Embedded insurance is taking the insurance world by storm, and for good reason: It brings a wealth of benefits to both businesses and customers.
We’ve previously explored the business case for embedded insurance. In this post, we’ll discuss the many benefits of embedded insurance for customers.
What are the Benefits of Embedded Insurance for Customers?
There are a number of benefits of embedded insurance for customers. Some of the most common include:
- Convenience
- Helping to avoid underinsurance
- Value for money
- Potential for personalisation
We’ll explore each of these in more detail in this post.
Embedded Insurance is More Convenient
In a nutshell, it is an arrangement whereby customers can purchase cover as part of a wider transaction. There’s no need to shop around to compare prices, no need to fill in any complex forms, no need to make any separate purchases, and there’s no interruption to the sales journey.
There are a few different types of embedded insurance, so the exact process by which customers purchase their cover can vary. But in any case, the end result is the same: A more streamlined and straightforward customer journey.
Embedded Insurance Could Solve The Underinsurance Issue
For some years, many have been concerned about the “insurance protection gap”. This is the idea that there’s a significant gap between insured losses and total economic losses. In short: Too many people simply aren’t covered for most, if not all, potential financial losses.
But as embedded insurance transactions are so simple and streamlined, it means that many people might purchase cover who might not have done so previously. In this way, embedded insurance does not just make buying cover more straightforward. It can also make it more accessible and inclusive.
Embedded Insurance Can Be More Affordable
Some embedded insurance arrangements allow customers to get the cover they need, for less. It can make cover more affordable for customers. Take travel insurance, for example. Traditionally, customers may have taken out annual travel policies in advance. They paid for cover regardless of whether they used it. So if anything prevented them from travelling – such as a global pandemic – many customers would have overpaid for cover that they were never able to use.
But with arrangements such as add-on or opt-in policies, customers can purchase travel insurance when they book a ticket or check into a hotel. This means that customers can buy travel cover when they know they’re going to use it.
Rather than buying extensive travel cover in advance, they can purchase cover for specific claims that may arise from specific journeys. This could prove a lot more cost-effective, and it’s yet another way in which embedded insurance can make the process of getting cover more accessible and inclusive.
Embedded Insurance Can Make Insurance More Personalised
One of the business benefits of embedded insurance is the sheer amount of data insights it can bring. If more people are purchasing cover, then insurers will have access to a lot more customer data than ever before.
Obviously, this will necessitate complex regulatory requirements to ensure that this data remains private and secure, and that insurers only use the data fairly, lawfully, and transparently. But over time, insurers could leverage this customer data to design and implement more personalised pricing models along with tailored underwriting services.
As embedded insurance is often arranged at the point of purchase, it’s easy to think of it as a “tick-box” process, whereby all customers will purchase the same off-the-shelf insurance product. But this doesn’t have to be the case. With increased customer insights, coupled with increasingly powerful AI and machine learning processes, embedded insurance products can become just as bespoke as standard insurance products.
We can Help You Embed Insurance Products to Your Customers or Employees
At Capacity Insights, we specialise in providing flexible and comprehensive healthcare and travel cover to businesses and companies for their customers or employees.