Financial services companies are increasingly embedding insurance offerings into new digital customer solutions and real-time apps.
As digital wallets become a standard transaction platform for consumers, FinTechs, established banks, and insurance companies are joining forces to deliver consolidated services available at the click of a button. That is driving interest in new apps.
That’s one of the latest findings from a survey of 200 global fintech and bank executives, along with 2,000 consumers, who are increasingly embedding insurance offerings into their digital customer solutions.
Embedded insurance is building revenue for banks and FinTechs around the world, with momentum that is likely to continue. At this time, a majority report that up to 10% of their revenues come from embedded insurance. This level is expected to double over the next three years.
Consumers want insurance that protects their lifestyles and their purchases. digitally. The survey shows 56% of consumers globally believe they need more insurance. And fewer than 10% have disability, travel delay, or shipping insurance for goods purchased online. While younger consumers are perceived as more comfortable with digital purchasing, demand for online financial and insurance services is strong across all age groups, the survey shows. A total of 46% of consumers globally believe that digital is the obvious way to buy such products.
The challenge to integrating the range of financial and insurance services through digital apps is bringing technology resources to bear. A majority of financial executives, 60%, say that lack of internal skills is the top internal challenge with embedded insurance. At least 48% say complicated technology integration is the top challenge with such partnerships. Tellingly, 48% of financial firms state that the embedded insurance customer experience is confusing.
“Insurance-driven revenue streams can be direct payments when insurance is offered as a standalone product for purchase,” the survey’s authors state. “When insurance is embedded in a product like a credit card without an extra charge for the customers, the revenue increase is indirect. The sales of the credit card itself go up when customers opt for a credit card with embedded insurance that offers them peace of mind.”