" class="no-js "lang="en-US"> Insurtech: Exploring the Impact of Embedded Insurance
Thursday, March 28, 2024

Key Elements for Embedded Insurance Success and the Impact on the Insurance Industry

In this article, Sizwe Mase, Business Development Lead, insurtech at Root, delves into the essential factors that contribute to the success of embedded insurance in the retail sector. We will explore how trust, transparency, and value play crucial roles in creating strong insurance propositions and discuss the impact of embedded insurance on the broader insurance industry, including the influence of compliance, technology, and innovation.

Insurtech: Breaking Down the Complexities of Embedded Insurance

Trust is essential in any business relationship. Customers must feel confident that the retailer and insurer will act in their best interests. They must have a strong reputation for transparency, honesty, fairness, and reliability. Customers should feel secure in knowing their claims will be handled fairly and that the insurer will protect their personal information. They need to understand what they get when purchasing insurance through a retailer. They need to understand the coverage, costs, and obligations. Retailers and insurers need to be transparent about their embedded insurance policies. This includes making it clear what is covered, excluded, and what the claims process looks like. Clear communication is essential to build trust with customers.

Customers want to feel they’re getting a good deal when purchasing insurance through a retailer. The policy should provide fair value in terms of coverage and price. Customers should feel that they’re getting a policy that meets their needs – at the right time – and that they’re not overpaying for coverage they don’t need.

The policy should also be easy to understand and purchase without requiring customers to jump through hoops to get coverage. In short, products must deliver what they say on the tin at all product life cycle stages with no exceptions. Finally, brand reputation is clearly crucial for retailers in any context, and this should be a key lens through which they view any embedded insurance proposition. Getting it wrong could erode trust in their products and ultimately damage their reputation. Customers need to trust both the retailer and the embedded insurance proposition or insurer if they are named within it, and the reputation of both companies can play a big role in building that trust. A strong brand reputation can also help differentiate a retailer’s insurance offerings from its competitors.

Compliance is King in the Embedded Insurance Industry

Insurance is, after all, quite rightly a heavily regulated industry. There are different types of regulation across territories and classes of business. As such, complying with regulation of this sector was a barrier to entry for non-insurance brands.
Technology is lowering this barrier to entry – there are advanced embedded insurance platforms available that can automate key compliance and reporting requirements even for multi-territory, multi-class offerings.

Tech platforms dedicated to this space also provide a data-driven feedback loop into retailers, allowing for more accurate underwriting and ultimately more relevant insurance at reduced cost. There is also a strong trend for insurtechs partnering with intermediary product specialists including MGAs and brokers, to further streamline access to licensing in new territories and ensuring compliant product offerings. In this way, embedded insurtech specialists can also serve as product engines for retailers who want to enter the market, assisting with embedded insurance product design, building, and launching simple products quickly and cost-effectively.

The Future of Insurance: Exploring the Latest Insurtech Innovations

Overall, embedded insurance is making the insurance landscape more competitive by creating new avenues for companies to offer insurance and providing customers with more personalized, relevant, and convenient insurance solutions.
As a result, retailers are not only winning market share in the insurance industry but also building entirely new customer relationships. This, in turn, is forcing traditional insurance companies to adapt and innovate to stay relevant in the market.
Embedded insurance is a diversification tactic that retailers are leveraging to expand their reach, and insurtech is supporting this drive by pushing the frontiers of embedded insurance forward with compliance and fairness first. Competition is Competition is a crucible for innovation, and the current dynamic is a hugely positive and vital step forward for the relevance of insurance in society.

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