How the insurance industry changes - Part 1

Rise of the ecosystems – Embedded Insurance

Insurance organizations across the globe are facing the same challenges in finding and exploring new sales channels and revenue streams beyond the traditional ones and adopting new technological capabilities more consistently.

For years, insurers have been using brokers and tied agents in their business as their main access point and contact to customers. IT solutions are usually tailor-made and fit perfectly into given sales scenarios and the processes of insurers. Their sales force has been pushing products and services into the market that are not easy to sell as the need for customers is not obvious at first sight and must be explained. As a bottom line, insurance is often perceived as a highly complex product that is “sold, not bought.” So, whether it's through direct sales, agents, brokers, or comparison sites, getting customers onboard has always carried a high customer acquisition cost (CAC).

With the advancement in the massive use of data and the mobility of the internet, the pressure and the demand to explore and incorporate ecosystems outside of the traditional insurance world have increased dramatically. This also requires a change in thinking and in IT infrastructure of insurers. Opening for new market participants and collaborating with them is a key element to success. Insurers must move apart from a pure risk-driven product approach without delivering any tangible value-add to its customers when selling it. Utilizing the attractiveness and positive image of third-party products and services and combining them with insurance products can help insurers increase customer satisfaction and market presence in the new digital world. That is what Embedded Insurance is all about. Most of the concepts and ideas of Embedded Insurance in the market apply to Business-to-Business-to-Consumer (B2B2C) area for private customers.

But Embedded Insurance shall not be limited to B2B2C only. It is also relevant in Business-to-Business (B2B) operations. Buying insurance coverage in B2B is often characterized by disruption, media break, and time consumption. In B2B insurance coverage can be subordinated under other leading business transactions (e.g., transport of procured goods and items).

Insurance products and services must be present where potential buyers are. The mobile internet and extensive use of social media as well as the change in lifestyle or developments like the sharing economy make direct sales or offerings on demand necessary. This means that insurance coverage shall be present and combined more easily with other leading products, services, and processes. Signing up for insurance must be as easy as buying or procuring the leading item. It is embedded!