App-based insurance and embedded insurance coverage have been part of the insurance digital disruption conversation for years now. Many insurers have embraced one or both options as a way to streamline distribution and better support customers.
As app-based and embedded insurance options become more commonplace, however, customers are developing their own set of expectations, wants and needs surrounding these distribution models. Understanding what customers want from app-based or embedded coverage can help carriers and agents build stronger customer bonds.
App-based insurance allows customers to obtain coverage directly from their smartphone. Embedded insurance allows customers to obtain coverage for an item, like a car or home, at the point of purchase.
Among carriers, both app-based and embedded insurance are often discussed in terms of their benefits to the insurance industry. “In property and casualty alone, embedded insurance could account for over $700 billion in gross written premiums by 2030, or 25% of the total market worldwide,” writes Simon Torrance, embedded finance and app strategies advisor.
Yet customer expectations play a large role in the success of these models, since both app-based and embedded insurance are aimed at reaching those customers and encouraging them to buy coverage.
One major selling point of app-based and embedded insurance for both insurers and customers is ease of use. For customers, app-based coverage offers the promise that the customer will be able to place coverage exactly when they need it. In fact, some app-based offerings, like Metromile, offer customers the ability to pay for coverage only when that coverage is in use.
Embedded insurance also promises ease of use to customers by eliminating an extra step in a purchasing process. Instead of buying a car or house and then seeking coverage for it, for example, customers can make the purchase and obtain coverage in the same step.
App-based and embedded coverage both promise convenience and ease of use to customers. Customers thus expect that promise to be fulfilled. To meet that expectation, carriers need to think about what ease of use looks like for their insurance customers.
The first step in meeting customer’s expectations for app-based and embedded insurance coverage is to see the process from the customer’s point of view. Insurers need to understand app-based and embedded insurance touchpoints within the context of the customer’s knowledge of insurance and overall journey.
Many customers begin their search for insurance coverage online. Often, they will read and explore on their own before deciding to dig deeper with one or more insurers. Since few insurance customers are also insurance experts, most will reach a point at which they will want to speak to an agent, a carrier representative, or another professional who can answer questions about that customer’s specific situation and needs.
Consequently, it is vital that insurers think of app-based and embedded insurance options as one tool among many for digital distribution. “To compete, or even partner in this new ecosystem, incumbents are going to need a multi-channel reach in order to provide multiple potential experiences,” says Yoann Michaux, senior partner at IBM.
Customers are increasingly comfortable connecting with companies, including insurers, online. They also expect to be able to supplement online connections with access to human assistance when it’s needed.
Tools that allow for seamless transitions between customer digital tools, like forms and AI-enabled chatbots, and human assistance can help meet customers’ expectations that app-based or embedded insurance will be simple to use. Meeting these expectations, in turn, helps build customer confidence in the insurer and the coverage.
Customers are attracted to app-based and embedded insurance because they promise easier access to insurance coverage, which customers see as necessary but not particularly joyful or exciting to purchase. If this expectation is disappointed, customers may avoid the carrier in future; if it is met, customers are more likely to stick with the carrier that delivered the convenient experience promised.
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