Following the launch of the Embedded Insurance 2.0 Market Map report, we run this virtual salon to showcase some of the best case studies of brands exploiting Embedded Insurance from around the world. Organised by aperture and Embedded Finance & Super App Strategies, Simon Torrance hosted four excellent guests:
- Graeme Dean, VP Global Insurance Solutions, Cover Genius
- Sriram Jayanthi, Senior Product Manager, Omio
- Jim Dwane, Chief Executive Officer North America, Bolttech
- Roberto Gonzalez, Director, Keller Covered, Keller Williams.
Main topics discussed:
1. What (exactly) is ‘Embedded Insurance 2.0’ and why is it important to business and society?
2. What specific problems does Embedded Insurance solve for brands and their customers, and how does it do so?
3. How to make an investment case for Embedded Insurance, at a brand and an insurer?
4. What does the future hold for brands and insurers with embedded insurance?
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The Market Map
Embedded Insurance 2.0
The most comprehensive analysis of the multi-trillion dollar Embedded Insurance market opportunity for brands, insurers, entrepreneurs and investors.
90+ pages; 46 Embedded Insurance providers profiled; 19+ Charts, diagrams and tables; 20 case studies; The Market Map quadrant.
Embedded Insurance 2.0: Best case studies
Full transcript:
[00:00:00] Simon: Hello everybody. My name is Simon Torrance, and I’m going to be moderating this webinar on Embedded insurance 2.0. We’ve gathered some people who are experts on this topic. They are going to share some of their experiences of delivering this concept in different parts of the world. Let me introduce them to you.
Firstly, we’ve got Graeme Dean, who is VP of Global Insurance Solutions at Cover Genius. Cover Genius is one of the leading embedded insurance companies. It raised, I think recently about $80 million in a new round of investment, and works across 60 countries around the world helping brands create embedded insurance programs. One of his clients is Sriram Jayanthi, who is a Senior Product Manager at Omio. Omio is a unicorn business; it’s a multimodal journey booking platform that helps you get from A to B through any type of transport. Omio operates now across many countries in the world, and indeed facilitates about 10 million journeys per annum in Europe alone. Sriram has been leading the insurance program, working with Cover Genius for the last year; he’s going to share his experiences.
I’m delighted also to welcome here Jim Dwane, who runs Bolttech in North America. Jim’s a veteran from the insurance industry. For the last few years he’s been in the tech industry, driving Bolttech forward. Bolttech also is a unicorn business; it describes itself as an insurance exchange. It connects brands with insurance solutions and insurance companies. Last year they facilitated insurance quotations to the value of $44 billion, Jim, wasn’t it? Doing really well, growing very fast, and operates across the world. One of his great customers and clients is Roberto Gonzales, who runs Keller Covered, part of Keller Williams. Keller Williams is one of the biggest real estate companies in the world. It operates in 80 countries, has 170,000 estate agents that work with it. Keller Covered is their insurance proposition which has been set up, or been updated in the last year or so, works closely with Jim and Bolttech to enable that.
I’m really delighted to have this group of experts together with you today. I should give you one word of apology: we are all men. We normally like to have a mix of sexes in our webinars. Next time we’ll ensure that we do, but for now bear with us, please. The agenda for today’s as follows: I’m going to share a few slides to set the scene and create the framework for our discussion today, then I’m going to ask the panelists to give their views on these questions here.
Firstly, what is embedded insurance and why is it important to society and businesses? Then we’re going to spend a bit more time delving into the details of what problems it addresses for brands and their customers. We’re going to ask Sriram and Roberto about their experiences, then Jim and Graeme are going to share some of their knowledge and expertise working with other companies as well. What problems is it addressing for brands and consumers? Then we’ll look at how do these types of companies, brands of different types and different sectors create business cases for embedded insurance? What are the methods and processes and lessons for that? We’ll end by looking at the future. How might the future look? How is this market going to evolve?
To engage you, the audience and the people who are taking their time to come and listen to us today, we’ve got some polls, some surveys that will run throughout the discussion today. You can also input your questions and comments in the chat or the Q&A function that you can see. I know you’ve all used Zoom before. Please do that. We almost certainly won’t have time to answer all of them during this session, but we will commit to responding to them afterwards. We’ll review them and we’ll write up a Q&A, FAQ document to cover the questions you might have.
