5 Embedded Insurance Trends Revolutionising E-commerce

When it comes to e-commerce, insurance is frequently put on the back burner; buyers focus on their need for a product and sellers direct their attention to the more tangible business assets, leaving little time or inclination to think about insurance policies.  Combine its low prioritisation with the numerous barriers to entry for an insurance product, and it is no wonder insurance is often an afterthought.

Insurtechs, however, are changing this landscape by combining insurance with technology to create new ’embedded’ propositions. 

But what does embedded actually mean for the buyer and why is it revolutionising e-commerce?

Simply put, embedded insurance means that the insurance product is offered and provisioned directly within the buyers journey.  It’s provided as a native feature, embedded (think integrated) within a platform, marketplace or ecosystem that the buyer is already interacting with, as opposed to being sold outside of the purchase experience at a later point in time.

This reengineered distribution method is transforming the way both buyers and sellers view and access insurance products.  According to an InsTech London report, the embedded insurance market is predicted to be worth $722billion in Gross Written Premiums (GWP) by 2030 and there are already plenty of insurtech examples within the e-commerce space today.  You may have experienced flight delay insurance offered as an optional extra when booking a flight, or bought a new car with insurance included within the purchase price.  Here at Anansi, we have developed embedded goods-in-transit insurance to help e-commerce sellers protect their goods whilst on the journey to their customers. 

Embedding insurance directly into the customer journey offers boundless opportunities for both innovation and optimisation, particularly within the e-commerce sector.  In this article, we’ll take a look at the significance of five embedded insurance trends.

1. Delivering insurance when and where it is most needed and improving the experience 

We have already touched on the importance of offering insurance at the right time and right place, but of equal importance is the ease in which it can be accessed and experienced.

It needs to be simple and hassle-free from start to end, and historically it really hasn’t been.  All too often the more traditional policies are challenging to obtain and frustrating to maintain, and have lengthy paper-based sign up processes which deter uptake and miss the crucial window of purchase opportunity.

We see a growing trend in which insurtechs are not only exploring new distribution methods but are also reinventing the insurance customer experience.  How? By leveraging technology to automate as much of the process as possible.  Automation eradicates the need to call an insurance broker to buy and claim on a policy, and can eliminate the need for copious amounts of forms and repeated information.  Improving the overall insurance experience, in combination with a right time and place offering, is a growing and significant trend that will change the insurance industry as we know it today. 

2. Trusted partnerships across the value-chain offer symbiotic opportunities

Trust has oftentimes played a dual role of acting as both a driver of growth and a prohibiting factor,  affecting both the insurer and the customer.

In the world of e-commerce, it’s important that merchants partner with trusted insurance providers but it’s of equal importance that the insurers also partner with the right merchant brands.  Building a healthy insurer-merchant relationship can pay dividends to both parties by providing access to new markets, garnering the right type of exposure and generating brand loyalty.

The trend has been around for awhile but is becoming more prevalent as new insurtechs enter the space. For example, the five-year partnership between John Lewis and Munich Re has enabled the German insurer to tap into a new market and be associated with a well-known and trusted brand. Similarly, IKEA launched a digital home insurance service in Europe and Southeast Asia in partnership with iptiQ/Swiss Re. 

Extending trust to the end customer, beyond the insurer and merchant, also pays dividends.  E-commerce businesses use Anansi’s embedded, automated zero-admin parcel insurance to help improve their customers post-purchase experience that in turn increases customer loyalty and satisfaction.  How? They are able to rectify a delivery going awry by expediting  replacement goods without ruining their bottom line. 

3. 3. Leverage existing data to optimise and personalise the experience
   
   Embedding insurance also facilitates a trend to deliver a more personalised consumer experience.  Insurtechs are accessing and using customer data that is already in existence within e-commerce platforms to provide highly tailored recommendations for aspects such as coverage, that are based on specific consumer needs. 
   
   By leveraging relevant data that has already been captured, the time and resources needed to complete insurance forms for both the merchant and the consumer are greatly reduced.  Additionally, it helps to build trust by mitigating  concerns around whether the correct level of cover is being purchased.
   
   Amazon’s extended product warranty insurance is a perfect example of a personalised experience –  seamlessly integrated into the buying process (offered at checkout), without the need to provide every repeat personal detail, and tailored around the specific product.
   
   4. Hyper responsive offerings to meet immediate needs
   
   Similarly, the embedded distribution model brings insurer offerings and end-user needs closer together which enables insurtechs to provide bespoke products in response to immediate needs.  A great example of this is action is Zego’s usage-based insurance  for the gig economy.  Deliveroo drivers can be priced down to the minute, providing a specific level of cover that responds to the needs of the individual at that point in time.In a similar fashion, our goods-in-transit insurance offers parcel-specific coverage that considers the value of each item sent. In other words, it is responsive to the individual needs of the e-commerce merchant and the individual needs of each transaction.

5. Game-changing improvements to the claims experience

Stephen Catlin, Convex Group chairman and CEO has rightly stated that claims are the “shop window for insurance” because claims are where the promise of insurance is fulfilled.  But often, traditional insurers have experienced low Net Promoter Scores due to issues and inconsistencies within customer service and the claims process, and the snail-like speed in which claims are resolved.

Embedded insurtech offers a next-level approach that greatly improves the claims experience and speeds up the process.  It utilises data and specific parameters (such as an indisputable event occurring) in order to trigger and automate a claim submission and automate the payouts.

We already see real-world embedded insurance being used to improve the claims experience today, with airlines reimbursing for flight delays and mobile phone insurers adopting the technology to use data to establish whether a phone with a damaged screen should be a repair or a replacement.

However, progressive embedded insurtechs are those taking the technology one step further by integrating open banking or other fintech tools to dramatically reduce the time it takes to receive claims and improve cash flow visibility for the business.  Our embedded shipping platform exemplifies this approach – Anansi’s automated goods-in-transit insurance solution allows partners such as 3PLs, marketplaces and e-commerce platforms to provide their merchants with access directly from the Partners order management system. Merchants enjoy automated customer billing and payment options as well as benefiting from automated claims triggering and payouts, solving a mutual pain point for merchants, insurance partners and end customers.

Looking to the future

What do we expect to see?

More and more personalised insurance products  offered during the buying process, or embedded seamlessly within the product price. 

Experience wise, it’s going to much less of a nightmare! Long forms and time zapping tasks will become a thing of the past. Customers and merchants will no longer be required to fill out cumbersome forms and provide repetitive information – the data will have been previously provided at an earlier point in time. 

Embedded insurance cover will continue to evolve in a personalised and hyper-focused fashion as a business’ needs change, and crucially, this approach will garner greater trust in the insurance promise and help to keep costs fair, flexible and specific to the needs of a business.

And finally, when there’s a cause for a claim, the process will be automated, with little to no human intervention, and, where possible, claims will be generated by parametric triggers, making the entire claims process as fast and simple as possible.

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About the author: Megan Bingham-Walker is the Co-Founder and CEO of Anansi.