In recent years, the insurance landscape in India has undergone a significant transformation. One of the most notable trends is the rise of embedded insurance. This innovative approach is reshaping how insurance products are offered and consumed, making them more accessible and relevant to the modern consumer. But insurers that approach this new concept with old (manual) thinking will only limit their success and create dissatisfied policyholders.
What is Embedded Insurance?
Embedded insurance, the integration of insurance products into the purchase of other goods and services, means that insurance is offered as part of a broader transaction. For example, when you book a cab ride through an app, you can opt for trip insurance that covers accidents and medical expenses during the ride. Other examples include when buying a smartphone (device insurance), booking a flight (travel insurance) or taking out a loan (mortgage protection insurance). The goal is to provide seamless and convenient coverage that meets specific needs without requiring a separate transaction.
According to estimates, India’s embedded finance industry, which includes embedded insurance, is expected to grow by 46% annually, reaching INR 1,61,442 crore by 2029 (Ref.).
Why is Embedded Insurance Gaining Popularity in India?
Increased Digital Adoption: The COVID-19 pandemic accelerated the digitization of various sectors, including insurance. With more consumers engaging in online transactions, the opportunity to embed insurance into these digital journeys has grown significantly.
Targeted Coverage: Traditional insurance products often come with broad coverage, all of which may not be relevant to the policyholder. Embedded insurance allows for more targeted and specific coverage, making it more cost-effective and appealing.
Enhanced Customer Experience: By integrating insurance into everyday transactions, consumers can enjoy a more streamlined and hassle-free experience. This is particularly attractive to the growing younger generations who are known to prefer digital-first solutions because of their convenience and personalisation.
Closing the Protection Gap: Most significantly, India has a significant protection gap, with many individuals and businesses underinsured. This gap is not only due to affordability and accessibility, but also stems from issues such as trust in insurers, consumer education and awareness, and cultural factors. Embedded insurance helps bridge this gap by offering affordable and more accessible coverage options.
Key Benefits for Insurers and Partners
With the growing popularity of embedded insurance, and as a strategy to help deliver Insurance For All By 2047, India’s general insurers can benefit from it in several ways.
Faster Market Entry: Insurers can quickly launch new products and test the market.
Increased Penetration: By embedding insurance into various ecosystems, insurers can reach a wider audience, including underserved and rural areas.
Improved Risk Management: Embedded insurance allows for better risk assessment and management, leading to more sustainable business models.
Access and own new markets: There are countless individual risks to insure. Insurers that can identify new risks first and deliver the value policyholders are demanding can not only benefit from being first to market but also establish an unassailable lead and own it.
Delivering Successful Embedded Insurance:
Those insurers achieving the most embedded-insurance success, offering it at scale and meeting the growing digital-first expectations of India’s consumers, are digital-first insurers and operate a truly digital insurance delivery ecosystem.
The traditional response of throwing manpower at the problem (delivering embedded insurance) will no longer work. Insurers must adopt a comprehensive digital strategy that includes:
Seamless Integration with third-party digital platforms Integrate insurance distribution with e-commerce websites, travel booking apps, point-of-sale systems and financial services platforms to offer insurance at the point of sale. Adopt an API-driven architecture for easy integration with third-party platforms and partners.
Real-Time Data Analytics Utilize real-time data analytics to personalize coverage and target insurance products based on consumer attributes and market trends.
Automated Underwriting and Claims Processing Leverage straight-through processing, automation and workflows to streamline underwriting and claims processing operations.
Cloud-Native Core Delivery Solutions Develop new products and go-to-market in weeks instead of months with a low-/no-code delivery system that is always up-to-date thanks to fortnightly ‘silent’ updates, not disruptive and costly upgrades.
Enhanced Customer Experience Prioritize customer experience with clear information, easy-to-use interfaces, and responsive support.
Duck Creek’s Cloud-Native Insurance Solutions Enabling Embedded Delivery
Duck Creek offers solutions to support digital transformation and embedded insurance, including:
Low-Code Configuration: Quickly configure and launch products and their experiences, reducing time-to-market from months to weeks.
Cloud-Based Ecosystem: Duck Creek’s cloud-based platform ensures scalability, flexibility, and enhanced security, allowing insurers to efficiently manage their operations and integrate with various digital platforms.
Advanced Data Analytics: Leveraging real-time data analytics, Duck Creek’s solutions enable insurers to personalize and optimize their embedded insurance offerings based on consumer behavior and market trends.
End-to-End Lifecycle Management: Comprehensive, integrated and seamless management from policy issuance to claims processing and redress.
API-Abundant Open Architecture: Countless API points and an open architecture allowing endless integrations with other insurtech solutions, as well as third-party distributor applications and technology.
By adopting these digital functions and leveraging Duck Creek’s solutions, insurers can meet the demand for embedded insurance and deliver a superior customer experience.
Conclusion
The rise of embedded insurance in India represents a significant shift in the insurance industry. By empowering distribution partnerships through digital and cloud-native core delivery platforms, insurers can offer more relevant and accessible products, ultimately driving higher penetration and better customer satisfaction. As this trend continues to evolve, it can potentially transform the insurance landscape in India and beyond. To successfully deliver embedded insurance, India’s general insurers need to ditch the ‘manual’ mentality and take a digital-first approach to match the demands and expectations of their policyholders with the product and experience.
