The future of Insurance Distribution is Embedded
Welcome to the 8th edition of Fintech Fridays.
Join 4,596 others who are receiving highly curated nuggets every week.
If you enjoy this, continue sharing it with your friends.
TL:DR
Atomic Essay - The future of Insurance Distribution is Embedded
Podcast Recommendation - How to Spot Embedded Insurance Opportunities
Join our exclusive Fintech OI Community!
The traditional insurance model was to sell through agents, brokers, and affinity partners, using the phone, face-to-face, and lots of paperwork. Through the technology boom, the insurers rapidly moved to direct to consumer distribution via a website without an intermediary agent. The next natural development from that was the emergence of online aggregators.
“Embedded Insurance means abstracting insurance functionality into technology in a way that enables any third-party product or service provider in any sector to seamlessly integrate insurance products and solutions into their own customer propositions and experiences. These solutions can be offered as complementary add-ons to the core offering of third-party business, at point of sale or point of need (for example, Amazon offering insurance cover for expensive goods at check-out). Or they can be invisible native components – ‘ingredients’ – of a broader third party offering (for example, free insurance cover as part of Uber’s contract with its drivers).”
-Simon Torrance (https://www.linkedin.com/in/simontorrance/)
This has become the hot topic for many in the industry, including emerging Insutechs, insurers, and investors, who see it as a potential high-margin, high-growth revenue generator.
Put simply, embedded insurance is the bundling of coverage or protections within the purchase of a third-party product or service as part of the customer journey.
According to a report by InsTech London, the embedded insurance market is forecast to grow to $722bn in GWP by 2030 – more than six times its current size. This growth will largely be driven by China and North America, which together will account for over two-thirds of the global market by 2030.
You cannot write about embedded insurance without looking at what is happening in China. Ping An Insurance Group (Ping An) is the leading exponent of the embedded insurance business model in the world today and the biggest insurer on most metrics too. Starting in 1988 as a traditional insurer, Ping An switched its focus to technology and building a platform-based ecosystem in 2008. From then on 1% of its profits, every year have been re-invested in research and development. As a result of all this investment Ping An has created a portfolio of platform ventures in adjacent sectors like telemedicine (Good Doctor), automotive sales, banking, and real estate which were integrated into its insurance platform.
It is evident that embedded insurance and creating a larger platform economy around various financial products is necessary for insurers. The insurers need to realize that have a long way to go to catch up.
Podcast Recommendation
Gloria Guntinas Vanzo is the Co-Founder of Pouch Insurance and CEO of MLTPLY. POUCH an insurtech focused in delivering great rates and better insurance product to small businesses. MLTPLY goal is to support top Insurtech entrepreneurs by funding at pre-seed and seed to accelerate innovation through access to operational infrastructure, insurance product delivery, fronting and reinsurance capacity.
In this podcast, Gloria gives examples of focus on embedded insurance with her home HVAC system and bridging that logic over to other areas like automative.
Embedded insurance means Information that leads to safety and prevention to make decisions.
