The Bridges of Embedded County
As we enter the third year of COVID-19 in which governments and the public are still figuring out how to normalize life again, certain aspects of our lives will continue to evolve. One of these is how we purchase our everyday needs, from groceries, medicine, and utilities all the way to entertainment and retail. The shift from on-site and in-store shopping to online is here to stay and more people are choosing convenience and online personalised content over the traditional shopping experience. In Europe 62% of consumers shop online, higher than ever.
In the US over 70% of consumers shop online. 61% of US shoppers top splurges consisted of home goods and furniture first, with jewelry and luxury accessories second. Consumers are not just shopping online; they are tapping into the latest technology to assure their purchase is perfect. This includes retailers’ VR/AR applications to try their clothing, make-up, accessories and even home furniture virtually in the comfort of their own home. This new shopping experience is all conducted over the consumer’s preferred distribution channels (mobile devices, retailer’s websites, marketplaces etc.). According to McKinsey, COVID-19 has reshuffled consumer habits, creating considerable brand loyalty disruption, with 75% of consumers trying new shopping behaviors, many preferring convenience and value over anything else. Offering consumers relevant and personalised offers at the point of sale dramatically increases sales. According to McKinsey 76% of consumers are more likely to consider purchasing from brands that personalise, and 78% are more likely to repurchase from them. Providing personalised offers at the point of sale after consumers have already decided on the purchase and are ready for relevant extended offers makes a win-win experience for all. With this in mind, more and more retailers embed complimentary personalised offers to their customers, and embedded insurance is no different.
The bridges of Embedded County
What is embedded insurance? Simply put, it’s when a non-insurance entity distributes an insurance product. With over 76% of customers considering purchasing brands that personalise, trusted brands are leveraging this new consumer behavior to offer embedded insurance at the point of sale. Among the highest trust-rated brands are financial institutions. According to research conducted by Cover Genius 45% of bank customers are highly interested in at least one insurance offer relevant to their financial activities. Many consumers said they were interested in receiving transaction-based offers due to convenience (49%) or trust (44%). The research also shows that 60% of consumers prefer to buy insurance from their favorite online retailer. Financial institutions can serve as a distribution “bridge” for embedded insurance to consumers. Additional “bridges” such as travel agencies that offer embedded travel insurance, jewelry retailers with embedded insurance for high-priced and luxury items are delivering a more complete shopping experience.
Electronics manufacturers can include embedded insurance rather than extended warranties for specific parts of their products. A warranty often provides coverage for repair of the product for a failure that occurs as a result of a defect in material or workmanship within the warranty period. An extended warranty extends the length of the warranty at extra cost. However, there are many aspects the warranties do not cover; examples in car insurance include vandalism, defects from negligence or lack of maintenance, accidents, wrongful usage etc. Embedded insurance can bridge this protection gap.
Additional embedded insurance “bridges” are marketplaces such as Amazon and eBay that offer embedded insurance based on the product.
Context is Everything
Embedded insurance enables any third-party platform to integrate innovative insurance offers as part of the buyer’s journey. This strategy positions the insurance buying process in a whole new context. According to the embedded insurance report there are 13 types of life events that lead to insurance decision-making. These include childbirth, home purchase, pet purchase, marriage, and the purchase of cars and other expensive items. These events provide the opportunity to offer personalised embedded insurance in the right place and at the right time. This is where a consumer’s mindset shifts from paying for something they don’t need to buying something they do. These are the contexts which, along with the third party “bridges,” that make a perfect match for an innovative insurance strategy.
Mind the Gap
Embedded insurance is also a great solution for closing the insurance protection gap. An insurance protection gap is the difference between the actual total losses and insured losses. Through embedded insurance, customers get access to a more agile insurance product that more accurately suits their needs.
The Future is Embedded Insurance
Embedded insurance enables meeting consumers not only at their preferred distribution bridge, but also at the right moment on their buyer’s journey. It’s no wonder that InsTech London reports that embedded insurance, driven by the Chinese and North American markets, is estimated to hit $722bn by 2030. It is predicted to account for two-thirds of the global market in the coming years. This is the end of traditional insurers chasing after potential customers to educate them on the need for an insurance policy.
Partnering for Success
Sapiens insurance solutions provide full third-party integration to complete any embedded insurance program. With a seamless customer journey that provides full customer data and insight to assure an accurate point-of-sale engagement.
For more on Sapiens digital solutions click here: https://sapiens.com/
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