What is the significance of InsurTechs?
There is no standardised definition for companies and start-ups that are referred to as InsurTechs (short for "insurance technology"). Broadly speaking, however, they are characterised by the fact that they use innovative technologies in the insurance industry to create new opportunities. InsurTechs can be seen as a contemporary response to the many challenges facing the industry. These include for example, rising costs, a high degree of product comparability and target groups that are very heterogeneous and therefore difficult to address.
Digital insurance solutions are characterised by the fact that they do not stand alone, but are integrated into products, services or entire platforms that are not directly related to insurance. This approach is called "embedded insurance" and enables customers to conveniently take out suitable insurance with their purchase. Some forecasts assume that integrated insurance could account for around 25 per cent of all premium income in the private customer business as early as 2030. Embedded insurance solutions not only have the potential to expand the range of products and services. They can also be integrated into platforms or apps.
Thanks to InsurTechs, completely new opportunities are also opening up for partners. In an increasingly digital environment, collaborations with third parties are playing an ever greater role, meaning that insurance solutions are no longer just niche products. Of course, it is crucial for sustainable success that all parties benefit from integrated insurance solutions.
Working with third parties allows insurers to engage with target groups that they would not normally reach, or not at the right time. Through strategic partnerships, they can develop additional sales channels and thus also a greater reach. The traditionally high expenditure on marketing can be significantly reduced in this way.
Of course, InsurTechs also open up some exciting options for their partners. Insurance products are a good way of gaining the trust of customers with a pronounced need for security. Suitable insurance offers not only help to strengthen customer loyalty but also generate additional income in the form of commissions. As insurance premiums are due again and again, embedded insurance helps to diversify sales in the long term.
Integrated insurance for retail and e-commerce
Embedded insurance solutions in e-commerce are based on an approach that is anything but new. AirBnB, for example, offers its customers travel insurance that is tailored to the country in which they are booking accommodation. When buying a mobile phone, it has also become increasingly common to take out mobile phone insurance directly with the purchase. This development is also likely to become increasingly important for e-commerce.
The possibilities for technical integration are more diverse today than ever before. For customers in online retail, for example, this development means that their purchasing experience is becoming increasingly personalised. According to the Oracle Consumer Study 2022, 53 per cent of consumers now emphasise the importance of personalised offers for their shopping experience. To enable this experience, integration via API plays a key role, allowing different shop systems to be linked together without excessive effort, for example. For many companies, having their app has also long since become a matter of course that their customers expect.
The fact that convenience is key is reflected in customer expectations. According to Adyen's Retail Report, 55 per cent of consumers abandon the purchase process if they are unable to select their preferred payment method. However, thanks to special retail integrations, the traditional retail shop is far from passé. This makes it all the more important to give the retail business the greatest possible boost. Insurance solutions can also help here by covering the financial risk directly at the time of purchase. In general, it can be said that the demand for flexible and seamlessly embedded omnichannel experiences is unlikely to diminish in the coming years. Integrated insurance solutions are a perfect fit for discerning customers who expect simple and convenient solutions to their problems.
Simple and intuitive handling is playing an increasingly important role in e-commerce. Online retailers that offer claims processing and customer service under one roof, for example, clearly set themselves apart from competitors who do not combine these services. The simplicity of smart insurance solutions can convince customers to take out insurance in addition to the product. Even those who would otherwise have been put off by what is considered a cumbersome process may decide to take this step.
By offering an innovative partner company, online retailers strengthen the bond with their customers. With customised insurance solutions, they make it clear to consumers that they take their security concerns seriously. At the same time, insurance integration in e-commerce is also worthwhile from an economic perspective. They are backed by commission models that contribute to long-term recurring income and thus to higher turnover. For this reason, their importance for cross-selling should not be underestimated.
Additional insurance offers can be perfectly integrated into the one-stop-shop experience, which is characterised by the fact that the customer can find all products and services in a single place. This bundling serves the goal of ensuring the most convenient customer experience possible. The fact that the purchase process is no longer split into several transactions is not only practical from the customer's point of view. The one-stop shop approach also meets an increased need for security that has been observed since the outbreak of the coronavirus pandemic. It is well known that customers tend to buy from a retailer again and again if it offers everything they need in one place.
In 2022 in particular, inflation has risen enormously in many areas, meaning that many valuable items such as bicycles, e-bikes and electronic devices have become massively more expensive. As a result of these sometimes enormous price jumps, many customers have become more cautious when it comes to purchasing high-priced products. If, for example, an expensive bike needs to be replaced, this is no longer an easy option for many consumers. Online retailers are responding to the widespread need for financial security by offering additional insurance in their shops.
Conclusion
The digitalisation push has long since taken hold of the insurance industry and is changing it permanently. Companies and customers are benefiting from this development in many different ways. Would you like to find out more about the topic or have you already developed ideas that you would like to discuss? Then please use our contact form.
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Advantages in e-commerce and retail
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