Embedded insurance is the new kid in the block. Embedded insurance offers great value to all stakeholders. Experts believe that the future of the insurance sector belongs to embedded solutions.
What is Embedded Insurance? How Does It Work?
Embedded insurance involves the bundling of insurance coverage with other products and services. For instance, the rental company offers collision damage coverage when you rent a car. Or, when you buy a new phone, the retail store offers insurance coverage against theft.
The insurance solution is integrated into another system through APIs (application program interface). APIs allow the insurer to analyze relevant consumer information and offer customized insurance coverage solutions.
In the post-COVID-19 era, consumers use the online medium to buy most of the products and services they need. The insurance sector is also moving towards digitization to meet the demands of its customers. Therefore, it is now essential to digitize embedded insurance solutions too.
The insurance tech company partners with multiple insurers to create customized embedded insurance plans that suit the customer’s needs. For instance, the Kanopi cover for homes involves leading underwriters to create streamlined insurance policies for renters and house owners.
How Does Embedded Insurance Benefit Your Business?
The main goal behind this is to provide affordable coverage to a more extensive customer base. It offers a massive growth opportunity for insurers.
With more and more people adopting the digital platform for shopping, entertainment, medical consultation, etc., the exposure to embedded financial products is more significant.
The most significant benefits of embedded insurance are:
1. Increased Business Revenue
Embedded solutions allow businesses to create new revenue streams. It provides access to a broader base of customers and lowers customer acquisition costs. It is a great way to increase profits without increasing operational costs or hiring more employees.
It opens a whole range of opportunities to expand your business operations. With embedded insurance solutions, your business is bound to grow exponentially.
2. Mitigating the Protection Gap
The term “protection gap” refers to the difference between insured and uninsured losses. The gap appears to grow wider with time. These solutions are offered to customers at the point of sale to reduce the protection gap. Customers feel more confident and relaxed to invest in insurance after they have purchased a valuable product after hours of research and financial contemplation.
3. Access to Accurate and Relevant Data
The digital footprint of a customer leaves behind a whole history of data. Insurers can use the data to offer customized insurance solutions to relevant customers. They can provide better pricing and reach out to the customer on a real-time basis.
For instance, the Kanopi cover for small businesses allows insurers to personalize their product offerings, thus adding more value. Embedded insurance solutions allow better risk assessment too.
How Does Embedded Insurance Affect the Consumer?
Embedded insurance offers greater convenience. Consumers enjoy more affordable insurance solutions without looking around for many options. The products are tailored to meet their specific needs and are highly relevant.
It allows insurers to create innovative solutions to satisfy consumers’ requirements within their budgets. It opens a whole range of purchase and service options for the customer.
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