Embedded insurance or “sachet insurance” offerings hold great significance for modern insurers. On this front, analyst estimates indicate that over 30% of insurance transactions will occur over embedded channels by 2028. This trend will be especially prominent in lesser-tapped insurance markets like APAC or Africa.
Rise in prominence of embedded insurance offerings and sachet products change how insurers’ Distribution roadmaps. The major change arises in how embedded policies seamlessly integrate coverage options into the purchase process. Such a shift calls for significant Digital Distribution Transformation, whether it is seamless technological integration, product simplification, or navigation of cross-location regulations.
From ‘pull’ to ‘push’
A case in point of the need for Distribution innovation can be that of a lost baggage insurance product clubbed in with a flight ticket booking. Or how a white goods retailer bundles screen protection coverage with a tablet—such innovative models must position insurance as an integral part of the purchasing journey rather than an afterthought.
Digital Distribution Transformation plays a pivotal role in an insurer’s evolutionary path towards optimal embedded insurance offerings. It enables the shift from traditional, agent-driven models to technology-enabled ecosystems that prioritize convenience, personalization, and accessibility.
Embedded insurance calls for the direct integration of insurance offerings into third-party ecosystems such as e-commerce sites, ride-sharing apps, or financial services platforms. Insurers can embed their products into everyday transactions by leveraging technology without disrupting customer experience. A five-pronged strategy is essential to seamlessly drive this shift.
#1 Forge powerful ecosystem partnerships
Strategic collaborations with high-traffic platforms like e-commerce players, banks, and mobility apps are essential to offer embedded insurance. Success in each niche segment also necessitates a diverse distribution model and channel strategy.
In addition to cross industry partnerships, insurers establish strong alliances with insurtech firms that excel in embedded solutions. This enables insurers to broaden their distribution network’s reach.
Technology enables insurers to fully utilize intermediaries such as banks, point-of-sale partners, aggregators, marketplaces, and direct-to-consumer models. Innovative models that integrate microservices and foster collaboration among partners is essential for success on this front.
#2 Ensure seamless fulfilment
Embedded insurance increases end-to-end fulfilment challenges. Specialist Insurtech ecosystems help solve such internal system bottlenecks.
Today, insurtech service partnerships offer ready-to-implement global best practices for insurers. Specialist gateways like Account Aggregators (AA) open additional innovation possibilities.
For example, Insurtech providers offer single-click embedded offerings for:
- Pre-issuance verification checks in complex products
- Intelligent underwriting services
- Multi-factor risk or financial scoring models
- Anti-money laundering (AML) checks
- Claims repositories
Orchestration of intermediaries, partner ecosystems, and Insurtech present unique embedded insurance challenges. Investments in the orchestration of distributed microservices can be more beneficial than internal creation and reinvention of services.
Integrated KPI-based performance monitoring and reward systems are essential for all insurance ecosystems, including embedded insurance. KPIs for STP closures, combination products, upselling, cross-selling, or loss ratios are integral to the orchestration of every sales journey.
#3 Simplify and innovate products
Embedded insurance’s success hinges on easy to understand, highly bespoke policies for the customer’s immediate use cases. Travel or car rental coverage are examples of the need for such relevant, accessible products.
Customized distribution through embedding, upselling, white-labeling, or API integration is essential to fulfil diverse partner needs and customer journeys. Such bespoke policies require extensive integration of digital platforms, APIs, and cloud-based architectures to embed insurance directly into the customer journeys of non-insurance products – a Digital Distribution Transformation forte.
Digital Distribution Transformation enables insurers to convert traditional siloed sales channels to deeply interconnected ecosystems. The accompanying operational flexibility enables insurers to optimally manage claims and customer journeys.
#4 Leverage the power of analytics-driven strategic insights
Data-driven decision-making that relies on predictive analytics and AI is critical to creating highly personalized embedded products with dynamic pricing options. A case in point is pay-as-you-go car insurance policies that depend on actual usage patterns.
Digital Distribution Transformation harnesses the power of machine learning alongside predictive analytics which enhances risk assessment and underwriting precision. Dashboards driven by integration of various data sources and insights from third-party providers enable decisionmakers to gain a clearer picture of their performance.
Insurers utilize distribution transformation initiatives to gain real-time visibility into important customer behavior metrics. It enables decisionmakers to analyze this information for quick product refinements and higher customer engagement.
#5 Streamline regulatory challenges
Proactive and rigorous compliance across allied partner industries is a non-negotiable hygiene factor in embedded insurance. Distribution compliance even calls for innovative management frameworks across borders.
Digital Distribution Transformation marks a significant shift towards complete automation—one driven by smooth integration and streamlined processes. Automation of data collection and data governance reduces manual efforts. High-quality data enables the creation of centralized data systems, comprehensive reporting, management dashboards, and valuable business insights that meet compliance standards.
For example, take the common regulatory demand for clearer visibility into policy sales and transaction processes. Adhering to multiple regional regulations can be a mammoth task for global insurance companies. Such insurers often face queries about customer risk profiles, distribution channel verifications, policy execution, premium collections, and claim disbursements. Digital Distribution Transformation delivers advanced reporting that enhances transparency and compliance while addressing regulatory inquiries.
Embedded insurance strategies backed by the power of Digital Distribution Transformation are powerful revenue multipliers for insurers. Optimal use of bespoke embedded insurance offerings empowers insurers to create a seamless and intuitive user experience that integrates effortlessly into everyday transactions.
Today’s competitive landscape demands made-to-measure embedded insurance products. Let the seasoned team at C2L BIZ guide you on your Digital Distribution Transformation journey. We bring to the table our extensive experience from successful partnerships with over 40 top insurance carriers and customer implementations in 12 countries.
Contact us today on [email protected] to discover more about how to realize the full potential of embedded insurance in your insurance business.