Are you in the insurance industry and want to stay competitive? We'll walk you through how embedded insurance is changing the entire industry as you know it.
In the insurance industry, the old saying is especially true: the only constant is change. Embedded insurance is changing how the entire industry works, and agents and insurers will need to get on board or risk being left behind.
What is embedded insurance? Simply put, this is the latest evolution of consumers' ability to buy insurance while they buy other products. Thanks to cutting-edge APIs, consumers can do things like purchase automobile insurance at the same time they buy a car. This is very convenient to consumers, but it poses significant challenges and opportunities for traditional insurance carriers.
What do you need to know about embedded insurance to thrive in this changing market? Keep reading to discover the answers.
Major Growth and Major Players
A good rule of business is to observe what some of the biggest companies are doing to shake things up. When it comes to changing insurance trends, Amazon has been changing the global insurance landscape for several years now.
Back in 2020, Amazon began selling automobile insurance to consumers in India. In doing so, the corporate giant is leveraging the existing trust of global consumers to help make a brand-new business endeavor profitable. Considering that customers get special deals and discounts for subscribing to Amazon Prime, embedded insurance is also helping Amazon drive its annual subscriptions up as well.
Other companies are increasingly following suit. Embedded insurance distribution is on track to exceed $700 billion in premiums by 2030, and some experts project that businesses that embrace embedded insurance may collectively be worth up to $5 trillion in the next 10 years.
Why Is Embedded Insurance Growing In Popularity?
Amazon began experimenting with embedded insurance back in 2020. So, why is it now such a hot topic among various businesses, and why is the National Association of Professional Agents (NAPA) doing its best to ensure insurance agents can stay on the cutting edge? It all comes down to the evolution of Artificial Intelligence.
It wasn't that long ago that basic AI was used to power things like chatbots. While those chatbots are still an important part of customer service, NAPA reports that more complex AI can help facilitate insurance underwriting, claims processing, and policy management. Now that more agents are using AI for lead generation, marketing, and sales, embedded insurance is providing better opportunities for cross-selling, which is one of the reasons we are likely to see more AI interactions on everything from iPhones to Teslas.
Done right, embedded insurance represents an opportunity to streamline operational costs while boosting profits. Needless to say, that has been a significant game-changer for carriers and agents throughout the industry.
Important Trends in Embedded Insurance
Even though embedded insurance as a concept has been around for a while, this iteration of AI-powered embedding is relatively new. If you are hoping to make the most of this opportunity, it's crucial that you understand some of the important trends that have been emerging regarding embedded insurance.
First, we are seeing more and more that customers actually prefer embedded insurance because it offers them greater digital convenience and better customer service than they have had before. Most consumers prefer the self-service options of embedded insurance, largely because they don't have to worry about an overeager insurance agent trying to needlessly upsell them on various products.
Second, the commercial insurance industry is beginning to embrace embedded insurance with the same fervor as the consumer insurance industry, mainly due to the growing trend of commercial carriers embracing digital technology. This market has been slow to change, but more commercial carriers now realize that embracing digital tech such as embedded insurance helps lower costs, reduce risks, boost profitability, and even assist with things like fraud detection.
Finally, embedded insurance is helping more traditional carriers and other companies become more transparent in their customer transactions. This is particularly important because rising demographics such as Millennials and especially Gen Z prefer more transparent companies.
If you're looking to stay up-to-date with industry trends, check out the benefits NAPA has to offer.
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