The biggest problem of the insurance industry today is the fact that the sales of an insurance product are separated from the sales of the core product or service that the insurance is associated with.

As a consequence of such “separate sales”, the insurance product is often rejected by customers as an unappealing hassle, causing a huge gap in protection in the end. And, due to market changes in terms of digitisation, climate change and lack of innovation, this gap is just getting bigger and bigger.

Buying insurance online is still a major issue for most customers because of the complexity involved. That is why most insurances are still sold offline. True, customers research online but cannot make a purchase online.

Closing the gap with embedded insurance

One solution is to embed the insurance into the digital service offering. This means offering the insurance on the spot, when the need is there and when the risk is a top priority for the buyer. Embedded insurance bundles the insurance coverage or protection while the customer purchases a core product or service. The insurance is no longer sold separately to the customer, but it is provided as a standard feature of the core product or service. The customer thus gets a more affordable, relevant, and personalised insurance when its needed most.

Looking ahead in volatile times

If we look at what happened all over the world recently, what is currently happening and if we are wondering what will still happen, we will agree that we are facing massive, serious, and stressful life events. Whether the Covid-19 pandemic, the war in Ukraine or a potential blackout crisis – events like these hit us physically, emotionally and financially. Consumers all around the world have felt it and continue to face extreme consequences. Many have lost their jobs and many are tackling with a decrease in income.

Events like these dramatically change consumers needs and preferences, making them more open to new, innovative products and new ways of purchasing products. More importantly, customers now want to reach for simple and affordable products with obvious, yet strong value propositions.

Consumers are looking ahead, they are trying to plan and find ways that will protect their life, health and well-being. They want to be better protected, just in case they must deal with a new crisis. They have become proactive rather than reactive. Insurances that will cover their hospitalisation expenses, life insurances with an emergency funds availability or protection of their income is what they are now focusing on.

They are looking for innovative products, embedded solutions and new ways of insurance distribution. Consumers expect the insurers to understand their needs and satisfy those in easy, direct and most affordable ways. They want insurers to help them feel somewhat normal again and provide them with new ways of engagement.

The role of embedded insurance

Embedded insurance helps customers when they need it most. It provides them with the possibility to protect their lives, their health and their lifestyle at the right point in time.

One example is an electricity company that decided to offer customers a free-of-charge bill protector insurance that covers customers’ electricity invoices in case of unemployment or a work inability.
They found a way to show their customers that they care and that they are there to help when things get rough. They also show them how much they appreciate their loyalty. This is exactly what customers expect during volatile times.

Embedded insurance can help people recover from the stress of the pandemic, the economic effects of the war and other serious life events by adding great value and combining it with great insurance solutions via new distribution channels and new ways of customer engagement.


Alma Ribanovic

Group Practice Leader Affinity

T +43 664 962 40 17

Related articles