Page 45 - Insurance Times Octoberr 2022

Customers and Businesses Will Benefit needs allows insurers to create offerings that will persuade
a consumer to purchase insurance for a product.
Embedded insurance provides an easier purchase flow,
as it's an 'add-on' to the primary product. As a result,
One way to bridge this gap is to develop a plug-and-play
there is no need for a lengthy warranty form, and
technology platform. This platform eliminates the hassle of
payment is made in conjunction with the main product.
developing an insurance product and allows the company
to focus on its core value proposition. The technology
For instance, if a customer provides information to obtain a
determines the best insurance plan for a specific product,
loan from a bank or a non-banking financial company
and the business decides where the insurance product will
(NBFC), that information can be used to issue insurance. This
be added in the purchasing process. A customisable plug-
removes the need for additional paperwork and reduces the
and-play platform also enables sellers to embed insurance
chances of errors.
products without the need for additional coding, and an
Embedded products are more personalised,
integrated analytics dashboard aids in the understanding of
complementing the main product's attributes and
both business and user metrics.
tailored to the customer's security needs.
Businesses are also benefiting from lower 'Customer
This creates a win-win situation for both the customer and
Acquisition Costs' because the customer is already
the business, as the customer is insured when necessary,
purchasing the main product and embedding the
and the business gains additional revenue without having
insurance product expands their portfolio.
to develop new technology.
The inherent convenience and personalisation have ensured
Such tools enable insurers to build value-added digital
that India's embedded finance industry will grow by 46% to
distribution partnerships and embed transparent offers,
INR 1,61,442 Cr by 2029.
resulting in relevant and customer-centric insurance
offerings.
Challenges with Embedding Products
However, the transition to embedded insurance is not as What is the future of Embedded
straightforward as it appears. Providing insurance in addition
Insurance?
to the core product requires time, effort, and capital. In
Insurance has the best chance of being purchased when it
addition, some products are easier to embed than others.
is provided at the right time or is bundled with the product.
Products that require complex underwriting, such as life
As a result, many ecommerce websites now bundle various
insurance, where health and behavioural considerations are
types of insurance with their products to ensure customer
important, will necessitate an understanding of customer
ease of use and convenience. This approach will also play a
behaviour and may be difficult to implement.
significant role in efficiently exploiting the protection gap,
resulting in the sustained growth of the embedded
As a result, a company must understand its product offerings,
insurance market.
create a parallel technology stack to provide insurance and
create a completely new business flow to resolve queries
However, for this model to succeed, businesses must strike
and provide integrated insurance services.
the right balance between speed and efficiency of business
operations, customer protection, and regulatory
How Is Plug-Play Technology Solving The
compliance. India is Asia-Pacific's second-largest insurance
Problem? technology market, and in the coming years, a greater
number of partnerships between product and insurance
In India, there is currently a 70% protection gap - the
difference between the amount of insurance required and companies will result in greater insurance penetration in the
untapped Indian market. This will particularly be the case
the amount of insurance purchased. Insurance companies
in rural and underserved areas, creating innovative and
are identifying these gaps and attempting to address them
by incorporating smaller products into larger ecosystems. tailored offerings for a diverse consumer base.
There is also the requirement to provide the appropriate
policy at the appropriate time. Understanding customer Courtesy : Inc42

The Insurance Times, October 2022 45