store. You frequent this store because it has good deals on electronics. After some browsing, you pick a model and add it to your cart. Right away, the eCommerce site displays an insurance offer. This is not generic insurance though. The retailer is offering a total damage protection plan for your new tablet. It covers not only manufacturing defects but also screen damage, water damage, and unintentional damage or loss.
Apart from being tailored to your new tablet purchase, the policy is reasonably priced. Add it to your cart and you probably won’t feel the pinch. You certainly will not get redirected to an insurer’s website to buy the policy. Just add the offer to your cart and pay for it alongside the tablet at the end of your transaction.
Since you bought from this e-commerce site earlier, they have your contact, payment, and billing details already. So, any embedded insurance forms come partly auto-filled, which saves you some of the hassles.
Embedded insurance makes policy purchases feel seamless. You can still buy insurance separately or consult your financial advisor for advice. But insurance does not have to be a separate activity that you make time for. Bundling plans into the digital checkout experience provides another way for consumers to get insurance coverage and for insurers to sell that coverage.
Embedding insurance through Turtlefin
Insurance plans have been available online for many years now. But the digital purchase experience is neither easy nor frictionless. By providing embedded insurance technology to interested businesses, Turtlefin is helping the insurance ecosystem step into the digital-first era.
A new distribution model: For too long, insurers have been creating and selling insurance products directly or through specialized agents. But now the time has come for a new, fully digitized distribution model.
Embedded insurance runs on software called application programming interfaces (APIs). Non-insurance businesses can join the insurance ecosystem by integrating embedded insurance APIs through Turtlefin. With Turtlefin OneAPI, non-insurance businesses can display and sell embedded insurance offerings from more than 30 insurers.
The API connects insurers with non-insurance businesses that cater to their own customers through a website or an app. This B2B2C model ensures insurance access for customers who were not necessarily thinking about insurance but who could be persuaded to buy a bundled plan with a single click.
By bringing risk coverage to the online retail and service sectors, embedded insurance targets digital shoppers who may not otherwise have the time, know-how, or inclination to buy insurance. No need to wait for users to get proactive about insurance. Bundled plans drive online insurance sales by bringing offers where the customers already are.
Good use of customer data: Many people are justifiably worried about the misuse of big data. As it is, sponsored ads on social media are annoying enough. But embedded insurance is one use case where customer information can be put to good use.
Embedded insurance technology such as Turtlefin OneAPI comes with artificial intelligence (AI) and machine learning (ML) capabilities. The API analyses customer data that the third-party business already holds. Then, based on the data analytics, it underwrites a personalized policy for each customer.
The personalized offer is displayed to the digital customer just before checkout. The customer is free to either accept or ignore the policy. The API does all the work in the back-end, and the customer has no inkling of the complex processes taking place behind the scenes.
Easy setup, new revenue stream: Developing embedded insurance as a new revenue stream is easy when you have Turtlefin by your side. Turtlefin OneAPI adapts readily across a range of digital sales channels, and our experts oversee the entire integration process. No need to worry about business interruption or high investment costs. Once the integration phase concludes, you can test the software and go live within minutes. Your customers can start viewing embedded insurance plans and paying premiums right away. Every sale fetches you a commission. The added value within the transaction flow improves the user experience and could contribute to brand loyalty. As your customer base increases, the one-to-many model allows you to sell more insurance to more users without any additional investment. And as commission revenues increase, you can use the funds to scale up your core business. Turtlefin will be with you every step of the way.
To know more about Turtlefin:
Towards an embedded future
By 2030, embedded insurance could be worth USD 3 trillion (Source: Simon Torrance). And two decades on, it could represent 40% of the total insurance business (Source: IBM). Millennials and younger members of the Gen Z cohort are already showing their preference for digital options such as embedded plans. As more and more Gen Z members grow old enough to join the workforce, online insurance sales are likely to accelerate.
In short, the segment is growing fast. Therefore, it makes sense for businesses with a digital presence to become a part of the insurance ecosystem. With embedded insurance, you can delight users by providing insurance products that truly fit their needs. Your business can drive insurance sales, earn commissions, and please customers all in one go.