What is embedded insurance?
There are several different definitions of embedded insurance. Put simply, it’s when insurance covers are offered with existing online purchases. Common examples include flight delay insurance offered at checkout when booking flights or cancellation cover offered alongside vacation reservations.
When embedded is done right, the benefits to travel providers are high attach rates, increased conversion rates and happier, more loyal customers. It’s what customers want; a recent study found that over 60% of online shoppers say they are more likely to make a purchase when insurance options are offered at checkout. When this is combined with the news that 45% of Travelers would prefer to book their entire trip through one single website, there is clearly a strong case for embedding insurance into travel bookings.
Why is it a great time for embedded insurance
Tremendous growth potential remains in embedded insurance. The travel industry is embracing the embedded coverage model, finding new ways to use embedded and point of sale coverage to improve business for themselves. .There are several reasons for this:
- One-size-fits-all insurance is no longer fit for purpose – recent years have created new risks traditional insurance policies can’t keep up with. Embedded insurance is flexible and highly adaptable. Pattern work with our customers using their business knowledge to co-create covers perfectly tailored for their clients. This means consumers receive insurance which actually works for them.
- Consumers have higher expectations – today’s consumers expect high-quality digital services. Demand is for simple and hassle-free experiences with everything in one place. Embedded insurance meets these expectations by using the data the consumer has already entered earlier in the purchasing journey to provide them with personalized, relevant insurance covers in real-time at checkout – a truly streamlined experience.
- The scalable model suits companies of all sizes – it is a common misconception that providing insurance is a difficult, highly regulated, specialist process. Pattern removes these complications by taking care of the administration and compliance. When a policy is purchased, the premium is distributed between the insurer, the reinsurer (who protects the company against large losses), and the travel company gets a commission from the sale.
How the travel industry can make the most of embedded insurance
As well as providing a new ancillary revenue stream, embedded insurance adds value to a travel agent’s brand by building protection products into their entire value proposition. End customer’s peace of mind cam be delivered for every part of their trip.
There are three ways to do this:
1. Tailoring the insurance to the individual trip for each customer addresses their unique concerns and provides instant peace of mind. By using the data already entered (trip location, time of year, age of travelers etc.) embedded insurance products can be truly personalized. Each consumer can be presented with several relevant coverage options in real time that are only one click away.
2. Seamless integration of the administration throughout the customer journey ensures an amazing and hassle-free customer experience. Working with Pattern allows companies to easily and quickly build any insurance product for any channel. Promotion can be integrated across the whole sales journey while we take care of the administration and claims to create a hassle-free, closed-loop process.
3. Utilizing the available data on each customer enables travel companies to estimate their shoppers’ purchasing behavior and requirements. This combination of knowledge and personalized data points allows companies to offer relevant insurance coverage and premiums tailored to their consumer profile.
The only thing certain in travel is uncertainty, but it’s clear that embedded insurance has the potential to hugely benefit the travel industry. Using personalized data, travel companies can present travelers with accurate, affordable insurance in real-time at the perfect point in the consumer journey. Providing a hassle-free underwriting and claims process helps increase consumer confidence.
Louise Robertson, our Global Marketing Director, will be discussing: Breaking New Ground with Embedded Insurance at THE TRAVEL INSURANCE PAYMENTS SUMMIT moderated by Yuri Poletto, Founder, Open & Embedded Insurance Observatory