Insurance hasn’t traditionally focused on the goods-in-transit value chain until now.
In 2019, there were just over 100 billion items shipped globally, yet less than 1% of these shipments were insured. This indicates that uninsured businesses around the world are sadly losing billions of dollars every year as a result of failed deliveries. These losses stem from the cost of the item itself, the cost of shipping a replacement item, repairs, customer service costs and reputational damage from negative reviews.
Insurance companies exist to support the risk protection needs of businesses and households. They are investing millions of pounds every year to develop new products and partnerships to distribute existing products to new customers. Yet this hasn’t flowed into the goods-in-transit value chain until now.
Let’s look at some of the reasons for this from an insurance company point of view:
Legacy Channels
One of the obstacles that the industry faces is how to transition from a focus on traditional distribution channels and tools to seeking a greater proportion of online digital distribution, which can unlock new market opportunities.
Explosion in data
There has been very little automation in the goods-in-transit insurance space, despite the rich availability of data in recent years. This includes harnessing the tracking data that business owners and consumers commonly use to track parcels into the insurance pricing and distribution process.
Customer experience
We’ve already seen a seismic shift in the ecommerce market, where the barriers to setting up an ecommerce business have been gradually reducing to an absolute minimum. Customer expectations had shifted towards simple digital processes and the use of plugins and apps to manage aspects of their businesses. For example, the average Shopify business is already managed with the support of 6-8 apps, covering finance, customer services, third party logistics and delivery tracking. Yet, insurance apps are not yet included in this bank of “must have” tools.
In recent years, we’ve seen an exponential growth in extended product warranty insurance sales as a result of greater awareness of this product by offering this option to consumers during the checkout process. We believe that there will be a similar shift towards a greater uptake of goods-in-transit insurance by embedding that directly into the offerings of freight forwarders, third party logistics partners, large retailers and ecommerce platforms.
So what are the first steps in embedded insurance?
Bringing insurance into the ecosystems and tools that businesses are already using to manage their business.
Leveraging the data within these tools to speed up the onboarding process
Ensuring customers have an awesome experience of the product from onboarding right the way through to claims payments.
The goal of the Anansi platform is to provide an automated end-to-end solution for goods in transit insurance from distribution right the way through to claims handling. We are conveniently embedding API-enabled insurance options into the logistics value chain by working with ecommerce platforms, tech-enabled logistics partners, freight forwarders and large retailers. The benefit of embedding insurance into the value-chain is to enable us to automate some of the more labour intensive aspects of the on-boarding process, so policyholders and brokers no longer need to fill in long repetitive forms. Taking an automated approach to claims management enables us to remove as much admin as possible (whilst retaining checks and balances against fraud) can help to remove some operating costs. Operating costs typically represent up to 20% of the combined ratio, so there are some valuable savings to be made here.
If you are an insurance company looking to put capacity to work in this market, don’t hesitate to get in touch at hello@withanansi.com
