WHAT IS EMBEDDED INSURANCE AND WHY SHOULD AGENTS CARE?
What is Embedded Insurance? When booking travel online, you’ve likely come across the option to protect your trip with insurance. On the same page where you’re finalizing your purchase, you can see the cost of coverage. You simply click a button to add the policy to your bill. Congratulations, you’re using embedded insurance.
You don’t have to call up an insurer after you book your vacation. Or even click through to an insurer’s website. You can do everything within the travel site’s ecosystem. Using technology such as APIs, insurers can embed quotes and enable customers to purchase policies through third parties.
Embedded insurance isn’t just limited to the travel insurance world. Commercial property & casualty (P&C) insurers can also embed policies into partner environments. Like financial services platforms or business formation websites. In the coming years, it could become increasingly easy for business owners to add policies like BOP insurance or workers’ comp coverage. It could be added when going about other business activities like filing LLC paperwork online or implementing a payroll system.
As embedded insurance becomes more prevalent, insurance carriers can spread their offerings to more channels. Insurance agents can get more inbound leads and customers, rather than having to conduct as much initial outreach.
AGAIN, WHAT IS EMBEDDED INSURANCE?
Embedded insurance involves insurers offering policies directly through a third-party channel. A customer doesn’t have to go to the insurer’s website to generate a quote and purchase a policy. With embedded insurance they can get that policy via another platform.
A professional liability carrier might partner with a customer relationship management (CRM) software provider to embed insurance. When a business owner signs up to purchase the CRM, they might also have the option to add on that liability policy. This could be useful as they’re in the mindset of thinking about customers.
“To achieve such offerings, and meet customers where they are and when they’re in need, insurers have to be able to reorganize, recalibrate and even rethink their offerings almost as a suite of apps or plugins that other digital businesses can then insert into their own offerings,” notes IBM.
WHY USE EMBEDDED INSURANCE?
Embedded insurance offers several advantages to all parties. Customers, carriers, agents, and third-party partners all benefit. At first glance, it may seem like embedded insurance cuts out the role of insurance agents, as carriers can sell policies directly through partner channels.
However, agents can benefit too. It’s just that their roles may look a little different. A client might initially sign up for a policy on their own, and the insurance agent would then be a resource for them throughout the year, leading up to the agent initiating the renewal process.
Plus, it’s not as if every policy will be purchased via embedded insurance. Especially in the near term. But either way, insurance agents don’t have to fear embedded insurance. This evolution can be win-win. With benefits like the following:
Embedded insurance can make the whole insurance process more efficient for everyone. For customers, they can gain the ability to purchase policies without having to visit additional websites or call multiple insurers for quotes. That can also be a big timesaver for carriers and agents.
“As embedded insurance solutions emerge and become available at the point of sale, they eliminate the necessity to hunt prospects. This will bring a shift in the future, where the majority of an agent’s time will be spent on advising and servicing, and only a small part remains direct prospecting,” explains Innoveo, an application development platform.
Provide Greater Relevancy
Embedded insurance also helps carriers and agents deliver more relevant offerings to potential clients. But it’s not just about saving time. It’s about helping customers get the coverage that serves them best.
Providers can “offer their products to customers who need them most at the precise point when they need them,” explains Accusoft, a software development company. “For the provider, it’s a much more efficient approach than relying on outdated cold calling techniques to sell policies that may or may not meet the current needs of a customer.”
Part of what makes embedded insurance more relevant is the opportunity to make data-driven decisions.
“The relationships SMEs have with their platforms and softwares are durable and data-rich, which leads to smarter cross-sell, pre-qualification and massive risk reduction opportunities,” says the Open & Embedded Insurance Observatory, of which Talage is a member.
That could also help the third-party partners offering embedded insurance to be seen as providing a better customer experience.
HOW TO USE EMBEDDED INSURANCE
Carriers and agents will likely look for more ways to embed insurance in the coming years. Embedded insurance is already fairly prevalent in areas like travel insurance. But there’s still significant room to grow across sectors, especially commercial P&C.
So, one step for insurance businesses is to find partners for embedded insurance. You’ll need to pay attention to any regulations that might limit the ability to sell insurance via third parties. Then you’ll need to work out arrangements with partners to offer policies through their platforms.
For example, a commercial P&C carrier might partner with a web hosting provider. Selling cyber policies when small businesses sign up with the web host to launch their websites. Insurance agencies might also be able to find partners to directly reach relevant customers. Like partnering with a local accounting firm. That way, when small businesses sign up for services with the accountant, they might be able to also generate insurance quotes and then contact the insurance agent if they have follow-up questions.
From a technology standpoint, getting started with embedded insurance generally isn’t too complicated. With APIs, you can easily integrate insurance quotes into third-party platforms. The Talage API, for example, provides a single digital connection to over 30 small commercial insurance products. Using this API makes it easy to embed insurance quotes from multiple providers in one location, so business owners don’t have to waste time visiting several sites to collect that information.
EMBEDDED INSURANCE IS THE WAY FORWARD
Overall, embedded insurance provides several benefits to all parties within the insurance landscape. Customers can quickly get insurance quotes from multiple providers without even having to visit an insurer’s website, and they can get more relevant offerings from platforms that can leverage data-driven insights.
Meanwhile, insurance carriers can reach more customers in more locations. Instead of just selling policies through their own channels, or only relying on brokers and agents for distributions, carriers can partner with other types of businesses to sell policies.
Yet insurance agents can benefit too, even if their role changes as a result. For those who do purchase or express interest in embedded insurance, they might still have questions about the policy, which the agent can then try to answer.
And a strong insurance business isn’t just about signing up new customers. It’s also about building relationships with customers. If an agent provides high-quality customer service to an embedded insurance client, that business owner might then refer other leads to that insurance agent, as not everyone will come through an embedded insurance channel. Plus, these embedded insurance clients might want to change their coverage over time, and agents might have opportunities to sell larger policies when the time comes for these clients to renew.
So, embedded insurance can be beneficial all around. And as the insurance industry becomes more digital and leverages technology like APIs, embedded insurance will likely only grow from here.