Strategies for Realizing Embedded Insurance Success

The rise of embedded insurance presents significant opportunities for insurers to enhance the customer experience, increase market penetration, improve risk management, and achieve operational efficiency. As technology advances, embedded insurance will continue to blur the lines between insurance and everyday transactions, ultimately benefiting consumers and insurers alike.

To successfully compete with embedded offerings, whether independently or through new partnerships, insurers must tackle several challenges¹:    

• Lack of Differentiation: Current insurance products may not leverage the latest data or insights. They may lack essential features and provide poor user experiences.
• High Costs: Core operations and the entire value chain can be burdened by multiple intermediaries, which can add 30–40% to costs.
• Insufficient Automation: Excessive manual processing constrains operational efficiency and responsiveness.
• Limited Use of Advanced Technologies: Adoption of artificial intelligence, machine learning, and other enabling technologies is compartmentalized as opposed to systemic.
• Legacy System Constraints: Existing systems struggle to integrate the speed, diversity, and volume of new data flows required for innovation in the embedded insurance space.

Other impediments must also be addressed. Most property and casualty insurers have yet to refine their offerings or underwriting models to account for the dramatic changes in mobility, including the rise of electric and self-driving vehicles. As mentioned in our last blog post, Driving Forward: Navigating Embedded Insurance in Mobility, rapidly evolving mobility trends, advancements in connected technology, and rising customer expectations are contributing to increased volatility in the insurance industry. Insurers must not only take concrete steps toward greater agility and responsiveness, they must also focus on refining their product offerings and underwriting models to deliver enhanced convenience, personalized coverage, and new revenue opportunities for all stakeholders.

Cloud Technology and Product Innovation

In an InsurTalk podcast interview with Guidewire’s Laura Drabik, Chris Raimondo, Americas Insurance Technology Consulting Leader at EY, discussed best practices for achieving success in embedded insurance based upon EY’s experience in the space: “Cloud connected, open API capabilities and a microservices architecture are really just table stakes for entering the embedded insurance sector with a viable offering.”² Insurers must develop entirely new methods for engaging in solution design and development by utilizing modern platforms that offer pre-built capabilities, facilitate seamless partner integration, and enable fast, secure data exchange.

According to Raimondo, “Insurance carriers must be willing to innovate and more aggressively self-disrupt, defining new product offerings and financial models specific to the embedded channel.”² Raimondo also challenged insurers to honestly assess the levels for innovation and disruption within their organizational cultures, define the capabilities necessary for bold innovation, and then work to develop these capabilities throughout the enterprise. These would include skills for creative ideation, rapid prototyping, and data-driven product management.

Success Factors for Embedded Insurance

In speaking about Chubb’s achievements in building successful embedded partnerships, Amy McNeese, Chubb’s Head of Partnerships for Digital Consumer and Small Business, elaborated on what it takes to realize positive outcomes: “We have a good idea of what it means for an embedded insurance partnership to work. It has to add value for the customer; to be relevant, contextual, accessible and easy to purchase; to add value for the partner, with revenue, customer retention or brand loyalty; and there must be a technology match so the insurance offering embeds seamlessly into [the] customer experience.”³

To garner more value and realize the full benefits of embedded insurance, insurers should take strategic action in these six key areas: partnership alignment; digital, cloud-based infrastructure; a seamless customer experience; innovative and scalable product design; competitive pricing; and trust development.

Partnership Alignment

• Understand and define the compelling mutual value proposition across the insured-partner value chain. Will it be a novel product offering not currently available in the market? Is it a differentiated technology platform that can enhance the experience and foster increased customer loyalty?
• Explore new business models based on multiple collaboration options, including B2B2B (commercial lines) and B2B2C (personal lines). Will the protection product be built into the existing product, or sold as an add-on? Will the product be co-branded or white-labeled?

Digital, Cloud-Based Infrastructure

• Invest in modern cloud-based infrastructure that provides pre-built capabilities, makes it easy to integrate with partners, and supports fast and secure data exchange.

Seamless Customer Experience

• Utilize design thinking to set elevated standards for customer experiences, ensuring personalization, seamlessness, and high-impact outcomes.
• Integrate embedded products into a clearly defined customer journey with a focus on simplicity, ease, and convenience.

Innovative & Scalable Product Design

• Increase utilization of advanced analytics to better understand the drivers of new product adoption.
• Use design thinking to prototype and continually innovate, setting higher standards for personalized customer experiences.
• Ensure scalability for the intended customer segments, as well as flexibility for changing customer preferences.

Competitive Pricing

• Leverage diverse data sources, largely based on actual usage patterns and real-time risk insights, to price products and dynamically adjust premium levels.

Trust Development

• Boost consumer confidence in both the product and the partners by helping customers reach a secure understanding of what will be provided as part of their purchase.
• Provide transparency around pricing, terms, and conditions.
• Educate customers about the benefits and limitations of embedded insurance policies. Building awareness is crucial to avoid misunderstandings, foster trust, and ensure customer satisfaction.

Per Chubb’s McNeese: “Even though we live in a digital age and even though we’re talking about selling insurance in this digital ecosystem, you still have to be able to trust the person on the other side. The number one item that I lean into every day is that it still comes down to relationships. It still comes down to real face-to-face human interaction, listening, collaboration, strategic alignment and building trust.”³

Delivering More

Embedded insurance may be the future of insurance distribution, but the future of insurance payments is digital. Are you ready to modernize your payment offerings to do more for your customers? One Inc provides a cloud-based, scalable payment platform that enables innovation and growth. By leveraging our next-gen technology and ecosystem partnerships, we deliver a simplified, seamless, and elegant customer payment experience. With One Inc by your side, continually adding value, cloud-based digital payment success is achievable. Learn more.

Sources

1. EY – https://www.ey.com/en_us/insurance/how-insurers-and-new-entrants-can-take-advantage-of-embedded-ins
2. Drabik Digest – https://drabikdigest.com/?ppplayer=5095025e9c5a57efb2f3ebe0709f405b&ppepisode=0c21af6664a712df012a82357d946800
3. Insurance New Magazine – https://www.insurancenewsmag.com/insurance/amy-mcneece-takes-on-embedded-partnerships-at-chubb/