An increasing number of consumers have moved to buy products and services online following the Covenant epidemic, and insurance is no different. Insurance companies focused on exploiting digital infrastructure and disrupting traditional purchasing and insurance policies. Simply put, embedded insurance refers to the insurance coverage of the product or service itself at the point of sale or service. For example, you may be given the option of purchasing travel insurance when you book a flight ticket, or you may be given the option of purchasing an electronic device in case of accidental damage and theft insurance. These embedded insurance products are already being offered online for shipping, delivery, booking, payment or other services by e-commerce companies and well-known mobile app operators. Embedded insurance can be provided as paid (for example, the customer pays extra for the insurance premium when purchasing the main product) or the insurance coverage may be charged for each product or service sale. .

The insurance coverage will appear as an additional purchase if the customer has already considered the financial decision and the information is already filled out for the insurance purchase. For insurance companies, this model creates a new revenue stream and provides the lowest cost distribution of the policy. It also provides insurers with a broad customer base and useful data to enhance overall product innovation, conduct risk assessments, and more accurate pricing. When you buy a valuable product or commodity, insurance is available and offers a lot of comfort to people. Such convenience is accompanied by information and technology and is an attractive idea for all concerned based on the customer’s digital fingerprints to ensure that the customer gets the right insurance product to buy.

The legal basis of embedded insurance

Most ’embedded insurance’ coverage is based on group insurance, as insurance distributions licensed by the Indian Insurance Regulatory and Development Authority (IRDAI) are highly regulated and restricted to insurers and brokers (including brokers, corporate agents and individual agents). Arrangements. IRDAI has developed extensive rules for requesting, distributing, and administering group insurance policies and setting certain key conditions for establishing an appropriate “group” for group insurance. Purpose and group should not be based on the primary purpose of insurance. Since insurance products can only be issued and sold by licensed and regulated entities, it is important to carefully review the included insurance arrangements.

While it is of great benefit to push the embedded insurance model, the Indian insurance market is highly regulated. Mandatory bonding of insurance products is not permitted by the Superintendent. In addition, the insurance law, which prohibits any person from purchasing insurance or discounting and only authorized intermediaries are allowed to receive commissions to sell insurance products, will continue to be challenged in the insurance model.

A detailed framework is also provided by IRDAI to promote insurance products and activities that may be performed by unlicensed third parties. One of the consequences of ’embedded insurance’ is that the insurance sector is ‘invisible’ to customers – this is a double-edged sword because customer awareness is critical to a financial product such as insurance. In order for embedded insurance to be successful, there must be a balance between efficiency and customer awareness on the one hand and customer quality on the other. In short, there are legitimate concerns that consumer interest should not be lost in a good publication, and customers should easily access insurance details. Designing customer communications and defining responsibilities will be important to identify the role of stakeholders, to avoid customer satisfaction, to control the risk of false sales and the risk of consumer disputes. Perhaps, one of the consequences of embedded insurance growth is the gradual simplification of insurance document terms, as well as easier and faster insurance claim processes.

Similarly, embedded insurance can not only increase the distribution of insurance players in the next phase of development, but also increase policy service / claims. Depending on the level of customer acceptance, this model may affect product creation and writing activities. With sophisticated writing and accurate pricing being the centerpiece of successful insurance, industry players are considering how insurance products can meet these challenges (along with improving distribution). Such models greatly influence insurers to produce products based on the customer access points available through their included insurance partners.

The way forward

‘Embedded insurance’ can be a wonderful tool to increase insurance penetration, especially for uninsured insurers and intermediaries in rural or other parts of the country. Similarly, the ease and convenience of customer use have significant benefits. The success of this model will be critical to the right balance between business speed, customer protection and data protection and compliance.



The views expressed above are those of the author.

End of article