Embedded insurance is a funny thing—it’s been around forever, but the industry is talking about it like it’s brand new.
Yes, embedded insurance is ubiquitous, whether it’s while booking a plane or train ticket, buying concert passes, planning a vacation, or even guaranteeing the safe arrival of packages. But it’s also surging in popularity—and the opportunity for insurance companies is palpable. Embedded insurance is one of the most powerful ways to integrate insurance into the customer journey, gain exposure to countless new products, and insure the uninsured.
This helps the consumer protect their valued, and often expensive, items, helps save companies money, and allows insurance agencies the opportunity to launch powerful new products to reach entirely new sectors.
Let’s do a deeper dive.
In his in-depth analysis of embedded insurance and what it means for the future of the industry, LinkedIn writer Simon Torrance described embedded insurance as a “$3 trillion market opportunity.” He believes it’s destined for growth, and centred around providing affordable, relevant, and personalized insurance to those who need it.
Both insurance companies and individuals benefit from this. Insurers gain the potential for lower cost distribution and reduced risk while giving individuals affordable coverage. Consider the impact on the auto industry—reducing the number of uninsured people means drivers everywhere are more protected.
It’s also worth noting that by 2030, embedded insurance is expected to account for over $700 billion in gross written premiums in property and casualty insurance alone—roughly a quarter of the entire global market.
What’s more, Forbes anticipates that one of the largest marketing opportunities for embedded insurance will stem from underbanked or unbanked sectors. Over 1.5 billion people in the world do not have a bank account, and yet this demographic seems most interested in pursuing embedded insurance products. Take India and Indonesia as prime examples: a whopping 95% of Indian consumers and 76% of Indonesian consumers demonstrated high levels of interest in bank-embedded insurance offers.
Why is embedded insurance so popular with the underbanked demographics? The simple answer is that existing insurance options available do not work for those without bank accounts. Embedded financial products, however, reach these consumers in ways traditional methods do not.
These products reduce the cost of serving customers and thus make both onboarding and customer outreach cheaper and easier, leading to more affordably priced products for underserved markets that desperately need it.
According to Chubb Business Insurance, the need for insurance is greater than ever, due largely to the continuously widening protection gap. In the last two decades alone, the gap has nearly doubled as a result of increased digitization, urbanization, climate change, and lack of effective innovation in the industry.
Swiss Re found that as of 2019, the global protection gap had reached $1.2 trillion USD, with natural catastrophes, mortality rates, and health care as the top contributing factors, and Asia and Latin America demonstrating the most significant gaps.
Embedded insurance seeks to tackle these protection gaps by abstracting insurance functionality into technology. This allows third-party providers to integrate insurance products quickly, easily, and at reduced costs into the customers’ purchase journeys, offering customers relevant value and simple, effective experiences.
This not only streamlines insurance for the average person—it also creates a more direct channel into insurance, meaning that those who are less informed about insurance can still receive top-tier protection at affordable rates.
Customers aren’t the only ones who stand to benefit from embedded insurance products. Insurers will also see improvements both in the products they are able to offer and the costs and risks involved in providing their coverage.
Through embedded insurance, insurers can develop hyper-personalized, targeted insurance products, like usage-based insurance UBI, that can better reach out and appeal to certain demographics. Increased volumes of customer data can also hasten underwriting and improve risk modelling, leading to less assumed risk on the part of the insurer and improved fraud prevention tactics.
New distribution channels allow insurers to connect with and gain a deeper understanding of their customers and their supply chain and manufacturing ecosystem as a whole. This provides a competitive advantage in the insurance game and allows them to thrive while reaching new customers and promoting a wider range of products.
Budding insurtech startups are fueling the growing charge for embedded insurance. Having raised nearly $800 million last year alone, companies like Extend, Bolttech, and Cover Genius are jumping on the embedded insurance train and not looking back.
At nSurely, we benefited from that surge in funding, finishing our seed round at the end of last year.
There is so much opportunity for such a young market. Most insurtech companies are under five years old and primed to explode, meaning that their endorsement of embedded insurance is something all insurers should take note of and consider among their strategies moving forward.
There’s no denying that embedded insurance is the future–in fact, it’s here already. Taking advantage of this momentous opportunity can result in significant advantages for yourself, your agency, and your customers, so why wait?
At nSurely, we focus on the three fundamental aspects of embedded insurance, technology, data, and network effects.
Technology: We help insurers increase their speed to market by bypassing their legacy systems and leveraging our white label solution. In essence, it’s a lightning-fast digital transformation.
Data: We process more data than ever before and garner more accurate insights than ever before. This helps insurers better their risk modelling and build out robust new ecosystems with seamless customer journeys.
Network effects: Our white labelled suite of services give insurers new offerings that increase customer loyalty and help attract newcomers, which significantly expands GWP.
Embedded insurance is revolutionizing the insurance game, and we’re here to help you make sure you take advantage of all it has to offer.
At nSurely, our goal is to provide the next generation data platform for insurers, helping our clients unlock new markets and reach their customers in new and innovative ways. Contact us today to determine how you can reap the benefits of embedded insurance and use it to up your insurance offerings.