Unlocking the Potential of Embedded Insurance: Journey to Future

Will embedded insurance be one of the main development drivers of the sector in the coming years? Will it also be extendable to life insurance? How to be ready? 

Impossible to blame this anxiety considering a phenomenon that promises impressive numbers, the analysts estimated it as a $3 Trillion Market Opportunity. 

Being behind the stage, I feel to stating that having the technology capable of supporting this preposition should be a significantly greater concern than defining a use case today and discover it obsolete in less than three months, while you will be evaluating the best solution to adopt and manage it. 

It is difficult that someone plans a road trip before having a vehicle or the ability to get one, instead it is not so rare that people purchase or get a vehicle motivated by the desire (concept) to travel. 

So don’t stop looking for a “concept” but at the same time be focused on finding the right enabler for this kind of model. Embedded insurance is a new distribution model, not a new family of products.  

Embedded insurance is definable as a form of bundling, where an insurance policy as the add-on to another product or service (not insurance), generally as a part of the digital sale. 

The solution to research for enables this model and at the same time makes operate all parties involved easier and smarter, must be: 

1. Easy to be integrated with your Core Systems  

2. Designed to communicate with the most varied Third-Party System 

3. Able to manage sales processes differentiated by channels 

4. Simple in grounding all the above points 

So, the first key is a technological solution able to support the concept and the advice is looking for a vendor that has already invested in this direction, avoid to starting thinking to customizations, these will be huge and will generate dependencies. 

Obviously, I cannot hide that we in NTT Data have a proprietary asset, Alondra, a B2B2C middle-layer solution that is the best in class, also thanks to our annual R&D investments on it and the many use cases already landed globally in the last years. 

But, looking to the Life & Saving business, my first competence, with the aim to find a concept to follow for my client, I has been hit by the Fogg Behavior Model, also mentioned in our INSURTECH GLOBAL OUTLOOK 2023 dedicated to the smart distribution, and I decided to deepen it. 

According to the Fogg Behavior Model, three elements must converge at the same moment for a behavior to occur: motivation, ability, and prompts.  

It is important to be present (prompts) with the right solution (ability) when happens life events that push people to think about protecting someone (motivation) that are important to them. 

Consumer research on life insurance found that life events had the stronger impact on younger generations, Gen Z and Millennial parents, when considering life insurance purchases.  

And what better target for "embedded" than natively connected generations?  

So, the second key, the journey must start from the analysis of: the target customer, their own customer groups, the life events that mark their habits, the brand of products or services well targeted for them and present in the moments of truth. 

In the coming years, Embedded Insurance will be the new distribution trend that will profoundly change this sector and change the way we perceive certain types of insurance coverage, including life insurance. It will be essential to be in the right place at the right time. To be one, the first thing you need to have is an adequate technology stack.