Understanding embedded insurance: what is it all about?

What to expect:

1. What is embedded insurance?
2. Embedded insurance examples
3. How does embedded insurance work?
4. Embedded insurance for companies: advantages
5. What do customers get out of embedded insurance?
6. Embedded insurance challenges
7. Conclusion

1. what is embedded insurance?

Embedded insurance means that insurance products are seamlessly integrated into the purchasing process or services. This allows customers to take out insurance directly when purchasing a product or service, without having to search for it separately.

By integrating insurance products directly into their customer journey, companies can offer a comprehensive package that meets the needs of their customers. Customers feel more secure and save time, as they do not have to search for a suitable insurance policy in a second customer journey.

2. embedded insurance examples

In other words, embedded insurance is when insurance is offered directly with a product or service. The insurance is embedded in the offer, so to speak. Let's look at a few examples from the customer's point of view:

When I buy a new laptop online at notebooksbilliger.de, I can take out insurance for my new device with just a few clicks and don't have to worry about taking out insurance separately.

I offer my employees the option of leasing a company bike. With the provider RIDE, the appropriate protection is automatically integrated into the leasing contract and the bikes are covered from the outset against, for example, crash or battery damage. Without the need for an extra insurance contract.

The next holiday is coming up. During the booking process, I just tick two boxes and I've got travel cancellation and international health insurance straight away.

In each of these cases, I save on the one hand the trip to an insurance office and on the other hand countless pages of paper contracts. I receive all the contracts digitally.

3. How does embedded insurance work?

These examples show that the embedded insurance approach offers great potential for making insurance tailored, simple and accessible to everyone. With the help of API connections or plug-in solutions, insurance is seamlessly integrated into the customer journey. The insurance is offered directly at the point of purchase, for example in the shopping cart. With just a few extra clicks, customers can take out insurance. However, the insurance can also be integrated into contracts by default, for example in rental or leasing. Here, customers are fully covered without any additional effort. The companies negotiate the appropriate scope of services with the insurance partner and then convert part of the insurance premiums into instalments/prices.

Thanks to the digital connection, the order, payment and provision of all relevant documents, such as the insurance conditions, are carried out in real time for the customer. Contracts and policies can then also be managed digitally. Claims settlement and customer support are covered by the insurance companies.

4. Embedded insurance for companies: advantages

For companies, embedded insurance is important because it precisely meets current customer demands. They are increasingly looking for products that cover financial losses, fraud and delays (e.g. when travelling). In addition, customers prefer to take out insurance digitally – especially for insurance that is rarely taken out, such as worldwide travel insurance, home contents insurance or extended warranties for high-priced consumer goods. Integrated insurance makes it possible to deepen and reshape relationships with customers.

Overview of the advantages for companies:

• Seamless integration into existing infrastructure
• Expansion of the business field
• New source of revenue thanks to insurance commissions
• Improved customer retention through personalised offers
• Cover for customers against financial losses, e.g. in the event of fraud, theft, delays when travelling, etc.

5. What do customers get out of embedded insurance?

For the end customer, convenience is at the top of the list. The protection can be easily added during the normal purchase process and is available immediately. Without customers having to go to any extra effort to search for insurance. This saves time and money. Because embedded insurance is tailored to the product or service purchased, customers only receive the protection they actually need. This additional service experience thus creates an overall positive shopping experience.

Advantages for customers at a glance:

• Time and effort savings
• Suitable insurance cover without paperwork
• Secure and convenient shopping experience

6. Embedded Insurance Challenges

The integration of embedded insurance offers many advantages for companies and customers, but there are a number of challenges along the way. Offering product insurance directly when purchasing the product can overwhelm customers. Companies must clearly communicate the advantages and make it easy for customers to understand the scope of protection and additional costs. The more precisely the insurance policy is tailored to the customer's needs, the easier it is for them to recognise the individual benefits. Insufficient explanation can lead to mistrust or rejection.

Another hurdle is the technical integration of insurance into existing platforms or e-commerce systems. The insurance offering must be seamlessly embedded into the purchasing process. This requires close cooperation between the respective IT departments and may tie up personnel resources.

Challenges for companies in summary:

• Overburdening customers must be avoided
• The degree of customisation must not be ignored; offers must be tailored to customers and products
• Prerequisites for the IT landscape must be met
• Human resources are required

Conclusion

All signs point to embedded insurance. The digital transformation means that the insurance industry is also undergoing a transformation. Customer requirements are shifting towards ‘insurance at a click’. They demand simple and digital insurance offers, as well as an uncomplicated purchasing process. With the help of embedded insurance, companies can meet these requirements.

The concept of embedded insurance offers companies the opportunity to easily and digitally integrate insurance into their existing booking processes and online shops. By offering a complete package, companies can benefit in a number of ways: they can generate new revenue opportunities, save costs and increase efficiency, improve customer satisfaction and differentiate themselves from the competition.

One final question remains: what happens if companies fail to jump on the embedded insurance bandwagon?

The answer is pretty clear: companies that cling to old traditions and fail to address embedded insurance could run the risk of being unable to maintain their market position.