Thank you all of you who’ve taken time to be with us today. Big thank you to the panelists as well. Let’s get started on this interesting topic.
The background to it is a report that myself with my friends at Aperture have just finished writing, called Embedded insurance 2.0. It’s been a labor of love for the last six months, looking at this market and how brands and insurers and others can take advantage of developments. It’s about 90 pages long. We surveyed and spoke to nearly 50 leading pioneering companies in this space, including Bolttech and Cover Genius, and we benchmarked them against various criteria. You can see a redacted version on the right hand side. The reasons we invited Bolttech and Cover Genius along today was they were very much in the top right hand quadrant there compared to others. I should say that there are many players in this space. Many of them do different things in different ways, and there’s a great deal of innovation happening in this market. It’s still early stage, but very vibrant and growing much faster than the rest of the InsureTech market today. If you want to get details of this report, you can see the URL there. It’s also in the chat space here as well. The URL, if you want to get more details on the report, is there.
Let me set the scene. What is emerging that is enabling embedded insurance. 2.0 is the following: essentially some brands have sold insurance for some time, but technology is dramatically changing the way that’s happening, and also the nature of the insurance solutions and the nature of the way that consumers consume them. Let me just try and bring that to life briefly for you. We always need to start with the end consumer. As many of you know, the world is getting riskier. There are more and more severe risks facing us as individuals, businesses, and humans on the planet. That is creating protection gaps, gaps between what we need to be resilient and have peace of mind, and what we have; the types of solutions that are available to us and that we have, that are going to protect us. Those gaps are getting bigger and bigger as the world gets bigger in terms of more people, and the risks increase. There is increasing demand for protection solutions.
What’s interesting in the past is that traditional insurers would provide those to consumers, if the consumer knows about them, understands them, can access them and can afford them. There are many people in the world who are completely uninsured. There are even more people who are underinsured. Even in advanced economies like North America or Europe, there are many people who don’t have the right type of protection to suit their lifestyle or their situations. The UN is very worried about this.
What we’re starting to see is the potential for a new type of organization to help consumers get what they need. Let’s call these brands, brands and digital platforms that interact with consumers on a more regular basis than insurers do, that understand their needs in the context of what they support their customers with, and have a lot more data – often real-time data – about customers that can be used to create more appropriate, relevant and affordable protection solutions for end consumers. Of course, brands and digital platforms have their own pressures. They need to find, keep and retain customers. They’re looking for new ways to do that. Insurance, we’re going to hear about it later on, is a way of helping them to keep closer with their customers.
At the same time, on the supply side, in the past individual insurers would sell their products to customers and those products, those capabilities tend to be tracked within individual organizations. But now digital technology is allowing those capabilities to be released, abstracted into software, turned into almost Lego bricks that can be reconfigured by organizations in new and creative ways. We are seeing the capability, not just in insurance, but also in financial services and other adjacent areas that are relevant to protection, prevention services, or other types of value added services.
What we’ve now seen, and this is what our report was focused on and why we’ve invited the panelists to join us, is a new breed of organization that is sitting in the middle, that is enabling those Lego bricks to be drawn in, configured to help brands support their customers with their needs. Cover Genius and Bolttech are two prime examples of companies that are doing this, that are focused on this as their business. I call them operating systems, because they essentially help to orchestrate innovation between the supply base, all the capabilities that are needed; and the demand, which are brands, digital platforms and end users.
Today, where our panelists fit in, we have Roberto from Keller Williams, who is a brand in the real estate sector, which is digitizing rapidly; and Sriram, who runs product management for Omio, which is a digital platform. Bolttech and Cover Genius are companies that enable them to offer protection solutions to their end users. Down the bottom, those companies also create some of their own solutions, customized solutions when required, and collaborate with other parts of the value chain as well, often the traditional insurers.
