Embedded Policies Give Insurers an Edge in a Competitive Market
Embedded insurance products just make sense. As Clearsurance.com reports in, How Insurance Can Leverage Embedded Insurance, embedded insurance is both innovative and practical. Moreover, because it’s a growing field in the industry, insurers would be remiss to neglect to invest in embedded marketing.
What is embedded insurance?
Embedded insurance is an insurance policy that’s offered at the point of sale of another product.
You’ve likely interacted with products and accompanying embedded insurance plans, even if you’ve never heard of embedded insurance.
For example, if you’ve rented a car, you’ve almost certainly had the option to add insurance to your rental. All the best rental companies give renters the option of purchasing insurance. That insurance policy is embedded in the rental car transaction.
Any product that warrants an insurance policy should be something that insurance companies consider creating a plan for.
What are examples of embedded insurance plans?
The following are a few examples of potential embedded policies:
- Life insurance with a motorcycle policy
- Life insurance with a trust fund
- Renters insurance with rental applications and agreements
The possibilities are limitless if you can think of an existing insurance product that meets a need or create a new product for an expanding market.
If an insurance company sees a need for a new insurance product, embedding is the best way to get that product to the consumer.
If the insurance provider created ad campaigns and pushed the product on all existing customers, they would likely not be nearly as successful as embedding the product and reaching customers who need it at the ideal moment, the point of purchase.
What are the benefits of embedded insurance products?
The many benefits of embedded insurance seem to indicate its potential for increasing insurer success.
Benefit #1 – Reach a Broad Audience
First, with embedded products, you’ll reach a wider audience. Traditionally, insurance agents offer insurance products. With embedded insurance, you can use other industries to provide insurance products.
For example, a banker can offer an accompanying insurance product with a trust fund. Their financial perspective can give the customer a better understanding of the insurance policy.
Benefit #2 – Growth Potential Without Overhead
Another benefit is that you can grow without the overhead. For example, insurance providers can utilize experts in other fields to sell their products instead of hiring new agents and building new agencies.
Insurance providers spend a significant portion of their income on overhead costs, so eliminating them can revolutionize their industry.
Benefit #3 – Reach Highly Specific Audiences
A third benefit is that embedded insurance reaches a targetted audience. Marketers continually seek to find ways to reach the best target audience. It’s hard to find a better target audience than someone purchasing a closely related and complimentary product.
No one needs rental car insurance more than a person renting a car. Embedded insurance provides the consumer the option to add coverage at that point.
Benefit #4 – Improve Customer Experience
Embedded insurance products simplify the purchase process for customers. In the current market, customers want ease.
For example, if a checkout process is confusing, they’ll just hop onto another site to make the purchase. Unfortunately, people don’t have the patience to do things the hard way.
So, when the consumer can buy insurance at the same time as something else, they’ll be more likely to purchase it and receive the protection they need. And they won’t have to waste any time figuring out what kind of insurance they need and researching where to get it.
Convenience is critical, and embedded insurance products provide that.
Embedded insurance is poised for immense growth over the next few years, so insurance companies should prepare to offer those products wherever there’s a need.
Read the full report from Clearsurance.com here: How Insurers Can Leverage Embedded Insurance.