The use of embedded insurance is a growing trend that’s reshaping retail and consumer experiences, as well as propelling business revenue for many companies across the world.
In 2023, the global embedded insurance market was valued at an already sizeable $78.7 billion. However, by 2030, it is expected to reach an enormous $175.2 (Pragma Market Research, 2024).
And it’s no wonder so many businesses are investing in this new tool as it can not only drive growth, but also drastically enhance customer satisfaction, leading to repeat business as well as higher conversion rates.
With so much to be gained from the effective use of embedded insurance, we want to make sure you know everything you need to know about how to implement it into your buying journeys and the embedded insurance trends that could make all the difference.
The rise of embedded insurance
Let’s start by explaining exactly what embedded insurance is — a marketing model that integrates insurance products directly into the purchasing process allowing consumers to add relevant cover at the point of purchase.
For example, if someone was in the process of purchasing a smartphone from an e-commerce platform, the platform would provide the option to add device protection or extended warranty coverage directly within the transaction journey. That way, the customer can instantly buy this coverage with just a click, without having to visit the insurance provider directly.
Why is it so popular?
The role of embedded insurance is to enhance the customer journey as well as provide insurers with additional selling opportunities. And, since today’s shoppers seek convenience, flexibility and peace of mind, it’s unsurprising this tool is becoming so popular.
But what specific qualities do business owners and customers benefit from?
Convenience
Using this model simplifies the buying journey for consumers by integrating protection options seamlessly.
It acts as a reminder
Not only does embedded insurance make purchasing insurance easier, but it also reminds customers to protect their purchases when they might have otherwise overlooked coverage.
Data-driven personalisation
Using customer insights, e-commerce platforms can create tailored offerings, to make sure their customers get everything they’re looking for.
How to effectively implement embedded insurance
Now that we’ve covered the basics, let’s look into how business owners and insurance providers can use this model to its optimal effectiveness.
Start with seamless integration
While you can build a new buying journey to incorporate embedded insurance, if your customer journey is already working well, building embedded insurance into your existing digital platforms is the easiest way to approach this model.
Integrating this tool into pre-existing journeys not only requires as little change as possible but also avoids disrupting the customer’s journey.
And, if you’re not sure how to do this without disrupting the running of your business, you can use technology partners (like Stubben Edge Group) to simplify integration and compliance, leaving them to do most of the work for you.
Leverage data and personalisation
The most valuable information you have is the data you’ve collected on your customers. That data is the key to personalising their experience on your platform and increasing the chances they will make a purchase and become a repeat customer.
Therefore, when you decide to incorporate embedded insurance, utilising your customer insights to tailor the policies you integrate and their pricing is essential.
Focus on customer education and trust
Authentically building trust with your customers is paramount to the longevity and success of your business, so the last thing you want is for your customers to feel confused and unsure about your new embedded insurance model.
To make sure your customers understand what they are being offered and why, explain the value proposition clearly during the checkout process, without cutting any corners. That way, even if your customers have never heard of embedded insurance, they’ll feel confident in your hands.
Align with regulatory standards
It goes without saying that regulatory standards must be upheld when selling financial and insurance products and services.
However, not everyone knows what these standards are. And, if you’re one of those people, collaborating with experts who can handle compliance efficiently might be the best route to go down.
Challenges to consider
While embedded insurance can be exceptionally useful and result in huge financial benefits for businesses, that doesn’t mean it comes without its own issues and challenges.
One common challenge businesses run into is balancing simplicity and clarity. You don’t want to overwhelm your customers with too many options and convoluted explanations, but you need to ensure you’re transparent with them to build and maintain trust.
Striking a good balance between doing enough but not too much can be difficult initially, but once you’ve mastered it, the payoff is more often than not worth it.
Another challenge you’ll have to consider when implementing embedded insurance is maintaining value for consumers.
Embedded solutions should offer meaningful protection to benefit the consumer rather than unnecessary upsells they’ll regret purchasing. Keeping this in mind is essential if you want to drive repeat custom and ensure satisfaction.
Maximising growth with embedded insurance
Embedded insurance offers businesses a powerful tool for growth by seamlessly integrating insurance into the customer purchase journey.
As its popularity continues to rise, driven by consumer demand for convenience and flexibility, businesses that implement this model effectively stand to gain not only financial growth but also enhanced customer satisfaction.
Entering the embedded insurance market could significantly improve customer retention and boost long-term profitability.
