Lighthouse #15
Curating the best insurance, insurtech, innovation and leadership content for you.
Ron Arnold
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The creation of a thousand forests is in one acorn.
Ralph Waldo Emerson
Embedded Insurance - take it seriously: A good article in The Digital Insurer on some of the mindset shifts and opportunities with embedded insurance - well worth a read. My key takeaways and some good quotes:
> The idea of embedded insurance is not new, however "...it is now coming of age, in a similar way to how the Apple iPod revolutionised the delivery of portable digital music."
> While not new, the intersection of data, technology and growing consumer acceptance of digital and desire for simplicity, low friction transactions favours slick "embedded" propositions - two good quotes:
"The primary difference between embedded insurance of old and new – is that the technology standing behind it today, is fully integrated. It does not require traditional sales, instead it is offered as a feature native not only to the platform being used, but to the specific purchase cycle. In that sense, it is literally a game changer, where the union of data science, artificial intelligence (AI), and real-time communication deliver the coup de grace to traditional insurance sales models."
“Fully digital, embedded insurance solutions aim for lower operational cost, a fast go-to-market, a customisable infrastructure, and most importantly customer-centric products.”
> China leads when it comes to embedded propositions with PingAn being a poster child!
> There remain a series of regulatory considerations still be traversed including:
– Whether the product is suitable for the customer’s needs
– Whether the product is appropriately priced to meet specific requirements around pricing fairness
– Ensuring consumers do not "unknowingly" purchasing the product during the sales process
The evolution of embedded insurance poses a very interesting threat (and opportunity) for incumbent insurers. Will it materially redefine the way insurance is distributed? Some commentators seem to think so...Source: The Digital Insurer
Swiss Re bullish on Embedded: Some good insights here from Sebastien Bert, co-head of strategic partnerships for the Americas at Swiss Re about embedded insurance:
> “Think about everything that’s changed in the last 10 years of how we buy product and services. There’s the digitization of the purchase, the customer journey, companies like Amazon, that have changed how we shop and buy...Customers are looking for bundled products and more personalization, and that applies to all services, so insurance is not excluded from that. And if you think about the pandemic, that accelerated that trend.”
> One challenge for insurers as embedded insurance expands into different product lines is around building the right partnerships. “It’s a different type of partnership, You’re working with a company that may or may have not ever had experience in the insurance industry. You’re dealing with infrastructure that is non-insurance facing,” he said. “You want that customer journey to be seamless … and the navigation from the non-insurance side to the insurance side to be a smooth flow.”
One of the interesting challenges for traditional insurers is that the number of companies with good customer reach and relevant customer journeys will be limited. The large brands will be very precious about the customer experience - from sales all the way through to claims. That is really no different from many intermediated partnerships today. However, digital and data do provide great opportunities to take these embedded insurance offerings to new levels and through channels perhaps never really effectively accessed before. Source: Insurance Journal
Aon and Paypal partner: Interesting move by Aon to partner with PayPal to offer a digital insurance program through Aon's CoverWallet solution on the PayPal Commerce Platform. The solution will give PayPal's small business customers in the U.S. the ability to shop for, purchase and manage insurance coverage. Customers can also obtain personalized advice and guidance from AON's licensed insurance advisors. Not dissimilar to some of Amazons moves to integrate solutions for merchants in their online platforms. While only in the US, if successful it would be expected that the model would shift to other markets. Globally, PayPal is estimated to have about 29 million active merchants.....so a rather large opportunity for AON and its partner insurers. Creates yet another distribution channel for small business insurers to get their head around. Source: AON
Telsa has bold aspirations for insurance: A bit more on Tesla's insurance foray. A few quotes worth noting:
>International expansion on the cards: "Tesla expects to be the largest insurer of Teslas in the state of Texas by the end of the year. In addition to expanding its “real-time insurance” offering into Virginia, Colorado and Oregon this week, Tesla Insurance is working toward a goal of giving 80 percent of U.S. customers access to a Tesla Insurance product by the end of 2022, ....we’ll pivot our attention to expansion outside of the U.S.,”
> Its more than just insurance: “This has become a real passion program for us… It’s bigger than just the economics. We’re trying to do a good thing here for our customers, save people money and make the roads a little bit safer....Having real-time feedback for driving habits is actually resulting in Tesla owners driving the cars in a safer way,”
> A quick and easy claims process: "Basically, the customer experience is just vastly better because if there’s an accident, there’s no argument. We’ll repair it immediately. And this is as compared to arguing with an insurance company and then a claims adjuster and then a collision repair centre."
Source: Insurance Journal
Amazon is serious about financial services: Super interesting report about Amazon’s foray into financial services by CB Insights. My key takeaways:
> Amazon is very focussed on reducing buying and selling friction
> Merchants are a key battle ground - making business easy and profitable for them is key - and growing merchant numbers is critical
> Need to service both merchants and customers
> At this point Amazon is not trying to become a bank but rather it is focussing on targeting specific banking services/solutions to remove friction and grow customer/merchant numbers
> Multiple products - Amazon Pay, digital wallet and payments network, biometric payments, voice payments via Alexa, Amazon Cash, Amazon business and consumer lending, and exploration of checking accounts and insurance.
This is a great read. Source: CB Insights
Payrolls and insurance: Incorporating insurance offers and services as part of employee salary and benefits systems seems like a good area to explore. This is what it looks like Overalls is doing. Overalls has just closed a $4.6 million funding round, bringing its total funding to $8.6 million. Founded in 2021, Overalls’ insurtech platform integrates with existing benefits programs and enables companies to help their people save time, money, and stress, while also improving the adoption of voluntary benefits. I am surprised we are not seeing more exploration of this distribution channel by insurtechs. Source: Coverager
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