In the past, the customer experience was primarily centered around meetings – customers would call or visit an insurance company to enquire about insurance in-person. Agents also had a personal relationship with their customers and knew a great deal about them. But as the world has become more digital, many of those relationships have transformed. Customers are also turning away from generalized policies that include items they do not need. They are now able to educate themselves and make decisions about insurance products before ever contacting an agent. One option that the insurance industry is starting to look at to improve the customer experience is embedded insurance.
Embedded insurance integrates insurance into partner ecosystems and relies on the partner to reach consumers and provide the customer relationship. While insurance products have been provided through third-party distribution channels for some time, the focus was on selling existing products. Embedded insurance involves selling new, personalized products as part of a customer's purchase at a third-party channel. This delivers a stronger value proposition for the customer.
Embedded insurance is the real-time bundling and sale of insurance coverage or protection while a consumer is purchasing a product or service, it offers an affordable, relevant, and customized insurance product, with the fast and convenient service that consumers expect today.
For insurers, embedded insurance offers new ways to reach customers. By partnering with brands that have a broad reach, either digitally or with a physical presence, insurers can offer protection to consumers when they need it. It is not a separate product but an additional feature of the customer's purchase. For example:
For insurers, embedded insurance gives them access to large customer bases, offering customers relevant insurance products in the right place at the right time at the point of sale. By having access to data about the product and the customer, insurers can perform real-time risk assessments and set prices accordingly, allowing insurers to embed their products virtually anywhere there is a risk. Insurers can then use the transaction data to create customized insurance products based on risk information that is accurate and updated in real-time.
Essentially, embedded insurance is based on data-driven interactions and requires real-time analysis and decision-making. The challenge for insurers is that their current systems are not designed to support real-time insights or integrations with partner or external data systems.
The way an embedded insurance solution can be integrated into an insurer's existing system is through an Application Program Interface (API). APIs are a set of programming codes that allow software programs to communicate and pass data between each other. Each API handles a specific communications task. More complex interactions between applications usually require several APIs.
However, integration via an API is not just required for the insurer's system but also for the system that the third-party partner uses, whether it is a store's point-of-sale or an online shopping site. The APIs link the two separate systems into a single shopping experience for the customer through which the insurer can offer policies and services directly.
Because many insurers' systems cannot readily implement APIs, a Data Integration Hub (DIH) is the first step that insurers need as a layer for real-time transactions to occur. Using a DIH simplifies and streamlines the distribution of the company's insurance products through partner channels.
Using a DIH to build APIs saves insurance companies time, reduces complexity, and accelerates the deployment of its APIs. Furthermore, APIs also need to be managed, from inception and use, to revision and retirement, a DIH has the tools needed to manage APIs through their lifecycle.
The Synatic Data Integration Hub provides the platform solution that insurers need to process data between their systems and those of a partner, be it bespoke solutions or standardized business solutions. Synatic's DIH provides the platform to create, maintain and manage APIs and their performance. Apart from providing the capability to integrate APIs with any system, Synatic can also manage all the data that is collected in the process of the customer transaction. Synatic’s built-in data warehouse can be used to store the data and perform in-flight data quality tests. This data can then be extracted, transformed, and loaded into an insurer's other systems to improve risk classification and decision-making.
The product-centric approach of yesterday's insurer is being displaced by a customer-centric model. Embedded insurance provides a way for customers to purchase insurance products how and when they want without the time-consuming complexity traditionally associated with buying insurance.
For embedded insurance, a new insurance technology stack is required - a platform that allows the insurer's system to interact with partner systems without creating a spaghetti-like complexity of integrations. APIs enable companies to integrate applications more easily and create new products and services that would otherwise take too long to build. The Synatic DIH allows businesses to streamline how they integrate applications with their partners, and to deliver composite data sources that empower insurers to get the Right data, to the Right person, at the Right time. To learn more about how you can improve the way your business connects with other systems and third-party providers, contact Synatic today
