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How Retailers are Winning Market Share in Insurance: Advantages of Embedded Insurance
Sizwe Mase, Business Development Lead at Insurtech, Root, explains how retailers like Amazon and Tesla are making significant strides in winning insurance market share and opening up access to insurance for new customers. This article will explore the advantages of embedded insurance for both retailers and customers, highlighting the potential for retailers to diversify their revenue stream and offer more relevant and value-adding products and services.
The insurance landscape is rapidly evolving, and a recent shift taking off in a big way is the rise of embedded insurance products offered by non-traditional insurers leveraging their existing strengths to enter the insurance market. This is made possible through technology, which abstracts insurance functions into a low-code environment. This evolution is part of a broader trend of offering financial products to customers embedded at the point of sale. It presents significant opportunities for retailers and other affinity players in insurance to diversify their revenue stream and offer their existing and future customers more relevant and value-adding products and services.
This means that companies like online retailers, car manufacturers, smart device OEMs, fintechs, and mobility providers, to name but a few, can now offer insurance without having to go through traditional channels or become licensed themselves.
What are the advantages to retailers and customers?
One advantage that large retailers have is their existing infrastructure, which they can use to sell insurance to their customer base. They have an existing relationship and client trust, making penetrating the insurance market easier. For example, Amazon’s brand recognition and reputation for innovation give it an advantage over traditional insurance companies, as customers are more willing to trust a company perceived as forward-thinking and technologically advanced.
Insurance product design is another area where retail players have an advantage as they have very rich and unique data on their customer base, which allows them to create personalized solutions – and in many instances, offer better value than stand-alone insurance products available on the traditional market. They can tailor solutions to meet the unique needs of their customers and leverage data on their existing client base/market to speed up the underwriting process, reduce waiting periods, and set policy features and benefits.
This can be seen in how Tesla leverages extensive data on its vehicles’ safety and performance. For example, Tesla’s Autopilot and Full Self-Driving systems provide a wealth of information about driving behavior and accident rates, which it can use to develop more accurate risk models and offer insurance policies tailored to individual drivers.
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