February 9, 2022

Embedded insurance is a $3 trillion chance to mind the protection gap — here’s why we’re excited (and why you should be, too!)

Maybe you know them as affinity groups or perhaps you haven’t heard of the concept at all. But today, embedded insurance is the new catchphrase taking the insurance space by storm

Insurance agents, businesses, and consumers are jazzed up by the idea of insurance that’s bought, not sold. Rather than being sold as a standalone product, embedded insurance offers an integrated component at the point of sale or sign-up. 

Just think of buying travel insurance alongside a plane ticket or tacking on auto insurance when buying a new car. This is embedded insurance at work; when a non-insurance entity distributes an insurance product as part of the customer experience to make it better or more convenient.

But truth is, this concept isn’t really new. It’s been in practice for the last twenty-some-odd years but is gaining popularity across the financial sector, thanks to the commotion of insurtechs and digital-first companies that provide personalized products that finally meet customers’ modern needs.

This exciting model of insurance presents a 3-trillion-dollar market opportunity that if harboured right, could put an end to the protection gap for good.

Insurtech is the future of embedded insurance — not just a passing hot trend

Embedded insurance aims to close the protection gap, which is the difference between total economic losses and insured losses. This gap has been widening over the last few decades and according to a 2019 study, affects approximately 5 million Canadian households or 32 percent of the Canadian population.

The same study reports that 2.3 million Canadians have no life insurance at all and 2.4 million are underinsured. Due to insurance spikes from the economic fallout from COVID-19 and rising natural disaster events, families are at risk and those looking to purchase insurance face possible delays, as they may not be able to move quickly to get adequate protection.

However, insurtech—new insurance technology that simplifies policy management within the insurance sector—can solve these problems.

Insurtechs that offer embedded insurance add relevant and immediate value to consumers and their needs at the point of sale. It delivers a frictionless customer experience and purchase process because the value is well-understood, as opposed to the traditional process that involves complex policies or strict financial requirements to qualify for insurance products.

Here are 5 reasons to get excited about embedded insurance

We know it’s “just insurance”, but what’s offered by insurtechs on the market today beat just about everything we know about insurance products, period.

  1. It's affordable

Technology helps lower the cost of distribution, making insurance through insurtechs more accessible to a broad range of people and their circumstances and life stages. People who are underinsured or don’t have any coverage at all can now afford low-cost, flexible plans. So whether you’re thinking about starting a family or supporting your loved ones, you can get the protection you need without breaking the bank.

  1. Get personalized customer experiences

Imagine getting access to your favourite gym or a wellness subscription to daily vitamins or meditation exercises. These lifestyle and wellness benefits can now coincide with the purchase of insurance. Insurtechs can better leverage customer data to drive innovation, personalize customer experiences, and offer relevant benefits that boost your overall wellbeing.

  1. Drive ancillary revenue

By partnering with businesses such as health and wellness brands, insurtechs not only provide holistic benefits to their members but help diversify the cash flow through our economy. Cross-collaboration and co-marketing with businesses can drive ancillary revenue for each party involved.

  1. It’s easy to understand

What you see is what you get, and it isn’t too good to be true. The driving force of many insurtechs is their transparent policies and no hidden fees. The process from beginning to end is designed to be easily understood by anyone, without the need for legal interpretation or follow-up appointments.

  1. Going digital makes everything faster

Same-day quotes are great, but instant quotes are better with a fully-digital experience. Within minutes of requesting a quote or completing an application, customers can expect a good look at their options. This quick and seamless experience through API and third-party integrations is complementary with a mobile experience from many insurtechs.

Insurtechs are just getting warmed up

Insurtechs are making great progress on flipping traditional insurance models on its head and getting their products and customer experiences to reflect today’s modern users.

Driven largely by design and their advanced digital capabilities, insurtechs understand the complex ecosystem of digital distribution and have simplified the end-to-end process. They also create opportunities to offer relevant services that consumers might already be interested in during the point of sale.

Travel insurance at checkout was just the beginning.

Walnut: Insurance when you want it, where you want it

Embedded insurance presents a three-trillion-dollar market opportunity to redefine the way people view insurance and approach life.

At Walnut, we provide transparent life insurance memberships and immediate value to customers through subscriptions with leading wellness brands like Headspace, ClassPass, and Dashlane.

With Walnut, you can lock in flexible pricing plans between 10–20 year terms and gain access to the well-balanced life you crave and the peace of mind that comes with a protected future. Get your quote today.