In A Decade of Digital Transformation in 12 Months, 46 C-suite executives spoke with PYMNTS for its Q2 eBook on what the world will look like as recovery rolls on and the next iteration of normal rolls out. In this excerpt, Dave Brune, president for the Americas at Cover Genius, discusses how embedded insurance has the power to revolutionize not only the insurance industry, but also those businesses that can harness the opportunity.
Read the entire eBook here.
One of the major themes that has come out of the pandemic – particularly as it relates to customer journeys and relationships – is simplicity. Businesses in all industries were forced to digitize formerly offline-only customer relationships almost overnight as in-person contact was paused. The next step in this journey toward simplicity and more efficient use of technology is to embed experiences within transactions to further deepen the customer relationship. This is already being seen with embedded insurance, where a customer is offered the opportunity to purchase insurance while signing up or transacting for another product or service. Embedded insurance has the power to revolutionize not only the insurance industry, but also those businesses that can harness the opportunity.
Take banking as an example. Nearly 60 percent of customers have changed the way they bank since the pandemic began. As more customers have moved their activities online, there are massive opportunities for banks to not only improve their practices and processes, but also to improve the lives of their customers.
A recent survey commissioned by Cover Genius and collated by PYMNTS.com found that banking customers are not only open to insurance offerings from their financial institutions (FIs), but they’re also hungry for the chance to deepen their relationship with their FIs. 70 percent of digital bank customers and 44 percent of traditional banking customers are highly interested in receiving bank-embedded insurance offers based on their transaction data.
In the same study, close to half of digital bank customers said they would be highly interested in bank-embedded homeowners insurance offers, 76 percent would be interested in embedded travel insurance offers and 59 percent would be interested in both embedded health and life insurance products. Interestingly, a majority of those who used traditional insurers in the last 12 months are also highly interested in bank-embedded insurance.
Customers already trust their banks and the data they hold, and many source insurance at the time of financing properties, cars, businesses and the like. Embedding insurance based on a much wider dataset that identifies key life milestones and major purchases in real time is the next logical step in getting closer to customers and helping them at the exact time they need support and protection.
This is similar across other industries such as retail, property, payments, auto and mobility. You only need to look at the launch of Tesla Insurance, extended warranty offers from Amazon and eBay, and COVID-proof travel insurance products from Skyscanner to see the impact that embedded insurance is already having Insurance infrastructure can take a lot of time, money and expertise to set up, which is why collaboration between businesses and InsurTechs will be so important. By partnering with the right InsurTech, businesses can be given access to all the backend insurance knowledge they need to launch a product or service that their customers need, while they focus on their core business.
Traditional insurance companies, brokers and agents are going to feel the squeeze in this post-pandemic reality. Legacy systems and a lack of technology – particularly for the provision of a customer-friendly experience – has already put them behind the eight ball. As customers continue to move online for both their personal and business insurance needs, the days of visiting a broker’s or agent’s office seem more distant every day.
As we look toward the post-pandemic future, digital habits have formed, and there will be no putting the offline toothpaste back in the tube. The importance of digital simplicity and embedded insurance has grown over the course of the last year, and this growth shows no sign of slowing.