As customers expect more digital, seamless interactions, the insurance purchasing process continues to become more embedded. Although, traditionally, embedded insurance has existed in industries like travel for decades, the increased use of APIs has offered insurers the opportunity to embed products in other purchase workflows and services.
Kyle Beatty, managing director of American Family Ventures, said at an InsurtechNY event in March: "The opportunity is to have some exclusive access to a specific channel. You can get a specific platform partnership that gives you a high degree of workflow and it's at a moment in the decision process with a high conversion potential or at least such a large flow that even a low conversion yields strong growth that can help catalyze strong growth."
Darcy Rittinger, chief operating officer at Cover Genius, adds that there are more technologies supporting a new era for embeeded insurance that all flow out from the API infrastructure. In that way, while natural fits like travel and insurance have existed, now embedded can be applied to logistics, the gig economy, property, mobility and auto, fintech and more.
"For example, we work with Rhino to embed renters insurance in the sign-up process and Zip, a Buy Now, Pay Later platform, to embed protection into the payment process and Zip's wallet experience so that customers can protect not only purchases in the moment but also recent purchases made," Rittinger said in an e-mail. "Technologies such as natural language processing and AI can analyze data in real-time to show relevant products at the right price. For example, we partnered with BNPL Zip to offer their customers 'Protection Pocket', which embeds protection offers into Zip's checkout for a seamless customer experience. The solution uses NLP capabilities to identify relevant items in a customer's cart, match them to product categories, and return an optimized policy via an API."
These use cases include instantly bindable auto insurance at the point of purchase, says Wayne Slavin of Sure. The insurtech's recently launched Home Warranty solution embeds home warranty protection into a platform using APIs. It also offers Retrace, which lets online merchants offer customers embedded one-click insurance protection like product warranties into a purchase flow.
"The shift underway in how we use technology to build digital insurance experiences is really benefiting both those that are offering the embedded insurance products and the consumers buying those products. Technology enables efficiency and speed to market. Very good APIs are the secret sauce, because they keep it simple."
The goal is differentiation and improved customer experience, adds Yuval Harry, Hippo's chief revenue officer.
"Hippo is committed to meeting customers wherever they are in their homeownership journey, and our portfolio of embedded partnerships plays a critical role in our success. Partnerships with leading builders and lenders like Lennar and AmeriSave, respectively, allow us to plug directly into the home transaction and closing process to save our shared customers time and money," they wrote in an email to Digital Insurance.
But the switch to using APIs isn't always easy for insurers that are still operating on legacy systems. Kiran Boosam, global insurance industry leader at Capgemini says that embedded and other API use cases make core system transformation even more important.
"I think the approach is that it's all about product architecture right now. So you don't depend on legacy for launching these kinds of products, in terms of the transaction management, you use legacy as a way of system of record, and move most of the real-time activity with the external world into a more modern [process]," he says.
"Customers have proven they want to buy differently and they want the right product, at the right time, in the right place – frictionless and digital," Slavin concludes. "Through data and technology, the use cases for embedded insurance extend as far as your imagination can take you, ranging from the quite simple to the extremely complex."
