What are the pros of embedded insurance?
It's easy to see why embedded insurance is popular with insurance companies. Catching you when you're already shopping and when you're most likely to think about the amount of money something is costing you (and thus want to protect it) means you are far more likely to buy insurance than if you were forced to seek it out seperately.
However, embedded insurance also has several benefits for you.
Embedded insurance streamlines the process of getting insurance. As a customer, you can buy your insurance simultaneously during checkout. You can purchase insurance policies without contacting another institution or talking to an insurance agent, simplifying the process to checking a box.
The insurance terms and conditions and all other info you need to make a decision should be readily accessible at the time of purchase. Read the details carefully, but in some cases you can pay in installments and can cancel your policy whenever you need to.
2. Personalized coverage
No two customers are alike. Your purchasing preferences, motivations and decisions are different from someone elses. As you're no doubt aware, when you buy anything online (or even just browse) you're providing data. The same data that enables stores to pursue you relentlessly with ads for that one pair of shoes you briefly considered buying online three weeks ago, can also help them provide better insurance recommendations for you.
Insurance companies are traditionally less responsive to changing customer preferences. That is so because they tend to work on older IT systems that cannot cope with the need to adjust in real-time to the type of product demanded by the customer. This is where embedded insurance wins over by ending the traditional 'same for all' approach. Embedded insurance provides relevant, personalized coverage by bundling protections per customers' needs.
3. Straightforward claims process
For customers, the insurance claims process can be hard to navigate through. It is stressful and complex and based on interpretations of policy language, value and the repair cost. However, with embedded insurance, the claims process becomes more straightforward since the data gathered during the onboarding stage can often be used during the claims process. This means that the probability of your claims getting rejected is relatively much lower.
As technology improves, the claims process in some cases may even be automatic. One Chinese online-only insurance company ZhongAn uses internal sensors in phones to detect when the screen is cracked and trigger a new phone to be sent before the owner even picks up their dropped phone.
4. Protection from uninsured losses
With deprecating economies, natural catastrophes and healthcare losses, the global protection gap has been estimated to reach USD 2.1 trillion. As a customer, if you purchase a one-off plan to protect a new product, it will not only feel cumbersome but sometimes even unnecessary. However, when insurance products are simpler to purchase, you, the customer, get a chance to protect yourself against uninsured losses. So, the protection gap narrows, and you get greater peace of mind.