Embedded insurance has become a buzzworthy topic in the finance industry, sparking discussions on how it currently impacts or could influence distribution plans. The emergence of disruptor companies like Tesla entering the insurance arena has added a sense of urgency to these conversations.
While some industry perspectives emphasize the technological requirements for carriers to participate in embedded insurance and the necessary product architecture, others, like Coverager, stress the importance of product design for success in this space.
Despite the critical importance of these capabilities, it is essential to consider embedded insurance from the perspective of the often-overlooked insurance agent. Our perspective acknowledges the continued relevance of agents in an embedded world.
Embedded insurance, as we define it, refers to any insurance that can be purchased within the transaction of another product or service. This concept is not entirely new, as seen with the example of purchasing life insurance at the airport before a flight, which evolved into a profitable model.
As technology and online commerce have advanced, we have seen the evolution of embedded insurance into web-enabled versions. This progression allows customers to seamlessly add insurance to various digital products, from concert tickets to online car sales.
Products like Volvo’s electric vehicle insurance in partnership with Allianz and Spot’s injury insurance included in ski passes represent a new protection paradigm, embedded 3.0. In this model, consumers trust vendors to provide the right coverage without the ability to select carriers or coverage levels.
In the context of an embedded insurance experience, our research shows that while consumers are comfortable researching and comparing insurance options online, many still seek out human agents before making a purchase. The human touchpoint remains crucial in guiding customers through complex insurance products and combinations.
Agents play a significant role in helping customers understand their risk profiles and the coverage provided by the products they purchase. Insurers should pay attention to the relationship between agents and embedded insurance to navigate implications for carriers, agents, and distributors.
We are open to discussing your thoughts on embedded insurance and potential business opportunities. Reach out to Scott and Bob for further insights and collaboration. Subscribe to receive the latest insurance industry updates, news, and research directly to your inbox.
