Integrated insurance products: on the rise

Link insurance benefits to the sale of consumer goods or services? Combine different topics with each other, for example, baggage insurance for mobile phone customers abroad? All of this can be achieved with integrated insurance products. Why insurers should now focus on this business segment.

A young man wants to book a trip. The first thing he investigates is proper travel and baggage cancellation insurance. During nights, he clicks through offers online, compares prices and terms, and immediately calls his broker the next day.
Sound unrealistic? This!

Due to trip cancellation or baggage insurance, no one will stay up at night to make sure they make the right decision. Instead, consumers expect to be able to book these services as a matter of course. The trend is increasingly towards bundles of integrated ecosystem products and services.

Integrated insurance products, which are currently making their way more and more into the DACH region, are ideal for fast and flexible sales. But for which segments are so-called embedded products particularly suitable, who is the pioneer and what should be considered from a technical point of view?

The turning point is in full swing

Integrated insurance has long been established in the US Development in local markets started a good ten years ago. A new breakthrough of integrated insurance can now be seen, which is accompanied by a fundamental change in the insurance market: compared to earlier times, the insurer is receding more and more into the background in the perception of end customers. What convinces many consumers is no longer the big name, but the overall package of services.

A good example is the extended warranty when buying the washing machine, which can be purchased at the checkout. This may seem unusual to some insurers at first, but it actually harbors opportunities: With such situational and correspondingly low-threshold microinsurance offerings directly at the point of sale, new markets and customer groups can be opened up. Classic areas include consumer goods, telecommunications, travel, and car leasing.

Thus, the first big players among insurers are already working to establish strategic alliances with retail and department store chains, travel portals or car rental companies, such as Zurich Insurance, which is already following this strategy very intensively and, for example, it sells its products to an electronics chain directly at the sales point of sale. More will follow.

What can you do? What insurers must do now

If you want to place and sell integrated insurance, you must adapt it as best as possible to the product being presented and to your target group. This is more complex than it may seem at first: situational insurance, sometimes very short term, and the associated immediate provision of coverage and insurance policy require a stable technical base.

This includes fast and secure data processing, connection of payment systems and interfaces to ecosystems and websites of cooperation partners. Furthermore, the white label producer’s strategy of appearing as a participant in foreign ecosystems is also an attractive positioning. It is of particular interest to small and medium-sized insurance companies as it allows access to a wider range of clients without having to make large marketing investments of their own.

In order to create these conditions, insurers must adapt their IT or configure it from scratch, which in turn requires a series of strategic decisions in advance. Therefore, the question of market positioning must come first: Does integration into an existing ecosystem or a strategic partnership with a company make sense? How exclusive and visible can or should the insurance brand be? Or is a separate ecosystem the best approach?

The path to the correct solution can go through the so-called strategic framework: an evaluation of your own possibilities. This includes, for example, the question of the right cooperation partner and the evaluation of customer expectations and service quality. The processes, documents, application routes and customer service must be flexible enough to be prepared also for white label products. On the other hand, the technical infrastructure must be tested: How is the management of the APIs configured? How do I create the highest possible level of integration and flexibility needed for products, processes and services?

An insurer that has not updated its core systems will struggle to meet customer needs over time. However, many insurers continue to work with their historically growing and technically independent IT structures.

The Ergo Group has come a long way here: long ago, it established a flexible platform with a flexible framework that leaves plenty of room for integration. It is part of the company’s strategy not to operate its own ecosystem for property insurance, but to integrate it with integrated products in other ways. We see similar developments in other big houses.

The little ones and the big ones

In the field of insurance against minor risks such as the loss of consumer goods or mobile phones, there is also a greater division of the insurance market: while large companies do not classify these areas as priorities, smaller companies and insurtechs do. they do. more and more active here. They actively strive to establish themselves on exactly these topics and to establish partnerships for precisely tailored and situational microinsurance products.

For example, the private Swiss insurance company Vaudoise has joined forces with the Migros cooperative, one of Switzerland’s largest trading companies, to reach a new and broader customer base. Vaudoise insurance services are offered through the Migros website.

In focus

In short: for many insurers in the DACH region, the topic of integrated insurance is becoming fashionable. Until now this has been seen more as a profitable extension of the business in many houses and less as a truly stand-alone component, but the core business is still done with the standard products. However, there is a growing willingness to strategically address the possibilities of integrated insurance services. The first companies are already working hard on how they can create the necessary flexibility of IT, processes and products to expand their business model.

well spent

There is a willingness to invest larger sums, as well as an openness for proper cooperation. All of this is effort well spent. If you are willing to take risks, you can end up with good new business with integrated insurance: a good testing ground for trying out innovative insurance services, integrating into new ecosystems and thus opening up new customer groups and cooperations. On the other hand, this is accompanied by a change in their own role and presence: many insurers will increasingly work with white-label products in the future, i.e. they will act in the background and therefore (will) have to give up more and more to the direct customer. Interface.

In exchange, they get the opportunity to establish themselves in an increasingly dominant network of platforms and ecosystems. This is an advantage for small and medium-sized insurance companies in particular, as they can access new customer groups with relatively little financial effort. Integrated insurance is thus becoming a key factor, both in the German insurance market and in the DACH region.

By Thorsten Schrader and Andreas Fensterer, Q Perior.

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