That’s the framework we’re going to use to discuss around. In terms of why this is such an interesting market, we’ve done some sizing and it looks quite attractive in terms of the growth of embedded insurance over the next 10 years, which is essentially a new method of distributing protection and insurance solutions that will eat into other distribution channels. If you are on the insurance side, wondering how this affects you, the value at stake for traditional distributors. We also see that if we can enable brands that have large customer bases to be involved in the creation and distribution of new protection solutions, we could also grow the total insurance market as well, create net new value above where we are or the current forecasts. If you are a brand or if you’re an investor, if you add up all that written premium, the premiums of insurance that could be distributed in this way, you get to an exciting business opportunity in the trillions for brands to not only add value to their customers, but create value for themselves as well. That’s why there’s a lot of investment and focus on this topic today, because the opportunity is so significant.
Finally, what’s our noble purpose with Embedded insurance 2.0? I think it’s something like this. If we have these protection gaps, how can we close them by working with brands that have closer interactions with those end users on a more regular daily basis, enabled by new operating systems? Maybe this is our noble purpose. It’s not just about making money. It’s about ultimately enabling more and better protection to be baked into the everyday lives of everyone. I think that’s something that we can all get excited about in terms of helping to achieve.
I hope that has been a useful opening stimulus for our debate. I wanted to ask each of the panelists just to give their opening thoughts of what Embedded insurance 2.0 means to them, and what protection gaps ultimately do you think it could address? Then we’ll get into the meat of how it works for brands and their end users. Roberto, would you like to start?
[00:13:54] Roberto: Of course, Simon. Thank you for that, that was a great introduction. I think it explains to everyone very nicely how this ecosystem is being built. From my perspective working for KWX, which is the holding company for Keller Williams, which as you mentioned is the one of the leading real estate franchises in the US, what we do at the end of the day is have a team of realtors, over 170,000 realtors, help people purchase what ends up being the most valuable asset for most people in their lifetime, which is their home. The whole idea of how insurance fits into that is in every single home transaction, you need to buy insurance.
But his is what’s interesting, the person is buying the home. The person isn’t buying insurance; no one gets excited about, I’m going to go buy insurance. Insurance is like an add-on that you have to have. From our perspective, and the reason why Keller Covered was created was not only to help the end user, but also to help the realtor, who is the enabler in that transaction, have access to a tool that can provide the most value to the end user. The realtor helps the customer find the right home in the right district with the right schools, for their right lifestyle. The realtor doesn’t really need to be an insurance expert in reality; they can’t even give insurance advice unless they’re licensed. That’s why providing them with a tool such as Keller Covered, powered by Bolt Insurance, is so valuable.
Answering your question, what is embedded insurance, it really means automating or facilitating the right coverage to make sure that when that person led by that realtor is buying their home, that they don’t have any gaps in coverage. I love the way you said it, because a lot of people are underinsured or they’re overpaying for insurance. But having the right protection, that is really something that most of us sometimes take for granted, unless a disaster comes along. Being able to provide that guarantee to a consumer that, hey, you’re going to have the right protection, the right levels of protection, you’re going to have enough money to rebuild your home in case something happens, you don’t have to know all the details because we’re going to use third party data to facilitate and to automate the underwriting and make sure that the real risk is assessed, automating all that process, which otherwise it’s very tedious because insurance is a complicated issue, that is something that people don’t understand and they don’t want to get into, making that easy for them is just the end game for us. That’s my view on it and how it relates to the real estate business.
[00:16:29] Simon: Yeah, because after just your health your house is really quite critical. I’ll ask Sriram, your views on this?
[00:16:40] Sriram: Hello everybody. On this, I think it’s a very interesting question. Because if you look at embedded insurance, I would think it’s like some sort of disruption to the insurance industry. I think it’s very analogous to what happened in payments and banking. Across the globe, there are a lot of underbanked and underserved individuals, which basically the new payment services help disrupt and provide access to them. I think with insurance it’s very similar. It provides access and relevant access to a wide variety of consumers who currently don’t have insurance.
If you brought it down to the noble purpose, this can actually provide access to a relevant insurance for a wide variety of uninsured customers, because essentially most of them are also one catastrophic event away from poverty. Embedded insurance can essentially save them if they get access to it.
