Insurers have faced significant headwinds in the last few years. The insurtech market continues to grow, even if it’s had the wind taken out of its sails recently due to funding for start-ups drying up and following the collapse of Silicon Valley Bank. But another contender and digital disruptor has been growing in popularity among consumers: embedded insurance.
Meeting the needs of modern insurance
While the concept is nothing new, companies like Tesla are using their digital capabilities to offer consumers convenient and potentially more affordable coverage, eliminating the need to find insurance independently. Companies like this are at an advantage due to the necessary supply chain partnerships, access to specialist vehicle parts and expertise to fix increasingly complex electric and/or IoT-enabled vehicles.
Despite the controversy surrounding some types of embedded insurance – such as hire car excess insurance – it seems that UK consumers aren’t deterred. Some 45% would be comfortable buying insurance from non-insurers today. Ease of purchasing insurance, lower costs and faster claims will likely be the most significant drivers behind this.
Embracing AI transformation in insurance
Established insurers don’t simply want to compete with embedded (and insurtech) companies. They want to combine their long-standing experience with the latest AI and machine learning-enabled tools and reimagine what customer experience (CX) looks like.
They’re starting to transform every business area to deliver highly-personalised products and services, and an actual omnichannel experience. While embedded providers offer a single policy for their products, insurance companies can provide a full suite of products. This makes up-sell and cross-sells a viable route to drive up their share of the customer's insurance spend, but only if the customer experience is seamless.
By enhancing their data and advanced analytics capabilities, insurance companies can get under the bonnet of what consumers really want and proactively anticipate their requirements at critical milestones throughout their lifetime. The recent Consumer Duty regulations imposed by the Finance Conduct Authority (FCA) have raised expectations for the care insurers must provide their customers. Achieving this standard necessitates a better understanding of who their customers truly are.
The importance of personalisation and customer loyalty
Like embedded providers, insurers who use SAS’ analytics platform can, for instance, draw on real-time data from multiple sources, including IoT devices, to understand the most up-to-date behaviours and trends.
Every touch point, from researching and buying policies to making a claim, is an opportunity to build customer trust and loyalty. They’ll quickly notice and go elsewhere if policies are siloed in different parts of the business or if they’re treated as a number, not an individual. Consumers want reassurance that their claims will be handled promptly and sensitively, with repairs being undertaken by trusted suppliers.
It’s important to communicate the flexibility established providers can offer clearly. While embedded insurance products may be convenient and seemingly inexpensive, it is important to assess whether they provide the same level of coverage as insurance experts can deliver.
The future of insurance transformation
As its name suggests, insurance transformation isn’t about changing just one business area like CX. It involves a raft of innovations driven by advanced analytics.
By enhancing efficiency across all business areas, including compliance, staff resourcing, and fraud detection, insurers can, directly and indirectly, enhance the customer experience. Real-time insights and decision-making allow organisations to allocate staff to critical areas during crucial times, such as extreme weather conditions, and reduce false positives in fraud detection.
This transformation will help insurers move from selling products to becoming truly omnichannel and customer-centric. It’ll help them to stay ahead of the latest developments, such as the adoption of EVs and adapt accordingly.