VOI talking point: Is embedded insurance reinventing the wheel?
Keith Meier, COO of American insurer Assurant, pushes back against those insurtech evangelists who suggest that embedded insurance is a new concept for the sector.
It’s a bit cliché to talk about people on different sides of the business being from different planets, but as platitudes go, this one has some utility.
In an insurance and technology context, it’s usually used to differentiate between traditional practitioners and the technologists disrupting and transforming the sector.
From technology acronyms to Lloyd’s underwriting jargon, insurance old hands and the technologists can still speak different languages. Unfortunately, what this can mean is that if they can’t understand each other, one side could end up reinventing the wheel.
Keith Meier, Chief Operating Officer at Fortune-500 US insurer Assurant, and Mark Geoghegan’s guest on the Voice of Insurance podcast, made a closely related point about a difference in perspectives on the fashionable topic of ‘embedded insurance’, between some of the technology-focused innovators, and experienced insurance leaders with longer market memories.
This is in part because Meier sees Assurant as a technology firm, and as a marketing and services company, with an insurance capability built in, he explained, rather than simply as an insurer.
To use marketing-speak for a moment, this extends the familiar B2B model to B2B2C – that is, business to business to consumer – something that Assurant has done for decades in its core markets of auto, mobile and home insurance products, but which is now being reinvented as embedded insurance.
The company has sold covers to its US and international customers through third parties, such as banks, phone companies or retailers, with a long-term concentration on matching products to lifestyles and customer experience journeys – a phrase with echoes in embedded insurance.
“There’s nothing better than having buzzwords related exactly to your core business,” Meier quipped.
Some of the hype about embedded is that it will strengthen customer loyalty – a thorny issue for retail insurers beset by a competitive market environment characterised by commoditised products and price comparison websites.
“Our own research has shown that offering support protection products, and those types of services that breed more loyalty actually increased purchase intent by up to 32%,” Meier said.
To give the technologists due credit, if embedded is not new, technology is providing it with a renaissance. The power of tech is enabling the insurance segment to be much more responsive, with products available faster, cheaper, easier to tailor and more configurable for scale. These are the parts that are exciting the insurtech innovators and investors.
Engagement levels can also rise with the greater connectivity provided by the internet of things, combined with advances in artificial intelligence now at an insurer’s fingertips. The resulting improved digital experiences can take relationships to a next level. The embedded business model may not have changed much, but it wasn’t possible with a previous generation of tech tools.
Part of the embedded evolution is to go from simple ‘yes or no’ added-on insurance products, to something more data-led, involving more choice, and better tailored to the customer. Sometimes, it’s best to keep it simple, on the basis that it’s easier to sell simpler products, Meier stresses, but in other cases, new tech-led bundling of several embedded insurance products and services.
“Much of this is about being proactive with the consumer. Digital tools allow us to communicate with customers in different ways, enabling us to provide a much more frictionless and a better experience,” added Meier.
The rise of ecosystems is also covered in the episode. Meier called this trend one of “coopetition” between service providers. Alliances between entities that can bring unique capabilities to the customer through a single gateway – the AdvantageGo Ecosystem is a notable instance of this within the world of insurance service providers.
“You want to bring as many unique products and services tailored to the customer needs as possible. To be the one that can bring the best of the best is a great place to be,” said Meier.
Bringing together entities that can offer unique capabilities but different focuses is a good strategy, he suggested, for ecosystems and embedded insurance in particular.
“It’s always been about bringing together the right solution for clients. I don’t see that changing,” he said. “The more embedded insurance grows the market, it gives consumers more choice and more opportunity to be able to enjoy these services.”