Fintechs partner with insurers on embedded offerings

A majority of financial executives believe embedded insurance will soon go from a nice-to-have to a must-have, according to a report from Chubb.

Banks and the Digital Wallet Race: The Embedded Insurance Strategy, looks to gauge how fintechs and banks view embedded insurance. The report includes information from a survey, conducted by iResearch Services, of 2,000 consumers worldwide and 200 executives from financial organizations.

The report suggests that financial organizations see growth potential from insurance. In three years, more than half of financial organizations surveyed expect to derive 10% or more revenues from insurance.

Adam Denninger, global industry leader for insurance at Capgemini, said the success of embedded transactions comes down to convenience. 

"I think the technology is there to do almost anything you want, it's not a technology problem," he said. "Things that don't work tend to be more complicated or require more personal information."

The more difficult and complex the underwriting and underlying risk, the less likely the transaction will work smoothly, Denninger added. He compares embedded insurance, when it works, to an impulse purchase.

"Is it working? I think it's a mixed bag. It depends on the lines of business and I think it depends on the quality of the buying experience," Denninger said.

Amy McNeece, senior vice president of digital consumer for North America at Chubb, works with partners in fintech and banking, amongst others, to embed insurance. 

"You need underwriting, actuarial and claims expertise in order to launch these products and make sure that you have a seamless customer experience," McNeece said. "Embedded insurance works when it's at the right time, right place and it's relevant."

Almost half of respondents suggested that buying insurance digitally is obvious but more than half said there are forms of insurance they would only buy from insurance brokers. The survey also found that consumers often have traditional insurance coverage like auto, health and life but lack paycheck protection and pet insurance.

McNeece explained that if, for example, an Uber driver receives a payment for a ride, their bank could look at that transaction and then suggest an income protection product to that person. 

"It's a value add, but also, what we heard in our survey was, it's really about increasing customer satisfaction and retention and building trust. Everyone is vying for customers right now," McNeece said. 

McNeece said there are significant opportunities for embedded but added that it doesn't mean the industry is moving away from insurance brokers and agents. 

"There are certain things that a customer is going to want to talk to somebody about to get confidence that they know what they're buying," she said. "But there is an appetite to buy more insurance digitally. There seems to be an emerging awareness, across all generations, asking 'How well am I protected? How well is my family protected? Do I have the right insurance?'"