Embedded Insurance: Key Consumer Insights Businesses Should Know
One of the most significant movements in the insurance industry over recent years has been embedded insurance. Embedded insurance has the potential to enhance partnerships using tech and underwriting capabilities to integrate insurance solutions into consumer journeys and points of purchase/sale (POP/POS), which opens up new business opportunities for companies seeking to invest in growth and to meet rising consumer expectations. This new-age digital coverage offers consumers relevant insurance products tailored to their exact needs at the right place and at the right time.
In our latest embedded insurance report, we uncovered fascinating consumer insights that every online travel-related business should consider implementing into their ecosystems if they wish to generate an additional revenue stream, differentiate in a highly competitive market and bring customers convenience. Here are 6 key points we learned:
1. There is a rising consumer interest in non-traditional insurance policy options.
Today’s customers are used to fully digitized, seamless experiences at their fingertips and understand the true value digital embedded insurance holds over traditional insurance. Integrating embedded insurance directly into the buying journey that is tailored to the customer's non-insurance purchase, inspires a shift in their mindset, where insurance becomes top of mind rather than an afterthought.
An easier claims process is what 20% of users prefer over traditional insurance solutions, making them more inclined to opt-in on embedded insurance which also speaks to the efficacy of a customised end-to-end consumer journey.
2. Embedded insurance provides a competitive edge to businesses enabling them to become the proverbial knights in shining armour during unpredictable times.
According to our data, 63% of consumers would opt in for embedded insurance should it be available at purchase. This demonstrates that insurance is no longer regarded as a grudge purchase or unwanted afterthought but rather a desired but necessary travel related insurance add-on.
Additionally, with over 80% of survey participants claiming instant payouts as their number one reason for purchasing embedded insurance, including it as part of your business strategy and offerings will have obvious and positive implications on your ROI.
3. Stand out travel-related insurance products can increase customer acquisition and develop a stronger sense of brand loyalty.
Notable travel-related insurance products influence switching behaviours among consumers as we learn that 64% are likely to switch providers if they were offered Cancel For Any Reason (CFAR) insurance to add to their travel bookings, 58% if they were offered Luggage Loss insurance, and 56% if they were offered Delay Insurance (covering flight, bus and rail travel).
4. Embedded insurance is not limited to the ‘digital generation’.
Demographics suggest that it is cross-generational and not limited to the Gen-Z consumer market. Although insights show that the majority within each generational class would choose embedded insurance if available, there is still an opportunity to educate the market (with 18% claiming they do not know enough about embedded insurance to make a decision), hinting that increased awareness has the potential to expand the customer population exponentially.
5. Businesses need to keep up with the digital world of insurance or risk being left behind.
Sooner, rather than later, digitally enabled companies should be looking to embedded insurance to not only stand apart from their competitors, but for their business growth. With the incorporation and usage of embedded insurance, companies are able to align themselves with the needs of their customers who are now existing and transacting in fully digitised marketplaces and consequently demand equally digitised insurance processes and payout solutions. Our data tells us that affordability, a fast and easy digital purchase journey, automated claims and instant compensation are the most compelling characteristics of embedded insurance for customers.
6. Embedded insurance collates invaluable data to better understand consumers, providing mutually beneficial insights.
Embedded insurance solutions can provide usage-based, real-time data that help businesses and insurance providers to better understand consumer behaviour, enabling them to innovate and provide their customers with relevant and customised insurance offerings. More data provides more adequate risk assessment and pricing recommendations, resulting in more competitive prices. This, in turn, provides cross and upselling potential.
All parties involved in the B2B2C business model of embedded insurance stand to win from the partnership, forging stronger relationships between businesses and their customers and increasing brand loyalty for long-term product purchasing. This is based on the fact that it leads to increased revenue with consumers willing to pay up to 15% more for quality service and flexibility.