For every business, customer satisfaction isn’t just a goal—it’s the foundation for building long-term relationships and ensuring success. Merchants are finding new ways to satisfy their customers and embedded insurance is one of them. It can delight customers by offering insurance right alongside its products.
But while businesses are excited over the growth potential of embedded insurance which is expected to soar by 12% in the next decade—there’s one industry that’s feeling the pressure: insurance.
For insurers and insurtechs, the opportunities and challenges of embedded insurance are neck to neck. But to embrace the shift, you’ve got to face these hurdles head-on.
Overcoming Challenges with Personalized Customer Experience
Merchants can ace customer experience with embedded insurance but for insurers? Not so easy. Here’s what pulling you back:
1 Outdated UI/CX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 UI experience until they are redirected to the insurance part. Jargon-filled insurance policies and complex claim processes often hit the customers bad.
Though insurers have started to make a shift, there’s still a lot to be done. Until then, you can use the below strategies to ensure worthy customer experiences:
- 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- Third-party Integration: Until you fully modernize, integration with third-party digital tools can help cross the outdated UI/CX hurdle.
For example, consider a customer renting a car online. The process is quick and seamless and 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 and you can assist customers with complex claim processes.
Insurers like Geico and Lemonade have already started to improve their customer service with advanced support systems and third-party AI chatbots. You can also use similar solutions to help your customers to navigate through complex processes and enhance their experience.
2 Ensuring Customer Experience through Merchant
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.
Insurers can improve the customer experience by involving merchants in all their processes.
- Merchant Support: Routing the merchant to handle the customer inquiries and limiting direct customer interaction. For instance, Tesla is supporting its insurance provider State National Insurance Company by handling most of the insurance queries on Tesla’s platform.
- Co-branded Marketing: Initializing joint marketing efforts to build brand awareness and trust.
- Data-sharing Agreements: Maintaining customer insights by creating data-sharing agreements with the merchants.
If you are a travel insurer, you can better use embedded insurance by partnering 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.
But it doesn’t stop there, you and the booking platform can promote your products together. This makes the insurance offering as an extension of the travel booking process which can help you to drive more 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. You can thus avoid discrepancies in their claim journey. Here’s how you can do it:
- Regulatory Compliance: Adhering to the data privacy regulations such as GDPR and CCPA.
- Standard Privacy Policy: Providing clear privacy policies to the customers that outline data collection and usage practices.
- Necessary 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 an 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.
Enhancing Customer Experience with 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.
It has led to the introduction of new insurance models that attracts 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 Usage-Based Insurance (UBI)
What if you can pay insurance premiums only for what you use? UBI gives a solution to this question by letting the customers pay only what they deserve. It’s like a reward for the better usage of a product. This can be better explained with car insurance.
In UBI, car insurance premiums will be calculated based on several factors like mileage, safe driving habits, and travel time of day. The drivers with the best driving skills can gift themselves with increased mileage, ensured safety, and additional cost savings in insurance premiums.
Connected devices help UBI offer an even better user experience by providing personalized insurance coverage based on driving habits and offering discounts for good driving behavior.
Progressive, an American insurance company, is using telematics to monitor driving habits and adjust premiums based on safe driving behavior.
2 Micro-Insurance
Why pay for a bunch of services when you only need one? Micro-insurance eliminates this one-size-fits-all approach, letting customers pay only for what they need.
This model is much more affordable, simple to understand, and offers a great customer experience. The travel industry makes the best use of this model. Customers can buy insurance only for the trip that they are booking. It also provides targeted coverage for missed flights, lost luggage, accidents during travel, and more.
Won’t it be good if you book your flight and insurance simultaneously? Embedded insurance makes it a one-click process.
BIMA, a mobile-delivered insurance provider offers micro-insurance products tailored to the needs of underserved populations, providing coverage for specific health events and short-term travel.
3 Pay-Per-Use Model
Why should consumers pay heavy premiums for the products that they use occasionally? The pay-per-use model gives this flexibility to pay for insurance only when they use the product.
It offers the convenience of integrating insurance into existing services or products and the flexibility to avail only when it is needed.
For example, consider buying high-tech products. Merchants offer a standard warranty period for that product and if customers wish, they can opt for an extended warranty beyond the standard warranty period.
This extended insurance coverage can also be applied to only some specific parts of the product, like extending the warranty period only for the motor of a washing machine.
Trov, an American tech company, offers on-demand insurance for personal items like electronics and appliances, allowing customers to activate coverage only when needed.
The First Step Towards Embedded Insurance Growth
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 in embedded insurance and achieve the goal of delivering personalized customer experiences. The emergence of new insurance models is a clear sign that you 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.
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