Shopping, banking and booking vacations online are popular with consumers largely for three reasons. The first is convenience. The second is security. The third is choice. Embedded insurance platforms recognize that these user preferences are driving a warp-speed increase in digital transactions that is unlikely to slow down. Using that insight to drive new and meaningful opportunities for digital interactions between users and the companies/services they interact with online helps cement the place of embedded insurance in the future.
For decades, if you needed to buy insurance, you had to take time out of your day (or evening), sit through a pitch, read a lot of text and walk away with a binder. In 2022 and beyond, that’s not the experience users are looking for and they are becoming more vocal about their expectations.
Embedded insurance, takes a decidedly different approach. No binders. No long pitches. Instead, it starts with the end-user in mind. It asks how can we make getting insurance easier and more relevant for purchasers? What kind of coverage do they want or need? Can we find ways to cover products or services that aren’t currently protected? How can we price protection so it makes sense and gives value? What can we do to increase the purchaser’s level of trust in our products?
Embedded Insurance Platforms Lead The Way
Embedded insurance is the bundling of some kind of coverage or protection within a product or service and making it available during the point of sale. Embedded insurance is distributed in several ways:
- Sometimes the protection is offered by default, meaning it’s integrated into the product as a basic layer of coverage that any user/purchaser receives.
- Offering protection as an add-on feature for an additional cost is another form of embedded insurance.
- And still another way to offer protection is through a tiered premium plan. Check out this article for a more in-depth look at these different types.
No matter how the protection is structured, tech platforms and marketplaces are in the best position to distribute embedded insurance as it should be: seamless, relevant and affordable.
And embedded insurance platforms are in the best position to help tech platforms participate in this emerging trend in insurance.
What Makes Tech Platforms A Good Fit For Embedded Insurance?
First, as innovators, tech platforms are open to exploring options in embedded insurance. There is both a need and desire for novel categories of protection products that tech platforms can create. Underserved markets are much more willing to try new embedded insurance programs because what’s currently available to them doesn’t meet their needs.
Creating embedded insurance products for these underserved users as well as users who don’t want to go to the trouble of finding a one-off insurance plan can help close the protection gap, an opportunity that is estimated to be worth $1.2 trillion worldwide. The protection gap refers to the difference between the ideal amount of coverage that should be purchased and the amount actually bought.
Second, you have access to rich data on your end-users. This wealth of information enables you to assess their risk in real-time in order to give them the coverage they want at more accurate pricing. But there’s a byproduct to this close connection with your end-user. Because you’re providing a way for them to reduce the risk of using your platform, their trust in you and your brand increases. This in turn strengthens their brand loyalty and increases their LTV.
Lastly, you already have your user’s attention. At the most appropriate time during their buyer’s journey, you can present your embedded insurance offering. You’re not asking the user to wait, shop for standalone protection or be sent to another website where they might be required to fill out forms.
Tech platforms have the opportunity to create bespoke insurance products, customized for their end-users based on the close relationship they already have with users. Because of the significant transactional data that tech platforms already have, they can offer programs that are in tune with the needs of users.
The Benefits Of Partnering With Embedded Insurance Platforms
The insurance industry is highly regulated which makes building an embedded insurance program on your own complicated. When you aren’t in the core business of insurance, it can be time-consuming and costly to ensure your program doesn’t have regulators knocking on your door.
While not all embedded protection is insurance in legal terms, there are still many factors to consider before launching an embedded insurance program:
- Do you know enough about insurance to stay in compliance?
- How much risk are you willing to take on?
- Do you have the necessary capital to start and maintain the program?
- How will you handle claims?
- Do you have the engineering resources to build out the necessary architecture?
- How confident are you in designing the right insurance product for your users?
- How will you ensure your program is a profit center rather than a cost center?
These questions aren’t meant to make tech platforms back away from adding embedded protection to their core offering. As mentioned earlier, there’s a huge untapped market with the potential for increased revenue from the protection products themselves and the boost in sales of your core offerings as your users’ confidence in your platform grows.
You can expect to enjoy these benefits if your embedded insurance program is executed right. That’s where embedded insurance platforms come in.
Embedded Insurance Platforms: Partners From Start To Finish
Embedded insurance platforms are sometimes described as an insurer-in–a-box. That box can be customized to fit your goals of providing a better user experience and building a significant revenue stream. They offer all the software, expert guidance, compliance and access to capital that tech platforms need to create their embedded insurance programs.
Of course, the range of services will vary from provider to provider, but here’s a look at what Tint offers tech platforms to help them build a successful program.
Over the course of several meetings, Tint’s team of insurance experts gets to know your users’ needs and specifically what you want to accomplish with your embedded insurance program. We’ll help you determine how much risk you want to take on, options for transferring that risk (aka having an insurer take on a portion of the risk), coverages, pricing, exclusions, limits, deductibles, contracts and how you’ll manage claims.
Having the right technology is all-important. Even if you have a team of software engineers at your disposal, building the necessary back-end and front-end infrastructure could take years – and take your valuable engineering resources away from focusing on your core platform. Rather than taking years, Tint can have you set up in a few months. Then after you launch, you’ll be able to easily manage your protection program without dedicated internal engineering resources.
If you aren’t in the insurance industry, regulations and compliance can feel pretty opaque. As an insurance insider, Tint can give you peace of mind that you’re staying compliant and avoiding fines. It’s included in “the box.”
Having enough capital to retain all or a portion of the risk when you bring your insurance in-house can be challenging for many growing tech platforms, especially in the early days. Some companies think that transferring most or all of the risk is the only way to go. Other options may work for you though. We’ll work with you to determine how much risk you’re ready to take on, and as you scale we’ll be there to help you make adjustments.
Since one of the reasons for offering embedded protection on your platform is to increase user confidence, you certainly don’t want to take a chance on mismanaging claims and damaging your reputation. Tint’s embedded insurance platform includes tools to manage policies and claims all in one place, so nothing falls through the cracks.
As your partner, we’ll use your own historical data - along with market data and our deep industry expertise to make sure your underwriting is on target. Dashboards and reporting make it easy to gauge the health of your program after launch. Our goal is to make it possible for you to manage your protection program as a profit center.
Tint As Your Embedded Insurance Platform
A final thought on embedded insurance platforms: find one you click with. Of course you’ll want to work with a platform that offers you all the benefits described above, but it’s also important to choose a partner you like. There’s going to be a lot of conversations; especially, during the initial stages. You want to leave those discussions feeling excited about what’s to come.
One of the best ways to decide whether working with embedded insurance platforms is right for you is to schedule a time to chat one or several. Sound good? Let’s talk.
This website is made available to you for informational purposes only. It does not provide specific legal advice and is not a substitute for competent legal advice from a licensed attorney. The material on this website may not be used by any person or entity without the express written consent of Tint.