The global insurance industry has been long due for a technological revolution that can bring about cost savings and increased efficiency to the insurance company and deliver a better experience to its customer. While insurance providers can adopt multiple approaches to achieve this, in our opinion, embedded finance can be the answer to this call for change.
Embedded finance is a new concept in financial technology which involves embedding financial services into non-financial applications or products. This innovative approach not only has the potential to revolutionise the insurance sector by automating processes by introducing artificial intelligence but also empowers customers with a more seamless and delightful experience. Thus, in today’s blog post, we will share how embedded finance has the potential to change the global insurance industry for the better.
The Need for Change
The digital world has become increasingly intertwined with our lives, and customers expect their daily experiences to be connected, smooth and frictionless. This need for seamlessness is especially true in sectors like insurance, where customers want their experience to be both safe and convenient. Providing a seamless and connected digital experience has become key for insurers to stay competitive as customer preferences are consistently shifting towards an end-to-end integrated digital experience.
Although, over the last few years, some insurance companies have taken a step towards digitisation by introducing customer portals and mobile applications that allow customers to purchase policies or manage claims through their smartphones, the current market reality demands that more needs to be done. For insurers to remain competitive in the long run, they need to go further than just digitising existing processes, and embedded finance can help them achieve just that.
How Can Embedded Finance Revolutionise the Global Insurance Industry?
In an industry as vast and complex as insurance, efficiency is key to delivering the best possible services to customers. An area where embedded finance can help boost efficiency is claim management. By introducing automated processes and intelligent analytics, insurers can better manage, monitor and process claims in a much faster and cost-effective manner.
For example, insurers can leverage artificial intelligence and machine learning to verify customer identities instantly and with greater accuracy. Automation of workflows will significantly reduce the time and cost incurred in processing claims while ensuring greater accuracy and efficiency. This can be achieved through features like automated fraud detection, automatic document verification, digital risk assessment, and more. Embedded finance thus not only has the potential to revolutionise the way insurers process and manage customer claims but also delight customers with an increasingly convenient and hassle-free claim application and settlement experience.
Another use of embedded finance in the insurance industry is in calculating customer coverage. With embedded finance, insurers can leverage AI and machine learning technologies to calculate coverages quickly and accurately, taking all customer’s needs into account. This will not only help reduce the time and cost incurred in processing claims but also ensures greater accuracy for each claim. Additionally, automation of workflows would significantly improve customer experience by providing them with a seamless and hassle-free application and settlement process.
Another use case of embedded finance for insurance providers, is in fraud management.
With the rise of digital technologies, insurance fraud has become an increasingly costly and persistent problem for insurers. Fraudulent activities such as misrepresentation, policy abuse and false claims cost the global insurance industry billions in losses every year. In order to combat this issue, embedded finance can help insurers build more robust fraud detection systems, which will not only reduce losses incurred due to fraudulent activities but also provide customers with a safe and secure environment for their transactions. By leveraging predictive analytics, machine learning and automation of workflows, insurers can ensure that only genuine claims are processed and settled quickly.
While the above are individual applications of embedded finance in the insurance industry, the true game changer is how insurers can use embedded finance to seamlessly connect all these individual processes together, empowering the customer with a hassle-free and end-to-end integrated experience.
Leaders Are Already Emerging
Leaders in this space are already emerging, setting the stage for industry-wide transformation. For example, Allianz General Insurance recently signed a partnership with Microsoft to shift their entire database to the Azure platform. This will not only enable them to offer end-to-end digital services to customers, but also leverage Azure’s advanced capabilities to analyse historical data and derive actionable insights, contributing to higher revenue and retention in the long run. Along with this, the insurer is also developing a new product line, Insurance-as-a-Service, for other insurers to use and improve their processes.Â
On the other, non-specialised providers like Tesla are now using embedded finance to provide customers with insurance right at the point of sale. This type of integration enables Tesla to undercut the competition by negotiating better deals for its users and nurturing a new revenue stream while reducing customer resistance contributing to higher sales in the long run.
The Takeaway
The insurance industry is on the brink of a digital revolution, and embedded finance has the potential to revolutionise the way insurers interact with customers, manage claims, and assess coverages.
By embracing this new technology, insurers can not only improve their efficiency of processes but also gain an edge over peers by providing customers with an unprecedentedly delightful experience. With embedded finance, insurers have the potential to revolutionise the insurance industry and become leaders in digital transformation.
In conclusion, embedded finance technology has the potential to rapidly transform the way we interact with insurance products both today and into the future.
Looking to offer your business customers an embedded finance experience? Get in touch with us today to learn how we can help you increase your platform revenue and stickiness and delight your customers by unlocking the power of embedded finance.
