Top embedded insurance insights of 2024
December 22, 2024 12:43 PM
Embedded can help close life insurance coverage gap
According to data from LIMRA's 2023 Insurance Barometer Study , 52% of Americans own a life insurance policy, and 41% of both insured and uninsured individuals say they don't have sufficient coverage.
A partnership between life insurer Wysh and fintech Helix launched anembedded micro life insurance product for underinsured individuals , aimed to help close the life insurance coverage gap. The embedded finance solution is a high-yield savings account available through Helix, bundled with a no-cost life insurance policy with Wysh.
Ahon Sarkar, general manager of Helix, said, "How do you help people both start saving…then, at the same time, help them get access to life insurance and start taking steps towards that type of protection that they may otherwise not get from themselves? This is a perfect example of embedded micro insurance, where you give insurance as a benefit inside of the context of a broader experience. The really exciting thing about what we're doing here is it's not an 'either or…' Wysh managed to give you a better savings rate than you can get somewhere else, and they managed to give you free micro life insurance as part of it."
A partnership between life insurer Wysh and fintech Helix launched an
Ahon Sarkar, general manager of Helix, said, "How do you help people both start saving…then, at the same time, help them get access to life insurance and start taking steps towards that type of protection that they may otherwise not get from themselves? This is a perfect example of embedded micro insurance, where you give insurance as a benefit inside of the context of a broader experience. The really exciting thing about what we're doing here is it's not an 'either or…' Wysh managed to give you a better savings rate than you can get somewhere else, and they managed to give you free micro life insurance as part of it."
Gen Z and Millennials want embedded insurance options
Most, 79%, of Millennials and Gen Z think that auto insurance should be an integral part of purchasing a vehicle , according to the 2024 Embedded Car Insurance Study by Polly. The study also shows that 81% would prefer to purchase their insurance while buying a car.
"Our embedded auto insurance study reveals that Millennials and Gen Z aren't just looking for vehicles; they're seeking a holistic buying experience that includes insurance. The research is clear, consumer demand for integrated solutions is not a passing trend. It's a new norm," said chief marketing officer Mike Burgiss in a press release statement.
"Our embedded auto insurance study reveals that Millennials and Gen Z aren't just looking for vehicles; they're seeking a holistic buying experience that includes insurance. The research is clear, consumer demand for integrated solutions is not a passing trend. It's a new norm," said chief marketing officer Mike Burgiss in a press release statement.
Challenges with embedded insurance
Insurers embedding coverage in other venues are finding the practice adds risks , and agents point to their value for interpreting coverage to policy buyers.
While embedding insurance brings carriers closer to where their customers are, it decreases the personal contact that agents have with insureds, observes Sebastian Kohls, associate partner in the New York office of McKinsey. "For many things, we still see a strong preference for talking to a human and so we don't expect the agent model to completely go away," Kohls said.
Along with the technical and risk challenges for embedded insurance,insurers must also navigate regulatory, legal and conflict of interest issues . There are ways to do so, however, some insurance executives say. Legal requirements can be an obstacle to even starting embedded insurance programs, according to Brian Casey, partner and co-chair of the insurance group at Locke Lord LLP.
"Anti-inducement" laws make it difficult to bundle services, he said. "It usually gets into commission sharing laws and referral fee law. It can be challenging, but there are ways around it," he said.
While embedding insurance brings carriers closer to where their customers are, it decreases the personal contact that agents have with insureds, observes Sebastian Kohls, associate partner in the New York office of McKinsey. "For many things, we still see a strong preference for talking to a human and so we don't expect the agent model to completely go away," Kohls said.
Along with the technical and risk challenges for embedded insurance,
"Anti-inducement" laws make it difficult to bundle services, he said. "It usually gets into commission sharing laws and referral fee law. It can be challenging, but there are ways around it," he said.
Embedded insurance is transforming brand loyalty
Embedded insurance enables insurers to engage with evolving markets and capture unique risk profiles , according to Matheus Riolfi, co-founder and CEO of Tint.
"I'm witnessing firsthand how this emerging approach is redefining the insurance industry at large, presenting insurers with an opportunity to drive innovation and unlock new avenues for growth," writes Riolfi in an opinion article for Digital Insurance.
"Embedded insurance at its core involves integrating insurance seamlessly into the customer journey of non-insurance brands. AirBnB's introduction of AirCover, for example, provides hosts with liability insurance and property damage protection. While this shift in distribution may seem like a threat to insurers initially, it's far from it. In fact, embedded insurance has far-reaching implications for insurers, enabling them to tap into previously untapped risk pools and forge powerful partnerships that can reshape the industry."
"I'm witnessing firsthand how this emerging approach is redefining the insurance industry at large, presenting insurers with an opportunity to drive innovation and unlock new avenues for growth," writes Riolfi in an opinion article for Digital Insurance.
"Embedded insurance at its core involves integrating insurance seamlessly into the customer journey of non-insurance brands. AirBnB's introduction of AirCover, for example, provides hosts with liability insurance and property damage protection. While this shift in distribution may seem like a threat to insurers initially, it's far from it. In fact, embedded insurance has far-reaching implications for insurers, enabling them to tap into previously untapped risk pools and forge powerful partnerships that can reshape the industry."