Strong pitch made for embedded insurance as business growth driver

• Coronation Ins. CEO; Konga CTO, list benefits
• Could unlock new opportunities for businesses

Cynthia Ezekwe

Embedded insurance, the practice of seamlessly integrating insurance products and services into the offerings of non-insurance companies, has been described as a potent growth driver that enables businesses to innovate, adapt to change, and build resilience in the face of emerging risks. 

Coronation Insurance, a full line insurer, brought the importance of embedded insurance to the fore at a recent webinar where it emphasised the critical importance of embedded insurance for businesses. The company cast a wide digital net at the webinar to lure businesses into the depths of embedded insurance. 

With the title, “Embedded Insurance: Leveraging Technology and Innovation to Drive Business Growth”, the webinar discussed the untapped potential of seamlessly integrating insurance into the daily operations of companies, steering them towards smoother sailing in terms of risk management, cost-cutting, and an improved customer experience.

Olamide Olajola, managing director and chief executive officer, Coronation Insurance Plc, highlighted the many benefits of embedded insurance for businesses. He stated that embedded insurance can drive sustainable growth, enhance customer experiences, and provide businesses with a competitive edge, helping them to adapt and thrive in an ever-evolving business landscape.

Olajola explained that embedded insurance is an innovative approach to insurance, adding that once products are integrated into the offerings of businesses, it benefits customers with its convenience as they no longer need to separately purchase insurance after making a purchase.

“As businesses strive to stay competitive in today’s rapidly evolving business landscape, Embedded Insurance is emerging to be the game-changer for businesses like yours. By seamlessly integrating insurance into your various solutions and product offering, you can enhance customer experience and drive significant business growth,’’ he noted.

The CEO explained that the National Insurance Commission (NAICOM) is at the forefront of driving embedded insurance, as they believe that it is a platform to deepen insurance penetration.

In his opening remarks, Elvis Chukwu, chief technology officer at Konga Online Nigeria Limited, pointed out that embedded insurance has several advantages that greatly benefit customers.

According to Chukwu, embedded insurance can offer a seamless and convenient customer experience by reaching out to customers at the point of their need, when they are already making a purchase. The integration of insurance into the purchase process makes it more likely for customers to consider insurance coverage, without needing to make a separate purchase.

According to Chukwu, insurance distribution has undergone a significant transformation, moving away from its conventional roots and embracing a more customer-focused approach. This transition has been driven by a recognition that customers prefer to have insurance seamlessly integrated into their purchasing journey, rather than dealing with traditional intermediaries like agents, brokers, or direct sales channels.

The CTO of Konga Online Nigeria Limited detailed the multiple benefits that embedded insurance offers to businesses and customers alike.

He explained that embedded insurance seamlessly integrates into existing purchasing processes, making insurance a natural part of the customer’s buying journey, increasing uptake and customer satisfaction.

Chukwu expanded on the significance of technology in enabling effective embedded insurance, emphasising that the integration of insurance offerings into various platforms can be achieved seamlessly through the use of technology.

He elaborated: “With technology, you can achieve a synergy or seamless integration between the product being sold and the insurance policy you want to attach to the product. Therefore, there is a vast potential to be explored in embedded insurance, provided you can utilise the right technology.

“Using AI and machine learning, technology can also provide an advantage where the insurance provider is able to analyse the risks associated with the insurance policy in that particular transaction, and also enables the personalisation of the insurance policy for that particular transaction. Looking into available data using data analytics, technology enables the insurance company or insurer to gain insights into tailored coverages and prices, understand the different purchase patterns that exist, and understand what the best pricing rate for that insurance policy is,’’ Chukwu added.

He also explained that embedded insurance leverages chatbots and virtual assistants to offer customer support, and education, adding that there is also the use of blockchain technology to enhance transparency and security in transactions.

The CTO highlighted the three core types of embedded insurance as including: 

–Product-based: Insurance tied to the purchase of a product such as warranty, extensions etc.

–Service-based: Insurance embedded within a service offering such as travel insurance with flights.

–Platform-based: Insurance offered through a  platform or market place such as insurance comparison sites.

During the webinar, Chukwu identified key stakeholders and partnerships in the burgeoning field of embedded insurance.

In his opinion, Insurtech companies play a critical role by offering innovative insurance products and digital platforms. He noted that traditional insurers can leverage their existing customer base and underwriting expertise. E-commerce platforms and modern markets provide access to a vast customer base and valuable purchase data, while financial institutions offer integrated financial services and risk management solutions.

Referencing statistics preference for insured purchases, Chukwu noted that 48.4 percent of consumers would be willing to buy more items online if they were offered insurance at checkout, while 60.1 percent are more likely to purchase insurance from the retailers that sell them the products.

While highlighting the potential of embedded insurance, Chukwu also cautioned that certain constraints may limit its adoption by businesses and individuals. These challenges include:

• Regulatory hurdles: The regulatory environment varies across regions, which can complicate the integration of embedded insurance into businesses’ offerings.
• Integration complexity: The technical complexity of integrating embedded insurance into existing systems might pose a significant hurdle, requiring the expertise of technology professionals.
• Customer education: A considerable portion of customers may not be aware of embedded insurance, which could hinder its widespread adoption.

Also speaking at the webinar, Opeoluwa Duntoye, chief operating officer, Paddy Cover, stated: “Embedded insurance is something I believe will help us grow insurance penetration in Nigeria, because as it is right now, a lot of people cannot on their own willingly pick up insurance. But with the emerging markets of embedded insurance, it makes purchasing insurance easier for people, and helps build a sustainable economy.’’

Duntoye further highlighted the empowering potential of embedded insurance, emphasising that it facilitates easier access to insurance products, giving individuals the opportunity to benefit from the protection and peace of mind that insurance can offer.

Nelson Madu, chief  information officer (CIO),  Coronation  Insurance Plc, while speaking on the role of data management and IT infrastructure in the successful implementation of embedded insurance solutions, noted that data houses have become critical infrastructures for technological advancement, pointing out that with  data, a lot of insights can be gained.

“Data management has become a significant part of the insurance process in the sense that it enables insurance companies to determine the kind of customer journeys that will require the personalisation of products that they will offer to their customers. These personalised products cannot be efficient, except when technology brings it to them at their convenience, on their phones and every other gadget they can lay their hands on to have access to these insurance products.

“Now, these innovations that bring about embedded insurance into this product leverages the API integration, which brings together the products and the risk cover on the platform where the customer will assess them, and with just a few clicks, technology makes it happen. Every other thing that happens at the back-end are all being taken care of by the innovative API technology,’’ he noted.

Speaking about the potential for technology-driven innovation in the insurance sector, Madu emphasised that the possibilities are virtually limitless.

He underscored that technology could be leveraged to create insurance products not just for tangible goods but also for intangible goods and services. He further added that consumer goods of all types could be integrated into platforms where insurance is seamlessly embedded, bringing the innovative approach to insurance to a wide range of markets and consumers.

“Therefore, every risk assessment that is required in terms of the customer onboarding for the insurance cover is being taken care of through the data extraction which is achieved  through technology,’’ he added. 

Coronation Insurance, in light of the significant potential of embedded insurance, urged businesses to reevaluate their traditional risk management and growth strategies, emphasising the pressing need to adopt this innovative approach.

It noted that by embracing embedded insurance, businesses could unlock new opportunities, enhance their customers’ experiences, and build long-term resilience in a dynamic and rapidly changing world.

Therefore, Coronation Insurance urged businesses to stay abreast of emerging trends in the insurance industry and capitalise on the opportunities offered by embedded insurance to navigate the challenges of the modern business landscape.