The evolution of embedded insurance from purely distribution-focused product sales to truly customer-centric protection solutions comes with both substantial opportunities and challenges for insurers, according to industry experts at the Digital Insurance APAC 2024 in Hong Kong on 27 June.
During a panel on the trillion-dollar market of embedded insurance, Lei Yu, CEO of North Asia and Regional Head of Distribution at QBE Asia, cited QBE’s mortgage insurance as an example of traditional embedded insurance sold at the point of sale.
Yu said insurers must now design solutions around customer and distribution partner needs to move beyond just “selling insurance” to actively provide needed protection tailored around customer needs.
She outlined QBE’s experiments in partnering directly with customers through watch companies. Rather than pushing standardized theft protection, QBE can embed customised coverage for expensive watches purchased through the distributor.
Arthur Siu, Head of Retail Services at Zurich Insurance, agreed the shift demands internal transformation. To do so requires “multiple bailouts” across expanded value chains and a much stronger focus on customer experience over exhaustive risk assessment, he said.
Unlike the traditional six-to-nine-month product launch cycles of the past, speed is essential as needs change rapidly, added Siu.
Yet, insurers’ “thirst for information” during underwriting could conflict with focusing on simplicity and customer experience now required, said Raphael P. Young, Head of FSI Business Development APAC at EPAM Systems.
The panellists see embedded insurance growing into a trillion-dollar opportunity over the coming years, but capturing this opportunity will require insurers to change their mindsets and rapidly evolving products.
Valer Merenyi, Regional Director of Digital and Tech Development at Ageas Group said digital financial services, including embedded insurance within mortgages, credit lines and investment/savings accounts linked to transactions, represent “huge low-hanging fruit.”
Merenyi highlighted three key areas that must be addressed for insurers to succeed.
For starters, insurers need to focus on the right verticals and partnerships. “Beyond traditional bancassurance partners, insurers must explore partnerships with the host of digital platforms in fields like financial services, travel, health, e-commerce and telecommunications,” said Merenyi, adding that software-as-a-service platforms for SMEs are particularly promising.
Second, existing insurance products will likely not meet customer needs in seamless digital journeys, said Merenyi. “It’s got to be seamless and support that seamless journey,” he said, noting underwriting and purchasing must not disrupt the customer experience. If insurers cannot offer lightweight, automated capabilities for embedded offerings, customers “will be scooped up” by competitors.
Third, Merenyi emphasised the importance of regularly updating products. “The products we have had…is not going to be something they will be able to embed,” he said.
Insurers must evolve offerings to truly serve as protection embedded within other services and transactions; failing to do so will “upset the digital form and upset the customer.”
