If you haven’t yet heard of embedded insurance, you’re about to: it’s poised to disrupt the insurance market, and by 2030 it could account for over 25% of the property and casualty insurance market alone.
There’s certainly a demand for it: the embedded insurance market totaled a whopping $3 trillion in 2020. And this is combined with a greater-than-ever need for insurance since the global protection gap reached $1.2 trillion in 2019.
So, what is embedded insurance and why should agents care? We’ll dive into that and more, next.
What Is Embedded Insurance & Why Should Agents Care?
To level set, we’re talking about any type of insurance that can be purchased within the same transaction as another product or service. For example, buying a new vehicle and car insurance at the same time. It’s easy to see how the convenience factor of embedded insurance makes it a quick sell.
Some other examples of embedded insurance include:
- Insurance sold while renting a vehicle
- Travel insurance is sold while purchasing a flight or trip
- Extended warranties are sold when buying appliances or electronics
- Airbnb sells Host Protection Insurance
Embedded insurance isn’t anything new, but it’s become a hot topic in recent years as companies like Tesla and their own car insurance are disrupting the standard insurance model.
So, why should agents care? The fact of the matter is embedded insurance can conveniently cut agents out of the sale, unless they buy into the embedded insurance model.
After all, if someone’s car insurance policy is bundled into the sale of their new vehicle, they have no incentive to reach out to their insurance agent for a new policy. They get instant peace of mind with their purchase, and it saves them time since they don’t have to hunt down separate insurance.
This is partly why agents need embedded insurance; it generates low-cost, quick insurance sales and that can benefit the agent. More on that next.
Where Agents Fit In Embedded Insurance?
Embedded insurance might be convenient, but it’s not always optimal for the consumer. After all, they might be sacrificing cost savings for convenience by purchasing the first insurance policy offered to them at the time of the transaction. They’ve had no chance to do their due diligence, ask questions, or ensure they’re getting the best deal.
Plus, insurance is still a largely human industry. Insurance is complex, and numerous studies show that although consumers are getting more and more comfortable searching for insurance quotes online, they still want human interaction to help guide them in their choice and answer their questions.
In fact, according to an insurance consumer study, 85% of consumers would rather interact with a human when asking for advice on products and only 15% conduct their purchases completely online.
Insurance agents aren’t going anywhere. But they do need to embrace embedded insurance to stay relevant and meet their clients where they are.
How Embedded Insurance Helps Insurance Agents?
The good news is that embedded insurance can help insurance agents while helping to close the protection gap. Embedded insurance allows for more personalized offers and services, which consumers say they want: a survey recently showed that 80% of insurance customers want personalization. And even more importantly, 48% of consumers expect their insurance providers to use their data to offer more relevant services to them.
Embedded insurance also helps agents close more sales to people who may not have thought about insurance for a specific product or service until it was embedded into the transaction itself.
Plus, it makes insurance, a historically inflexible and complex product, more flexible, personalized, and easier for clients to understand. Clients see the importance of insurance and they get more satisfaction from buying insurance, which makes the job of insurance agents infinitely easier.
The Bottom Line: Insurance Agents Should Care About Embedded Insurance
The fact is that InsurTech and the increased digitization of products and services are transforming the insurance agency, whether we like it or not. Embedded insurance isn’t anything new, but it’s also not going anywhere. Insurance agents that jump on board will see their revenue and books of business grow significantly in the coming years.
Agent MarketPlace can help in the meantime. Get access to low-cost leads that are ready to buy insurance now, so that you can set yourself apart from the competition. Get started today.