Embedded Insurance: Focus on the Future

Patrick Nobbs

This is the last in a series of blogs about embedded insurance. Read part 1, part 2 and part 3.

To what extent is embedded insurance a result of changes in the insurance and technology landscape, and to what extent is it driving those changes?  

Getting your technology right  

Effective tech-powered systems are the driving force behind successful insurer-retailer partnerships when it comes to embedding insurance. So, where to start?  

Traditionally, the insurance industry has been held back by legacy systems, which haven’t allowed them to fully integrate with third parties such as retailers. Now, some innovative insurers are developing new digital strategies with integration in mind. Other insurers are partnering with experienced insurtechs that bring to the table extensive insurance expertise combined with the technological infrastructure essential for embedding insurance products. 

Working with an agile insurtech empowers the insurer to bring new products to market in a matter of weeks, seamlessly integrating their insurance offering into a third-party’s brand without incurring a large technical debt. Fuelling this insurance integration are open APIs, no-code or low-code platforms, and AI-powered software. 

These emerging technologies enable insurers to modernise their legacy systems and meet customer needs through digital innovation, while remaining compliant. In this way the insurance landscape becomes fully automated – from quotation and customer acquisition to complete policy lifecycle support; and from billing and renewals to claims. Third-party retailers and distributors can harness this technology to incorporate relevant and agile insurance products into their own customer purchase journeys – swiftly, efficiently, and affordably. 

Revenue models 

Simply put, if the retailer acts as an intermediary, they are allocated a percentage of the premium and a share of the profits. For retailers not taking an intermediary role, they are usually paid a fee for all leads they generate. 

Based on data from the 2022 10-K of one of North America’s top three retailers, its sale of protection plans contributed to 1.4% of its overall revenues – equal to $725 million. 

Preparation for the future starts now 

With new ways of thinking about insurance, combined with evolving retail models, opportunities and challenges abound when it comes to developing future strategies for protecting customer purchases. Some of the key industry trends, their accompanying risks, and how to navigate them include:  

  • The changing face of retail. With the growth in omni-channel shopping – integrating both online and in-person consumer experiences – POS (point-of-sale) and e-commerce technology are equally important. As this technology is constantly changing, it’s important to work with an agile insurtech partner to ensure your aligned insurance systems keep up. Customer acquisition and retention are a key focus for retailers. This provides an opportunity for insurers to add value and help brands to differentiate themselves. 
  • Younger generations are especially happy to share their data, creating future opportunities for insurers to capture more rich customer data. But with this comes the increased threat of data breaches, so insurers must be able to demonstrate their cyber resilience and reassure retailers and customers that personal data is secure. 
  • Consumers are seeking more personalised shopping experiences – whatever they buy – and insurance is no exception. E-commerce provides an optimal opportunity for insurers to access data that allows them to refine their risk profiling as more data is collected, allowing for real-time premium pricing and coverage that is specific to the needs of the individual customer. 
  • Innovative protection products that align with the ever-changing needs of today’s – and tomorrow’s – consumers are something that embedded insurance offers vast opportunities to create. For example, in the warranties space, Garanteasy provides an innovative digital wallet, allowing customers to keep and access all their warranties in one place. Meanwhile insurtech bolttech partnered with telco Three in Ireland for the creation of a subscription service that allows SIM-only customers to swap one device for another, regardless of its physical condition, up to twice a year – providing a unique customer-centric proposition. 
  • Insurers and retailers now have myriad opportunities for growth – through the offer of good value cover and services that allow for differentiation through innovation. 

Embedded insurance is not a magic bullet that is guaranteed to solve all insurers’ problems. Nor is it a product that will sell itself, succeed, and be profitable just because it’s there. The insurer wishing to enjoy the benefits that embedded insurance can bring must first ensure that the technology and revenue models have been properly set up to maximise the odds of success. 

This article contains excerpts from the Sapiens whitepaper, Embedded Insurance: Unlocking Un-tapped Potentional. The whitepaper contains many more insights vital to understanding the current face of insurance, as well as its future. Read it here. 

  • embedded insurance
  • EMEA
Patrick Nobbs

Patrick Nobbs Patrick Nobbs is regional marketing director for EMEA and APAC at insurance software provider Sapiens and had has several years experience in the financial services and technology sector.