What's Next for Embedded Insurance?

The growth of the embedded insurance landscape will create a swell of new partnerships and VC investment.

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Since the dawn of the smartphone brought convenience to our fingertips, delivering exceptional experiences to your customers has been all but required for companies to succeed. Now, to remain competitive in a constantly evolving, digital-first world, companies are investing in even more creative solutions to meet consumer expectations. The insurance industry, known for being complicated and often confusing, is undergoing a digital revolution of its own in the form of embedded insurance. 

Embedded offerings have been instrumental in the growth of the fintech industry over the past few years, offering ease of use to consumers and additional market opportunities to companies and giving organizations the ability to tailor products and services to individual industries. As embedded offerings continue to evolve and reach new customers, here are my top predictions for what to expect in 2024. 

Embedded insurance is poised for significant growth throughout 2024 and beyond

As traditional and digital insurers continue to make the insurance process more accessible and seamless, the importance and value of embedded insurance offerings and partnerships will continue to grow. In fact, the embedded insurance market was valued at $63.1 billion in 2022 and is expected to grow to over $480 billion by 2032. 

Embedded insurance offerings are nothing new. Travel insurance and services like Apple Care have been around for years. Digital insurance companies were born out of the need to simplify the insurance process for consumers and were designed to quickly adjust to the ever-changing insurance landscape, making them prime contenders to lead the charge into the new age of embedded insurance. 

The growth of the embedded insurance landscape will create a swell of new partnerships and VC investment, but only the strongest will provide long-term value and survive. Embedded insurance partnerships that are created “just because” will not last unless both parties and the consumer benefit from the solutions they offer. 

See also: Embedded Insurance Is Made for SMBs

Partnerships that receive buy in from both parties will survive long-term

In addition to satisfying customers' changing needs, the smooth incorporation of insurance into routine business operations creates opportunities for companies of all sizes. Challenges can always exist, but the advantages of improved customer experiences and a continuously growing market share are too great to pass up. Unlocking the full disruptive potential of these solutions will require a purposeful and cooperative strategy from organizations as they set out to embrace embedded insurance. 

For example, NEXT partners with some of the largest small business software providers in the U.S. to meet a range of small business needs, including purchasing insurance. NEXT's partnerships with Gusto, a payroll workflow platform, Intuit Quickbooks, a full-service accounting platform, and LegalZoom, a legal technology and services company, are all examples of how embedded insurance is providing more value to the small business ecosystem. By offering small business insurance directly through the platforms they are already using, insurers can help entrepreneurs address more of their business needs within a single, integrated platform. These embedded partnerships can continually integrate workflows and be easily updated for efficiency.

Although embedded insurance offerings have simplified the purchasing experience for the customer, some challenges need to be solved. Among these is the intricacy of integrating the current systems of both companies in a partnership. 

Digital insurers will have an advantage because they have the experience and expertise to create the infrastructure for embedded solutions that are not only simple to implement but have the ability to be quickly and easily updated. 

Organizations need to evaluate the traditional standards of financial soundness and underwriting and the technological capabilities of their potential partner, as well as any prior experience with successful embedded solutions. 

The partnerships that will ultimately withstand the test of time are those where both companies are committed to working together to maximize the power of digital offerings. This commitment includes continuous improvement to the servicing and purchasing experience, digitally powered underwriting for fast and accurately priced policies and seamless purchasing within existing user experiences and tailored policies. 

Unlocking the full disruptive potential of these solutions will require a purposeful and cooperative strategy from enterprises as they set out to embrace embedded insurance. 

See also: A New Approach to Embedded Insurance

Embedded insurance is here to stay—it’s not a fad. As consumers continue to expect companies to adapt to meet their ever-changing needs, partnerships that mutually benefit companies and consumers will increase in popularity and value. 

From personal lines of insurance like home and auto to commercial policies like business insurance, embedded solutions are a way of simplifying a traditionally frustrating and time-consuming process. As the number of embedded offerings increases, those that can adapt to the needs of the consumer and have high-level buy-in from all parties involved will break through the noise and not just survive, but thrive. 

Companies that are built in digitally native environments are set up well to claim their place in this embedded landscape, particularly in industries that are primed for disruption, such as restaurants and e-commerce. Embedded solutions help tackle pain points for consumers that have been entrenched for decades, and organizations that can solve these problems quickly and efficiently will lead the charge into the future.

Nick Mabunay

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Nick Mabunay

Nick Mabunay is the director of partnership growth at NEXT Insurance

He leads the revenue channel and team responsible for providing embedded digital insurance solutions to leading small business ecosystems. Before joining NEXT, he was assistant vice president of strategic partnerships at Liberty Mutual. 

He holds a bachelor’s degree in business and technology from Stevens Institute of Technology and an MBA from Boston College Carroll School of Management.

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