In the never-ending pursuit of customer satisfaction, more merchants are finding they can delight customers by offering insurance right alongside products.
But while businesses are excited over the growth potential of embedded insurance, one industry is feeling the pressure: insurance.
There are huge opportunities for insurers and insurtechs, but they must face these hurdles head-on:
HURDLES
1. Outdated UI/CX
While the world is busy building modern apps, many insurers are still stuck with complex systems due to lack of resources and complicated regulations. Consumers will have a smooth user interface (UI) until they are redirected to the insurance part. Jargon-filled insurance policies and complex claim processes often turn off customers.
Although insurers have started to improve, there’s still a lot to be done. Until then, you can use these strategies to improve the customer experience (CX):
- Minimal Integration: Use the merchant’s platform to show basic policy information and claim status, but anything complex? Redirect to the insurer website.
- Dedicated Customer Support: Support customers to navigate the complex platform through email and chat.
- Third-Party Integration: Until you fully modernize, integration with third-party digital tools can help cross the UI/CX hurdle.
For example, consider a customer renting a car online. The process is quick and seamless, but when the insurance part hits, the experience often becomes fragmented. Your company can make a difference here by letting the rental company offer only basic insurance details online while you assist customers with complex claim processes.
Insurers such as Geico and Lemonade have already started to improve their customer service with advanced support systems and third-party AI chatbots. You can use similar solutions to help your customers navigate through complex processes and enhance their experience.
2. Poor Communication With Merchants
When insurance products get bundled with the merchant's, ensuring a seamless customer experience is on insurers. You need to establish clear communication with the merchant to avoid misalignment while framing the terms and conditions for the product.
- Merchant Support: For instance, Tesla is supporting its insurance provider State National Insurance by handling most of the insurance queries on Tesla’s platform.
- Co-Branded Marketing: Market jointly to build brand awareness and trust.
- Data-Sharing Agreements: Maintain customer insights by creating data-sharing agreements with the merchants.
If you are a travel insurer, you can partner better with merchants like online booking platforms. Imagine a customer booking a flight and being presented with a personalized insurance offer that covers everything from trip cancellations to lost luggage, all without leaving the booking site. This not only enhances the customer experience but also increases the likelihood of a purchase.
You and the booking platform can also promote your products together. This makes the insurance offering an extension of the travel booking process, which can drive sales.
3. Data Privacy and Customer Knowledge
As embedded insurance involves data-sharing between merchant and insurer, it's the insurer’s responsibility to safeguard customer data and educate customers about the terms and conditions. Here’s how you can do it:
- Regulatory Compliance: Adhere to data privacy regulations such as GDPR and CCPA.
- Standard Privacy Policy: Provide clear privacy policies that outline data collection and usage practices.
- Customer Education: Offer all the must-know information about the insurance products on the merchant’s platform.
As an insurer, you know that transparency and trust are crucial to customer satisfaction. Imagine the impact of a seamless integrated experience where a customer is provided with all the necessary data about the privacy policies and the risks associated with it while booking a flight ticket or getting employee-provided health insurance.
This level of transparency not only builds customer loyalty but also strengthens your brand's reputation in an increasingly competitive market. You can enhance the customer experience by keeping them informed, protected, and engaged about how their data is being used by the insurer.
See also: Is Embedded Insurance the Wrong Idea?
NEW INSURANCE MODELS
The advent of connected devices such as wearable devices, IoT, and smart home devices opened a new era of possibilities for the insurance industry. New insurance models can attract users to move from the old way of paying annual premiums. Data generated through the connected devices further helps insurers cater to more specific and personalized products.
1. On-Demand Insurance
This model will give the convenience of using insurance for your immediate needs and help avoid unnecessary costs for coverage you don't use.
Uber, a ride-sharing service, offers its customers and drivers the option to purchase insurance coverage on-demand. This means that both parties can use insurance protection only during the ride. Uber leverages connected devices like GPS and telematics to accurately track their vehicles, ensuring that both riders and drivers are protected precisely when they need it.
2. Contextual Insurance
Ever thought about insurance that adapts to your real-time needs? Contextual insurance makes this a reality by providing coverage based on the context of the user’s activities.
Imagine you’ve just installed a smart home system that can analyze data like occupancy patterns, appliance use, and even environmental conditions. This data offers a clearer picture of potential risks in your home, allowing your insurance coverage to adjust.
This approach ensures that you’re not paying for unnecessary coverage but are instead getting precisely it when you are in need.
Google Nest’s extended warranty is a prime example of contextual insurance. At the time of purchase, you’re offered a plan that not only covers accidental damage but also uses data from your thermostat to offer protection to your home.
3. Pay-Per-Use Model
Why should consumers pay heavy premiums for products they use occasionally? The pay-per-use model offers the convenience of integrating insurance into existing services or products and the flexibility to use it only when it is needed.
Consider purchases of high-tech products. Merchants offer a standard warranty period for that product. If customers wish, they can opt for an extension only to some specific parts of the product, like extending the warranty period only for the motor of a washing machine.
See also: Beyond the Hype on Embedded Insurance
THE FIRST STEP
Customer experience is not just about keeping customers happy—it’s about acquiring and retaining them with minimal costs.
That’s why many businesses are shifting toward embedded insurance. To stay in line, insurers are relentlessly working to overcome challenges and deliver personalized customer experiences. The emergence of new insurance models is a clear sign they are on the right track.
The future of insurance is undoubtedly embedded, and your current progress will benefit insurers, merchants, and, most importantly, your customers.
