Product design, including technical and architectural features, is the foundation for carriers to operate in the embedded insurance space, but strategic use of agents can dramatically increase the likelihood of success for embedded products. Masu. We believe agents can play a critical role in embedded insurance distribution, driving sales and capturing cross-sell and up-sell opportunities.
In the previous post, An overview of the evolution of embedded insurance From “version 1.0” of purchasing life insurance at the airport before a flight, through “version 2.0” and “version 2.5,” technology and online commerce have propelled embedded insurance towards its current “version 3.0.” Ta. We define “Version 3.0” as insurance sold as part of another commercial transaction. Purchasing auto insurance from an OEM or home insurance through a real estate agent are examples of what could be considered Embedded Insurance 3.0.
In this post, we highlight why we think agents are critical to achieving more with embeddedness, and outline the potential implications for carriers, embedded distributors, and the agents themselves.
Customers, agents, built-in relationships
There are two products within an embedded insurance transaction: a main product, which is the original product or service that the consumer sought to purchase, and an attached product, which is the insurance product sold within the main product or service transaction. To do. Ideally, customers can interact with both the primary and ancillary products through a single, unified experience.
Currently, most embedded insurance transactions occur through digital/direct sales channels rather than agent-driven sales channels. This is likely the result of his three market trends:
- Consumers prefer to consult agents as a trusted guide for the majority of Personal Line products. Consumers are concerned about the risk of being wrong about the type and quality of insurance they purchase. meta found That means 65% of auto insurance purchases and 71% of property and casualty insurance purchases are still done over the phone or at an agent’s office. We also found that 32% of buyers found their auto insurance options online, but 40% turned to an agent to determine which product was right for them.
- Embedded insurance has a large share in low-cost products that typically do not involve an agent. The higher the value of an insurance product, the more customers will want to work with an agent who can provide personalized recommendations. Most embedded policies tend to offer coverage that doesn’t cost much, covers something of limited value, or has some consumer protection in state-specific coverage.
- Primary product providers typically have a strong desire to control the customer experience. This tension between the primary product vendor and the carrier offering the ancillary product will inevitably lead to changes to the ancillary product being negotiated or the primary product provider deciding to create its own insurance product. Embedded product development slows down. Primary product vendors have solved this problem by developing their own insurance products. tesla) or form an exclusive partnership to provide insurance to customers, as in the case of online used car marketplace Carvana. Providing insurance Built in partnership with Root Insurance Company.
As carriers pursue embedded strategies, these market forces create barriers to successful embedded insurance adoption and enablement. These obstacles also result in delays in educating and upskilling agents to seize embedded opportunities.
Understand where agents fit into embedded distributions
If the primary product vendor is focused on selling their products and managing the customer experience, agents can act as advocates for ancillary insurance products and drive conversions. A potential use case is renters insurance (ancillary product) sold through the real estate rental process (primary product). By leveraging built-in rental insurance, carriers have the potential to capture additional customer segments and increase their overall market share.
Rental insurance is a relatively simple product in nature, with low costs and low profits. However, it interacts with other insurance products that customers may own, such as car insurance or pet insurance. As an embedded product, it creates significant cross-selling opportunities at any point in the customer journey. In this way, built-in rental insurance serves as an entry point for new customers, especially younger demographics who are more likely to rent, to learn about the airline and purchase additional insurance products.
It is clear that the embedded partner (rental broker or property management company) has an incentive to market and sell ancillary insurance products, but this is at best adjoining to the core business. Insurers are responsible for marketing insurance products and ensuring that sales occur along the customer journey, whether or not they have control. This is where agents come into play.
We believe that inserting agents within core products leads to more effective sales funnels. Because products like renters insurance interact with other products, advice on the complete risk profile, including how the coverage protects the customer and whether there may be gaps or overlaps in coverage. The need arises. The agency is uniquely positioned to take advantage of the interactions between different insurance products. Ancillary products may have lower commissions (as they do for renters insurance), but cross-sell and upsell potential allows agents to steer customers toward purchasing a set of products that meet their needs. This can ultimately lead to the following outcomes: Overall fees will be higher.
Embedded product distribution strategies are very flexible and should be tailored to the core product they are attached to. It is important for carriers to assess when and where to leverage agents is appropriate from a customer perspective and beneficial to the business.
For example, warranties and replacement insurance for simple e-commerce products like VR headsets can be provided at the point of sale without the assistance of an agent. Because key products are easy to purchase, customers are less likely to need guidance from agents, and there are fewer opportunities for cross-selling and up-selling. Such products are likely to be sold through digital channels and targeted to a digitally native millennial audience. Carriers can leverage retailers’ digital channels and partner with them to create seamless experiences across brands. We look at this type of model as a defensive play with less emphasis on development. With the right placement, carriers can reach new customers they wouldn’t otherwise be able to reach.
Key considerations when deploying agents in embedded environments
To achieve growth through embedded insurance channels, insurers must pay attention to agent and embedded relationships as a core part of their strategy development. Important considerations when deciding where agents fit into your embedding strategy are:
- Are you building embedded insurance products for defense (growing share) or offense (preventing share erosion)?
- Do you understand your customers’ buying preferences for different types of products?
- Do customers need to understand how the product interacts with other insurance products they own?
- What segment of the market is this new embedded product designed for, and how does it fit into your current customer base?
- Will the product be sold only to “new” opportunities at the point of sale, or will it also be sold to existing customers of the primary product vendor?
These considerations will help carriers decide where and how to deploy agents to support customer experience and sales through embedded channels. By thinking about how agents drive the customer journey from the beginning, insurers can develop built-in insurance experiences that truly stand out to customers.
If you’re looking for ways to incorporate embedded insurance into your current sales strategy, we’d love to talk to you.get in touch with bob vescio and Scott Stith.
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