The insurance industry, valued at over $6 trillion globally in 2023, is often considered a legacy market, relying on traditional practices that have been in place for centuries.
As a legacy market, it's not prone to change like others. However, as customer expectations evolve and new technologies emerge, the industry must adapt to remain competitive. Protection gaps have opened in the industry, often with those most in need of financial protection having the least access.
Embedded insurance, seamlessly integrating coverage into existing customer journeys, represents a significant opportunity for insurers to modernize their offerings and bridge the protection gap.
However, to fully realize the potential of embedded insurance, the industry must address outdated systems, embrace modern solutions, and switch the focus to the customers.
To get an authoritative perspective, we invited six insurance experts to discuss the current challenges and future solutions for insurance.
Let's dive in.
Challenges Facing Agents and Brokers
First, two insurance executives, Donna Jermer of Insuritas and Louis Bode of Cedo Group, highlighted the challenges facing agents and brokers. They pointed out that agents and brokers often struggle with legacy systems, hindering their ability to provide quick quotes, approve endorsements, and process claims efficiently.
Legacy systems used by many agents and brokers often lack the flexibility and auditability necessary to support the dynamic nature of embedded insurance. These systems may struggle to handle real-time data processing, personalized coverage options, and seamless integration into customer journeys, essential components of embedded insurance.
As a result, agents and brokers find themselves unable to meet evolving expectations of their customers, who increasingly demand personalized, usage-based coverage. Without the ability to quickly adapt to changing customer needs and provide transparent, data-driven coverage options, agents and brokers risk falling short of evolving customer expectations.
New solutions, such as driver telematics for rating, should improve client experience and engagement with insurance and risk management tools. However, Louis Bode suggested, "Agents tend to be frightened by offering insurance that could change premiums on a whim. They don't want to lose control of clients and what premiums could be."
This reluctance to embrace new technologies comes about from fear of ceding control to consumers and losing customer relationships and revenue streams when the data and the tooling have low transparency or agent interaction versus seeing the tools and technology as a means to engage with clients at new levels.
Technology needs to be seen as part of a three-way solution: the underwriters (product owners), agents and brokers (distribution and support) and the consumers.
The Need for Accessible Coverage
Paul Mlodzik, an insurance executive specializing in client engagement and experience, emphasized the need for insurers to leverage embedded insurance to make coverage more accessible, particularly for underserved groups. By meeting customers where they are and offering tailored solutions, insurers can expand their reach and provide much-needed protection. This approach benefits customers and helps insurers tap into new markets and grow their businesses.
Mlodzik explained embedded insurance can be particularly effective when offered at the point of sale, as "you're also getting them at a period where they're highly engaged to do the thing that they're doing, and they want to protect it."
By seamlessly integrating insurance into the customer journey, insurers can increase the likelihood of purchase and provide a more convenient and intuitive experience for the consumer.
Technological Solutions for Personalized Coverage
Arthur Mulwa and Frederick Hui discussed the technological solutions that enable more personalized, dynamic risk assessment and pricing. Mulwa explained how his company, AiCare, uses "real-time vehicle tracking technology to estimate risk." This approach allows for more accurate premium calculations based on actual driving behavior rather than relying solely on historical claims data—a unique combination of telematics and embedded insurance solutions.
However, implementing these solutions can be challenging due to legacy systems. Hui, whose solution, CoverGo, provides product creation and rating, stressed the importance of adopting modular, configurable systems, stating, "It needs to be done in a way that is harmonious."
By focusing on quick wins and gradually transforming their digital infrastructure, insurers can overcome organizational resistance and deliver value to customers more rapidly. Hui added, "I think that doing POCs and pilots and breaking down modules for quick wins is an easier pill to swallow."
Consequences of Failing to Adapt
Chris Cline of the Agent's Council for Technology, part of the agent's Big I association, warned of the consequences of failing to embrace embedded insurance and other innovations. "Insurers that do not prioritize customer-centricity risk losing market share to more nimble competitors," he stated. To stay relevant, insurers must evolve their strategies and business models, leveraging technology to embed protection seamlessly into consumer purchase journeys. Given that the ACT organization sits between vendors, insurers, and agents, it's important to call out the relevance he refers to, including insurer distribution partners, captive and/or independent agents, and insurance consumers.
Cline emphasized the need for insurers to be "really clear on what that customer is and how you build an experience for them." This requires a shift in mindset from product-centric to customer-centric, with a focus on understanding and meeting the unique needs of each policyholder. As Cline put it, "Success requires more than bolting on new channels as an afterthought to existing products."
Paul Mlodzik built on his earlier comments of embedded experiences by pointing out next-level strategies work on 'omni channel' approaches and allowing consumers to move between solutions, i.e., starting in an embedded channel but being referred to an agent for additional assistance then returning to digital channels to complete the transaction. Louis Bode's inclusion of agents in the processes and transparency and Donna Jermer's support of embedding the agents themselves into the processes all speak to consider client centricity over product centricity. The product is what is being sold, but let's design and implement products that are meant to be sold digitally and built into a process that engages our distribution and consumer participants.
The Future of Embedded Insurance Sales
The future of embedded insurance sales lies in the industry's ability to modernize its approach and prioritize customer needs. Insurers must adopt flexible, modular systems, enabling them to offer personalized, usage-based coverage and respond quickly to changing customer preferences. By leveraging real-time data and IoT devices, insurers can provide more accurate risk assessment and dynamic pricing, ultimately leading to better customer experiences.
As the industry evolves, the role of agents and brokers will also shift. Rather than focusing solely on sales, they will become trusted advisors who guide customers through increasingly complex insurance landscapes. To succeed in this new environment, agents and brokers must embrace technology and develop the skills necessary to provide valuable insights and support to their clients.
