September 9, 2021
Embedded Insurance Reaches Tipping Point
Embedded insurance is the way forward for many online businesses to offer confidence to consumers in these uncertain times.
As coronavirus infection rates rise again, businesses around the world are asking themselves an uncomfortable question: Will consumers buy?
Since the outbreak of the pandemic, consumer behavior and business engagement with their customers has gone into uncharted territory. Consumers, influenced by COVID-related restrictions, experienced changes in needs for goods (increased consumption of food eaten at home), services (demand for high speed broadband bandwidth) and experiences ( an increase in outdoor leisure events). Businesses had to deal with volatility of their inventory, changing consumer demand patterns, the need for a complete move to online ordering and changes in their product mix (restaurants, for instance, have changed menus to accommodate a better pickup/delivery experience).
What we can now say for a fact after dealing with 1.5 years of COVID is this:
- All consumers, including previous nay-sayers, have become more comfortable shopping online.
- Using e-commerce platforms such as Shopify, every business can spin up a virtual store in no time.
- Consumers want relevant offers to be made where they shop.
- There is consumer resistance to generic ad-tech offers.
- Consumers expect higher levels of service. They look for higher certainty and flexibility from the businesses they buy from.
Reality for every person is now changing much faster. One moment you may be planning to leave for Hawaii for a few weeks, and the next you are quarantined at home because your kid has a runny nose.
There’s an old Yiddish saying, “Mann Tracht, Un Gott Lacht” — Man makes plans, and God laughs.
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Business in uncertain times
How can businesses succeed in an environment where everything is possible but nothing is certain? Many businesses have found the answer is to give consumers enough certainty that they reach a conviction that allows them to purchase — create a sense of security around their ability to make changes, to cancel or to return the goods.
Into this gap comes embedded insurance. When done right, it allows insurance products to meet consumers when and where it makes the most sense for them and to deliver highly sensible protections that they really want.
What makes embedded insurance so exciting is that it changes an insurance model that is centuries old.
If you are thinking to yourself, how does this all relate to changing consumer behavior and to the need to increase consumer conviction, consider this: A family is researching the option to go on a vacation via an online travel agent. They are interested in a beach resort in the Maldives. They will not book until they have strong conviction that there’s little or no risk to their travel plan or their experience. Risk means different things to different people at different times. In normal, non-pandemic times, a family like that might care mostly that the weather is nice, that the water is free of jellyfish or that there are no air quality issues. Nowadays, they may care more about having medical coverage, getting infection rates and screening procedure updates or simply having the flexibility to cancel if something goes wrong or doesn’t feel right.
Embedding insurance to create trust
Undoubtedly, a merchant selling goods is the one who knows his or her consumers and their purchasing behavior the best in the world. This kind of business oversees the customer journey and can recognize demand, conversions and trending concerns. The challenge the business has in these uncertain times is that consumers hesitate due to perceived risks. Embedded Insurance can be inserted into the online buyer path to create reassurance around the associated risk. Using AI, embedded insurance can allow for additional value-added protections to be customized and tailored to the needs of each consumer. This is a seamless experience as the consumers have already supplied all of their relevant details to the supplier. To complete a positive online experience, bundling, pricing and drafting of the policy needs to be done in near real time.
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In a sea of protection and service providers, insurance companies, technology platform providers and more, how would a business go about selecting the best insurance solution for its customers? In my mind, a business selling embedded insurance needs an insurance partner that:
- Understands the complexities of how businesses sell to their customers,
- Is up to date on what consumers expect,
- Has a wide portfolio of protections and coverages either in-house or from third-party providers,
- Bases decisions on data,
- Can seamlessly integrate with the merchant
- Can offer insurance streamlined into the core product or service sale.
Including an embedded insurance or service offering in the product offering can boost customer engagement and overall customer lifetime value. These protection policies can be auto-renewed or set as a subscription service to ensure customers keep coming back. Embedded insurance is the way forward for many online businesses to offer confidence to consumers, so they buy products and services in what are undoubtedly uncertain times.