It’s no secret that for many brands, embedding insurance offerings into an existing customer journey provides a great opportunity for generating new revenue and expanding customer relationships.
In fact, it’s estimated that embedded insurance could account for around 16% of total global insurance distribution, or $1.5 trillion of gross written premium by 2030. And considering that 65% of people are willing to purchase insurance from a non-insurance brand, consumer-facing brands shouldn’t ignore the potential that insurance presents to build new revenue streams, while adding distinct value for customers and further building loyalty.
However, while the opportunity is certainly there, it doesn’t mean it’s easy to take advantage of it. Those brands who are interested in making insurance part of their value added services may quickly realize that simply having access to the tools to sell insurance is not enough. If you truly want to embark on a successful insurance program, you’ll have to approach it with the right mindset.
The evolution of embedded
As we’ve said before, embedded insurance is anything but new. Airlines have been offering travel insurance alongside the purchase of a flight for years. Wireless carriers have been offering mobile device coverage at the point of sale for at least as long as smart phones have existed. Including a warranty with the purchase of a washer, dryer, or other large home appliances is the norm from most manufacturers.
So while embedded insurance is not a completely novel idea, it certainly has evolved. Technology and data have enabled different, more compelling ways to offer insurance to customers and in turn, brands now have an exciting opportunity to become a more integral part of the value chain. The most successful and differentiated embedded experiences now aren’t those that follow the status quo, but instead offer choice and use data to provide personalized or custom products and offers (while also capturing new data points on customers), ultimately moving insurance from a product that is bought and not sold.
Developing differentiated embedded experiences
Without the right strategy, selling insurance as a non-insurance brand is not easy. It takes a purposeful approach that capitalizes on the trust you’ve built with your customers to meet their changing needs and expectations. Do it successfully, and you’ll reap the benefits of a new source of revenue and increased customer engagement. But do it wrong, and you’ll end up with dissatisfied customers, lost revenue and resources for your business, and potential hits to your brand reputation.
For instance, it's not particularly hard to put a referral link on your site, directing your customers to an insurance company’s site to complete a quote or buy a policy external of your own brand experience. But does this really lend itself to the best experience for your customers or add value to your core offer?
To get long term value from an insurance program, you need to invest in the right plan, technology, and partnerships that will ensure its success. Here are three keys to a successful program.
Build a roadmap using experimentation
There is a lot of complexity that goes into a successful insurance program. Determining the proper carrier and product mix, implementing the right technology, and knowing how best to market your program takes a concentrated effort. Simply spending money to set up an insurance program is not enough. You’ll need to develop a roadmap for your program in order to think strategically and holistically about how you market your program and enable growth. Setting it and forgetting it will never garner the best results.
If you’re embarking on this for the first time, it’s helpful to remember that your roadmap doesn’t have to be - and perhaps shouldn’t be - static. There are distinct benefits to taking a crawl, walk, run approach.
Perhaps you stand up your program by first outsourcing agency services to a partner. This will allow you to test the program and see what’s working, without spending the extra capital and resources it takes to launch your own agency. Then if and when you eventually start your own agency, you’ll have the insights and experience to find ways to calibrate your program and drive continuous improvement. Experimentation like this will help you think more strategically about your program and remain competitive in an evolving landscape, without as much worry about costs or wasted resources.
Maintain your brand through seamless experiences
No organization, especially one that’s worked hard on building deep relationships with their customers, wants to compromise their brand integrity. So when it comes to offering insurance, you’ll want to make sure you're presenting your program in a relevant and seamless manner that stays true to your brand.
Embedded insurance offers are most effective when they are a convenient extension of your current workflow. The unique value to your customer is that you can leverage existing data and the relationship you have with them to make an informed, helpful, and timely offer. Customers will appreciate the added benefits you’re providing, and consider you a trusted source for their protection needs.
If you’re a non-insurance brand that is considering offering insurance for the first time, you’ll need to be thoughtful about when it may make sense to invest in your program through internal means and knowing when to partner externally and with whom.
You should always play to your strengths. If you have a strong tech team, investing in APIs to build your program makes sense and gives you the most control over the user experience. APIs enable you to inject a quoting experience directly within your own website or app, creating a seamless purchasing experience for customers. But if you don’t have the tech resources, then you should look to partner with a team that can build out a white-label digital experiences for you, at least to start.
Similarly, if hiring, training and managing agents is going to be a significant distraction to your core business, start with leveraging a partner’s agency and move towards developing your own once things are running smoothly. Plus, partnering with an outside agency gives you immediate access to their carrier appointments (a huge benefit considering the amount of time and effort it takes to secure a contract to sell a carrier’s products on your own), and can allow you to access to quotes from a variety of carriers, a critical component to attracting consumers in today’s market, especially for auto and home.
It’s also important for brands to consider how best to approach the post-sale experience, servicing, and claims. If you’re acting as the agency yourself, your organization can take on the responsibility for servicing policies and managing renewals, and if you choose to operate as a managing general agent (MGA), you’ll own even more of the customer lifecycle. On the other hand, outsourcing agency services or relying on your carrier partners post-sale keeps you out of the claims process, offering protection to your brand reputation should customers have a negative experience.
When it comes to finding the right partnerships, what can’t be ignored is experience. And in an industry like insurance, experience is key. Non-insurers will need to navigate the intricacies of insurance and the regulations that loom over the space. For example, in many states, you can’t offer consumers any type of monetary benefit or credit for getting a quote. If you don’t know these limitations, it could get you in trouble with regulators and have a big impact on your business.
You know your customers; they like you and trust you. Industry incumbents know insurance and how to sell it effectively. Combining these two respective strengths to build out an insurance program that actually works just makes sense.
Everyone needs insurance, including your customers, and when you consider the myriad of ways that insurance can accompany everyday transactions, you start to realize the true business potential of embedded insurance. Adding value to your relationships with complementary and convenient insurance offerings that meet your customers’ needs will not only build brand loyalty and trust, but will also expand your revenue potential. Additionally, offering insurance will give you more visibility into your customers’ buying behaviors, providing data that can inform how to best engage with them outside of your direct value proposition.
Most consumers don’t seek out the opportunity to shop for insurance, but if it’s relevant to your core offer and the buying experience is convenient and seamless, you can create an added dimension to your brand. Embedded insurance is a lucrative way to increase your share of wallet with your customers, showing you understand customers' everyday lives, needs, and challenges - even those you can't solve alone.
If you don’t have an embedded insurance strategy today, or if you’re looking to maximize the potential of your existing offers, Bindable can help. Reach out to us today to learn more.