Insurance at the point of need: How banks can profit from Insurance

A new whitepaper has just been released by AAZZUR and bsurance, detailing how embedded finance will allow for insurance products to be sold at the point of need for the customer, based on real-time payment data. This will see an increased uptake in insurance products being purchased and will tap into a relatively new market of consumers who may not have purchased a wide variety of insurance products before.

The idea of banks selling insurance has been around since the 1980s but there was never the infrastructure to make this happen seamlessly. The process relied on banks passing on spending data to insurance companies who could then cold-call the customer with the relevant product, but this was too removed for there to be any tangible uptake. The time gap was too large as the customer had moved on from the point of sale and the necessity of the product diminished, as by then it was perceived as an unnecessary add-on.

Fintech has transformed banking and insurance. Last decade, the emergence of tech-first challenger banks like Revolut, Starling and Monzo sent traditional banks scrambling to update their outdated infrastructure. Due to this, most national and global banks are now tech-focused enough to justifiably consider themselves fintech businesses too.

With digital transformation happening across every sector, it is no surprise that consumers are now demanding an ecosystem of products and services, wherever they spend their money, and many are now looking for a similar service from their banks.

This market is prime for banks to take advantage and the embedded insurance and finance allows any bank – challenger or incumbent – to build these ecosystems. Now the most innovative finance and insurance products in the world can be offered to customers as and when they need them.

Philipp Buschmann, CEO of AAZZUR comments: “There are a number of reasons why embedded finance products such as insurance and insurance-as-a-service (IaaS) are proving to be so profitable. Put simply, banks earn commission on every policy that is taken out, and by offering insurance policies at the point of purchase, a 10% closing rate on policy offers is attainable.”

Embedded finance will see banking and insurance seamlessly join and smaller, low-cost, one-off policies that are of particular value to the customer will be popular for the masses and profitable for the banks and insurance companies alike. Traditionally, cultivating partnerships between banks and insurance companies would be expensive and time-consuming. Now with API platforms like AAZZUR, banks can start offering these products within as little as six weeks.