THE RISE OF EMBEDDED INSURANCE

As embedded insurance becomes a hot topic in the insurance industry, we look at its growth rate so far, what holds it back and its future potential

WRITTEN BY: LOUIS THOMPSETT

Though embedded insurance may not appear to consumers as a flashy new means of purchasing coverage, it’s not designed to be.

In fact, the reason embedded insurance has become such a hot topic as a means of product distribution for insurers is due to its seamless integration with other associated insurance offerings, addressing both primary purchase and related insurance needs in one transaction.

Enabling customers to have a more comprehensive and holistic solution, embedded insurance flips the traditional model of offering insurance products, which requires consumers to actively seek coverage for standalone products. Effectively, it eliminates the need for customers to go through additional steps or fill out complex forms to obtain insurance.

A covert operation of sorts, embedded insurance allows insurers to tap into new customer segments and leverage existing distribution channels of partner companies, all while gathering valuable data from customer transactions to create more personalised underwriting and pricing models. Although this paints a rosy picture for insurers, there are complex regulatory requirements to consider, giving some legacy institutions cold feet over offering packaged insurance products – and ensuring embedded products meet the licensing needs of all products in a single package is but one consideration. Add to that the need for complex compensation algorithms for each embedded offering, compliant advertisement licensing, rebate cognizance and intellectual property law adherence, and it becomes clear that completely remodelling legacy models may be a pricey risk for established insurers.

DAN BRATSHPIS CEO AND CO-FOUNDER, INSHUR

This is where insurtechs have taken up the mantle, offering insurers integrated solutions that can make embedded insurance a part of their offering. But, do the benefits of embedded insurance outweigh the risks for insurers? We look at use cases of embedded insurance and ask: will it become a ‘must’ for insurers in the future?

Is embedded insurance the answer?

For Dan Bratshpis, CEO and Co-Founder of INSHUR, “embedding insurance solutions is the answer to building efficient insurance products and personalised relationships with both the platforms and their customers”. While partnering with insurtechs may prove costly, Bratshpis feels the extensive budgets insurers spend on advertising “to assert their presence in key areas of everyday life – such as car, life, travel, personal and professional liability insurance”, doesn’t help them “deliver the right product for these workers when relying on standard customer data such as gender and location in the underwriting process”.

He adds: “With embedded insurance, there are many mutual benefits for workers, insurers and platforms, but it’s the symbiosis