4 key traits to look for as embedded insurtech rises

On track to reach $5.4billion this year, the insurtech industry is expected to expand north of $152billion over the next 8 years. An increasing number of companies across banking, lending, financial planning, benefits, and even lifestyle verticals are all taking advantage of this trend by partnering with insurtechs and integrating digital insurance products right into their offerings.

Industries are increasingly looking for sustainable, long-term ways to offer a holistic solution for their users as people turn more and more to digital platforms to manage the full spectrum of their lives. Let’s take financial services for example, these companies are at the backbone of people’s financial health, yet the space has traditionally felt complicated and intimidating for many. Digital innovations in this vertical are so exciting because they help people better understand the fundamentals of their finances and take action where it counts. Fintechs now have the opportunity to provide a bridge for their customers to protect their financial lives in a way that they understand and can easily accomplish – and that’s where integrated insurance comes in.

With so much activity in the space, the natural question that arises is how to pick an insurtech partner that will set you and your customers up for success. With that, here are four key things to look for:

User-focus and innovation

Placing the customer at the centre and innovating around their needs should be a hallmark of any good insurtech company. It can also be a hallmark of any good insurtech partnership. Let’s say you start planning your financial life – odds are that you want to be able to see all of your data in one place to make the most effective decisions for yourself. Insurance is a key component of that financial picture, and being able to surface it where it’s most relevant puts the user at the centre.

Companies looking to embed insurance are in a unique and powerful position when it comes to being able to best serve their customers. At Ladder, we find that our partners have unique data and insights that enable them to recommend life insurance in a more personalised way at the right time to the right people, right in their experience. Beyond the initial purchase, we also offer the unique ability to change your coverage as your needs change, giving customers the flexibility to manage their coverage over time right from the partner’s site or app.

A true digital experience

More and more insurance solutions appear to be digital. The user enters some basic information but quickly comes to encounter the same old traditional process lurking below the digital surface. If they want to get a good fully-underwritten price, they often have to at least get on the phone with someone if not endure a medical exam and still wait weeks for a decision. Finding an insurtech that is digital end-to-end will create a seamless experience for your customers from start to finish, and will also be able to share important and actionable insights to help more of your customers get the coverage they need.

The ability to integrate seamlessly

It should go without saying that embedded insurance solutions need to actually have the capability to be embedded, but that’s not always the case. The ability to provide a solution that delivers a seamless experience for customers is the difference between a holistic product and one that merely makes suggestions for where to check out different products. Embedding the insurance solution directly into the experience — whether that’s through a mortgage, savings, financial advisor, you name it — is key. Look for companies that offer deeper API integrations in order to do this well.

Look for the activation gap

Opportunities often lie in the gaps — the barriers to entry that need to be broken down to provide a clear and easy path to access. Take life insurance, for example. Unlike home and auto, which are compulsory for homeowners and drivers, life insurance is not a requirement for those who need it. 102 million underinsured or uninsured Americans know that they need life insurance, but are getting stuck in the traditional processes or procrastinating because there’s a perceived barrier to entry. It is in this activation gap where the opportunity lies to best serve people using your products and services.

Life insurtechs took the first big step in stripping out barriers to entry — transforming a typically weeks-long process of appointments, phone calls, and medical exams into a seamless, near-instant experience. The next layer down, then, is embedding directly into platforms where people are already managing other aspects of their lives. As soon as the product is brought directly to where the customer already resides, it becomes a no-brainer.

The original version of this article was published on March 30, 2022 in The Fintech Times.

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