The increased awareness of risks has emphasized the importance of insurance, leading individuals and businesses to reassess their insurance needs and seek comprehensive coverage tailored to specific risks.
Embedded insurance is a concept that involves seamlessly integrating insurance offerings into the purchase of other products and services. For example, when buying a phone, customers can opt for anti-theft insurance that is automatically included in the purchase. Similarly, when booking flight tickets, travelers are often given the choice to add travel insurance, providing protection against flight-related issues. Embedded insurance simplifies the customer experience, streamlines the insurance purchasing process, and offers a personalized and tailored insurance solution at the point of purchase. In most cases, coverage can be acquired with a simple click, making it more convenient for customers to obtain insurance protection.
Embedded insurance is gaining popularity among millennials and Gen Z, who prefer quick, straightforward, and digital access to solutions. The availability of coverage at the point of sale, whether online or offline, benefits insurance companies as well.
One of its significant advantages is its contextual nature. Gen Z and millennials are comfortable sharing their activities, preferences, and whereabouts on social media. Insurtech companies leverage this valuable data to offer personalized insurance solutions to this new generation of aspirational buyers. With this information, insurers can ensure that the right insurance product is offered to the right customer at the right time.
Another key benefit is the substantially lower onboarding costs for insurers. Insurtech firms are collaborating with regional micro-credit organizations and micro-lending institutions to provide embedded insurance products at competitive rates, particularly in regions like India where insurance penetration is low, and data availability is limited.
Embedded insurance has the potential to transform the insurance landscape by making it more accessible and seamlessly integrated into everyday transactions. It offers convenience, customization, and new opportunities for businesses, but its successful adoption requires careful marketing and clear communication.
