How carriers can digitize with embedded insurance options

In today’s fast-paced and interconnected world, the insurance industry is undergoing a seismic shift. As traditional business models face unprecedented challenges, insurance providers must embrace innovative strategies to remain competitive and meet the evolving needs of their customers. One such strategy that has gained significant traction and is reshaping the industry landscape is embedded insurance. 

Also known as integrated or contextual insurance, embedded insurance represents a groundbreaking approach where insurance coverage seamlessly integrates into the customer experience through non-insurance products or services. Most importantly, embedding insurance policies within other products allows for more automation of the sales process than ever before. 

When a customer submits information via the non-insurance product website, the embedded insurance provider automatically accesses that information to generate a quote for the insurance premium. This paradigm shift leverages the power of relationships, advanced technologies, and data-driven insights to offer consumers personalized and easily accessible insurance solutions. 

We have all seen embedded insurance in business-to-consumer settings: extended warranties for appliances and consumer electronics when checking out at Amazon or Target; rental car companies embedding coverage during their checkout process; and even giants like Airbnb offering AirCover for hosts, a liability insurance policy provided directly by the company. But embedded insurance in other business-critical applications like payroll and HR products for the business-to-business community are also beginning to explode.

As the insurance industry continues to digitize, a wider breadth of insurance providers need to begin exploring embedded options, including the genesis of the insurance sales funnel, the technology required, and the relationships that bring this strategy to life. 

Underwriting

Before even beginning to build the technology to implement embedded sales, insurance providers need to determine the right underwriting questions that will help drive the customer experience from initial interest to quote generation. 

Customer feedback has been clear that many carriers ask too many irrelevant questions. Therefore, ideally, only questions that lead to a straightforward and immediately bindable quote should be asked. For example, most workers’ compensation insurance quotes only require a few basic pieces of business information, such as payroll, industry, and location, to move forward. 

A complex quoting process can not only deter prospective customers, but it can also complicate the mapping of your embedded tech stack. Figure out what questions are critical, and remove all others.

Embedded tech stacks

It is unlikely customers are going to find value in buying anything online unless there is an immediate price available. This is especially true for small business owners in search of the best possible price for operational expenses like payroll software and insurance.

While embedded insurance strategies are convenient for prospective customers, the technology running embedded sales can become quite complicated for providers if not set up properly. Above all else, insurance companies must prioritize tech to create a simple experience and provide immediate prices in a trustworthy fashion. This is achieved through the use of multiple application programming interfaces, also known as APIs. These tools allow different software applications to communicate and interact with each other, even if they are developed using different programming languages. Simply put, APIs are the foundation of a successful embedded insurance strategy. 

By allowing interaction between product sites via APIs, providers can meet customers where they already are in lieu of customers bouncing around from site to site. Two crucial APIs are quoting and payment: 

Quoting APIs: streamline and simplify the quotation workflow by eliminating manual calculations and enabling dynamic pricing. Straight through underwriting rules are the primary factors driving the decision-making behind the API strategy. Real-time, accurate data allows underwriting to generate up-to-date and competitive quotes. In the case of embedded insurance strategies, they allow customer information to operate and flow between both insurance provider systems. For example, a customer does not need to input their information twice when buying insurance for their rental car; all they have to do is check a box, and their information from the rental car company is instantly available to the auto insurance provider. This is crucial for a seamless customer experience and allows the customer to make an immediate insurance buying decision. 

Payment APIs: are perhaps more crucial than any other facet of an embedded insurance strategy due to their necessity in completing the customer sales experience. Early adopters of embedded insurance sales were not seamlessly connecting payment vendors into their tech stacks, denying customers the digital payment experience they wanted. However, today, these APIs enable businesses to securely accept and process various types of payments, such as credit cards, debit cards, digital wallets, and bank transfers. 

The right relationship

Most important of all, the relationship between service providers has to make sense in order for an embedded insurance strategy to truly take off. We’ve seen it paired best when travel insurance gets added on to an airline ticket purchase. The process is simple, immediate, and the buyer of the flight is also the final decision-maker for purchasing travel insurance. 

The same must be true for embedded business insurance relationships. Within a small business operation, for example, someone in the market for a payroll or human resources software is typically the same buyer for business insurance like workers’ compensation, making a pairing like this is intuitive and mutually beneficial for both providers. 

While variations in embedded insurance relationships may change your sales strategy, the tech strategies and processes will remain very similar. At the end of the day, it is your responsibility to create a seamless and enjoyable sales experience for your prospective customers. And as more and more sales move to digital avenues, embedded insurance is the next strategy for our industry to stay ahead in today’s market.