The Covid-19 global pandemic is helping to evolve the insurance industry as consumers increasingly turn to their favourite online platforms to buy products and services. The embedded insurance market has been estimated as potentially worth $3trillion globally.
Embedded insurance – the offering of an insurance product by a non-insurance entity – is about getting more affordable, relevant and personalised insurance to people when and where they need it most.
For Arijit Chakraborty, managing director APAC for insurance firm Cover Genius, embedded insurance is the future of how insurance and warranties will be distributed as it allows a high degree of responsiveness and adaptability to customer needs in a fast-changing world.
At Cover Genius, Chakraborty is responsible for spearheading the insurtech’s insurance and commercial partnerships and leading the regional teams in Singapore, India, Malaysia, Indonesia, Thailand, Vietnam, Philippines, Korea, Japan, Australia and New Zealand. Its clients include large digital companies, such as Ola, Booking Holdings, Intuit, eBay and Shopee.
For the past few years, he has also been advising and building Asia-Pacific’s most well-known insurtech businesses. Here Chakraborty addresses the shift in the distribution model.
For consumers, buying protection from traditional insurers is clunky at best and maddening at worst. Jargon-filled policies are hard to understand, exclude important coverages and include unnecessary benefits.
Even more frustrating for consumers, buying the policy requires an extra step in the process after they’ve already purchased the thing they want to protect: when purchasing insurance, traditionally, the responsibility falls on consumers to seek out insurance policies (usually from traditional insurers and intermediaries).
Just bought a house and looking for contents insurance? Now go find a broker that offers protection for the specific construction materials used on your home. Want protection for a new laptop? Don’t forget the technical specifications!
Now, though, the Covid-19 pandemic and the rapid digitisation of our everyday lives is drastically changing the way consumers want to buy insurance. Consumers want to be able to purchase a relevant insurance policy at the same time they purchase the item or experience they’re insuring — hence, embedded insurance.
Embedded insurance has existed in a simple form for years (think: buying insurance when purchasing a plane ticket online at the point of checkout). What’s changed, though, is this consumer purchasing trend is moving beyond travel into retail, fintech, mobility, business services and even logistics. Any digital company who has data on a transaction or a user can now offer relevant, contextual and tailored insurance at the point of sale or sign up (and build an extra income stream in the process).
It’s clear: through embedded insurance, digital companies are now eating the world of insurance.
Embedded insurance removes all barriers of access to purchasing relevant protection because it’s part of the customer experience — rather than a simple after-thought. There’s no longer a need to go through the tiresome process of seeking out the right coverage and filling out the endless paperwork that comes with traditional insurers, well after the fact. From the moment they make their purchase, consumers receive peace of mind.
The world’s leading digital companies including Ola, eBay, Shopee, Skyscanner, Booking Holdings, Descartes ShipRush and Intuit have already begun to offer embedded insurance to their customers. As our world shifts from physical to digital, consumers expect their favorite brands to keep up. Consumers are largely living in the digital sphere — from online grocery shopping to banking — which has led to an influx of customer data that’s redefining how brands add value to consumer’s everyday lives. Embedded insurance allows organisations to be customer-centric in our digitised world.
Fintechs, in particular, have the dual advantage of advanced customer data and trust from those customers. And we know that in a post-pandemic world, consumers want their banks to offer the protection they need most.
For customers, relevant insurance offered at the right time means the company they’re engaging with demonstrates a genuine understanding of them and their needs. Convenience and personalisation have become what consumers expect — and with so much competition in the market, they no longer need to settle for anything less.
Further along the supply chain, embedded insurance enables dynamically bundled policies, optimised price testing to boost conversions, built-in compliance and streamlined claims assessments that include instant payouts.
Embedded insurance is the fast approaching future. Consumers demand access to protection at the time of purchase, so that they can check out with peace of mind. Embedded insurance is the top opportunity that all digital companies, and most of all, fintechs, should look to capitalise on in 2021 and beyond.