Embedded insurance is currently the hottest topic in the industry. This has permeated many of our recent conversations as clients evaluate how embedding currently impacts, or could impact, their distribution plans. The sense of crisis is further amplified by disruptive companies such as: tesla Throw your hat into the insurance ring in a meaningful way.
Some recent perspectives on embedded insurance have focused on the technical requirements for carriers to operate in this space and the architecture needed to embed their products. Others see it differently. for example, Interviewer We focus on product design as the key to success.
While these features are important, we like to approach built-in promises through the often-forgotten lens of the insurance agent. Our view is that agents continue to play an important role in the embedded world.
First, I would like to share the definition of embedding. We define embedded insurance as insurance that can be purchased within the commerce of another product or service. Embedded insurance is not a new innovation. The built-in “version 1.0” model of purchasing life insurance at the airport before a flight has turned into an incredibly profitable business.
Then, as consumers started purchasing more and more expensive items, we reached “version 2.0” of embedded, which allows customers to seamlessly add insurance while making a physical purchase. Given that auto dealership auto finance providers are also licensed to sell insurance, sell rental car insurance sold over the counter, or the ability for customers to purchase extended warranties when purchasing appliances. Let’s look at.
Advances in technology and online commerce have brought us to version 2.5, web-enabled embedded insurance. This built-in version will allow customers to purchase insurance along with “digital” products such as concert or airline tickets. More recently, the inclusion of this version has made it possible to obtain auto insurance through sites like Credit Karma, original equipment manufacturer (OEM) auto parts insurance, or online auto sales sites.
Coverager refers to products designed to work in the background. Volvo electric car insurance In cooperation with allianz or Spot accident insurance is included with your ski pass. We see this as a new protection paradigm, Embedded 3.0, where consumers do not have the opportunity to choose their carrier, protection level, or cost. Customers need to have a high degree of confidence that their vendor is providing adequate coverage and a good deal.
Where agents fit into the embedded insurance experience
Through research on insurance consumers, we found that while customers are increasingly comfortable learning about insurance and comparing options online, they are often not ready to make a purchase before consulting with a human agent. got it. Most customers still call the call center. according to Accenture Insurance Consumer Survey,85% consumer They prefer human interaction when seeking advice about products and products, and only 15% make purchases exclusively online.
If consumers are looking for a human touchpoint when purchasing a single insurance product, they will increasingly need guidance when combining multiple, more complex products. As the risk of getting the wrong type of coverage needed increases, customers want to be able to rely on a single source of truth to help them sort through their risks and find ways to be properly covered.
Even as some products move toward Embedded 3.0, we believe agents still have an important role to play. Specifically, the role involves helping customers understand their risk profile and how the coverage and products they purchase cover them, explicitly or implicitly, and where there may be overlap in coverage. We believe that this includes providing support for understanding, even in cases where there is a problem. We believe that insurers need to pay attention to the agency-embedded relationship and the implications for carriers, agents, and embedded distributors.
We would love to get in touch with you to discuss your thoughts on the potential opportunities embedded in your business.get in touch with Scott and bob.
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