Trust, value and flexibility are the key principles shaping embedded insurance offerings in the Nordics, and the next few years will be critical in the development of this technology-driven ecosystem as we move towards an “insure as you live” future
The Duck Creek Technologies EMEA team hosted a senior-level roundtable discussion in Copenhagen, Denmark, as part of the influential Insurance Innovators Nordics event. It was a thought-provoking and dynamic debate among the region’s insurance leaders, the key themes of which are summarised here.
NB: This was a Chatham House Rules closed-door roundtable, and the 12 senior executives from across the leading insurance brands in the Nordic region spoke freely and openly about the marketplace under the agreement that they were not directly quoted.
The Nordic insurance marketplace is characterised by large, long-standing multinational insurance companies, together with smaller regional businesses and mutual structures. It’s a mature insurance market with well-educated policyholders who have a high level of trust in their insurance provider and the value of the products they buy. Focusing on getting as close to customers as possible unites the insurance businesses across this market.
In this respect, roundtable attendees agreed that ecosystem partnerships and embedded insurance are really nothing new; rather, the change is the gallery of new actors in this space and the drivers of consumer demand and engagement.
From Tesla to Amazon, from life insurance to gadget insurance – the ecosystem partnership approach between insurance businesses, technology providers and retail brands is critical to developing relevant, flexible embedded insurance propositions.
The attendees also agreed that this approach goes hand in hand with wider service offerings focussed on mitigation and incentivising policyholders to avoid claims.
“It’s about reimagining insurance, but we are not moving too far from the core of insurance. Instead, we must do our best to educate the policyholder on the benefits of insurance and risk mitigation, not just the negative scenario of needing to make a claim.”
But there was debate over the structure and value of partnerships, particularly over bringing together multiple suppliers in a chain to deliver a single offering, and the risk of unintentionally over-insuring or under-insuring customers.
“Is a universal ‘pay as you live’ policy the ultimate endgame?” asked one attendee.
“Our only obligation is to build and retain the trust of our customers.” said another, noting, “The brand under which that trust falls is ultimately academic – they are leaning towards large retail, auto and technology brands embedding insurance at the point of sale, and it is our job to make sure those propositions add value and are trusted.”
Another attendee agreed and added that commission structures and long distribution and supply chains needed particular focus. “It’s about the value proposition – and with lots of suppliers involved, it’s important to realise that not everyone can take the lion’s share of the income from an embedded insurance product.”
There was discussion over compatibility with legacy systems and how new technology that enables embedded insurance products to be rolled out interoperates with existing tech stacks. Flexibility was a key consideration – with unanimous agreement from the 12 senior executives at the table that the inflexibility of core systems was a major frustration for insurers.
“Even though the Nordic market is fairly advanced already from a technology and data perspective, I feel like we still have a long way to go to get to the magic formula. I think the next few years will see a scattered marketplace with lots of testing and a ‘back to basics’ approach as we explore what makes sense,” noted one attendee.
Ultimately, the conversation always came back to the customer. “The question that should come before any other consideration about profit, distribution, etc. is ‘Are we helping our customers’?”
It was noted that the insurance industry’s assumptions around attitudes to buying insurance need to be kept in check. “No one wakes up and wants to buy insurance 24/7.” noted one attendee.
Transparency and fairness around the embedded insurance proposition were also considered critical for customers. The key observation here was simple: “If you’re good, you don’t have to hide.”
In this vein, there was also strong agreement that regulators would rightly have a hand in shaping the embedded insurance landscape going forward.
Attendees were also presented with exclusive first findings from the 2023 Global Consumer Insurance Insights Survey. Preliminary data from over 2,000 overall survey respondents – all individuals who own at least one insurance policy – was extracted for the Nordic region, and key findings included:
- Almost two-fifths of the Nordic respondents were aware of embedded insurance; almost half were not. Significantly, the majority of Danish respondents are unaware of the concept, whilst higher proportions of Norwegian and Swedish respondents are unsure.
- Almost half of those regional respondents who said they were aware of embedded insurance trusted it. More are unsure than concretely untrusting (29% vs. 26%). The trend was similar amongst Danish and Norwegian respondents. In Sweden, almost two fifths were uncertain as to whether they trust the concept of embedded insurance.
- A fifth of Scandinavians trusted embedded insurance due to trusting the insurance provider. However, two fifths of those who did not trust embedded insurance said it was unnecessary. A quarter of those who were unsure said they would require more information.
Access the full Global Consumer Insurance Insights 2023 whitepaper.