[00:17:36] Simon: Great. Thank you. Jim, your perspective.
[00:17:40] Jim: I love the fact that you use the term gap before, because one of the ways we characterize this emergence of embedded insurance is insurance distribution is essentially democratizing. Why is it democratizing? The reason it’s democratizing is the traditional means of insurance distribution, which is certainly not going away, was as you said, creating a large population of un and underserved consumers. There was a lot of protection not being served.
I think embedded insurance fills almost three different dimensions of gaps. The first gap it fills is one of, of different places. You can now buy insurance in a multitude of different places. Those places may be physical. You want into a store, you buy a cell phone and you can buy insurance on the spot. That in essence is an embedded experience. It’s a physical embedded experience. Then you’ve got the digital embedded experience, where you’ve got a digital journey. There’s something broader happening, like someone’s buying a house, and there are a series of things that people need when they buy a house, including a mortgage and title insurance, you need some access to legal services, and if you’re going to get a mortgage, you can need homeowner’s insurance. There’s a digital gap created, or a digital location. Finally, one of the most fascinating parts of this, and I thought it was great that you had Cover Genius and Bolttech on the product side portion of your slide as well, that is the emergence of these previously unknown exposures. The whole sharing economy has created a multitude of previously unaddressed coverages.
Embedded insurance affords the opportunity, not just to distribute insurance in unique ways, but it also allows you to concurrently invent coverages that satisfy or protect whatever the particular circumstance is, whether it’s the emergence of pool sharing or boat sharing and things like that. There’s all sorts of interesting things you could do in terms of product invention. I view it as a three dimensional filling of the gaps.
[00:20:12] Simon: Thank you. Graeme, what do you think?
[00:20:15] Graeme: To use your 2.0 language, I think embedded insurance 1.0 was really finding a way to offer an insurance at a point of sale. Typically, it was probably an airline selling insurance, a travel insurance with their flight. But as we’ve evolved, and people are using more digital and technology companies where there’s different touch points, there’s different channels that they’re interacting with those brands, I think 2.0 is the evolution of that in just being broadening the product suite that we’re able to offer and make available to customers through all of those different touch points, through all the different experiences. I think it’s just double downing on a lot of those experiences that people are used to, and they want to interact with those brands. They want to continue that experience that they’re used to. I think it’s about making products available at a relevant time at the right price.
People don’t really want to go and do a lot of shopping now. The likes of Amazon have made us impatient and lazy. We want it all to be ready for us and ready to go in one simple click. I think it’s just utilizing that same ethos, and then broadening the products suite. Because it’s not just for consumers. It’s also for businesses. That’s the evolution where it’s going to go.
[00:21:36] Simon: Brilliant, thank you. Let’s do a little poll just to engage the audience. If we put up the poll, Diana, let’s see what they think. Here it is. Which of these questions do you agree with most? Protection gaps being the gap between what you need and what you have. Let’s think about it on a global basis, but which of those statements do you agree with most? Does it have a very significant role, a significant role, a limited role, or a very limited role in helping to address protection gaps compared to other things that are going on? If I can ask you just in the next 20 seconds to submit your vote, and we’ll see what you are thinking about this, then we’re going to move on to talking about some of the practicalities of creating an embedded insurance program for brands and the value to their end customers.
Let’s just give you another 10 seconds now to cast your vote. Unfortunately, the host and the panelists are not allowed to vote for some reason. It means that we can’t be biased, I guess. I think time is up. Let’s see what you said. A significant or very significant, that’s good to know. That’s great. There’s a reason for getting out of bed in the morning to enable this topic. Thank you for that.
Let’s move on to the next part of the discussion. I wanted to get into the nitty gritty and ask particularly Roberto and Sriram first about their company. Let’s bring it to life with a case study. I wanted to ask you how you are using embedded insurance specifically. I know Roberto you gave a little bit of a hint of that, but maybe go into a bit more detail. What specific problems does it solve for you and your customers? If you could just bring it to life in terms of how exactly it works, where it’s placed, how it’s offered, how much it costs, things like that, that would be great. I’m going to ask Sriram, would you be happy to go first? I’ll ask Roberto, and then I’ll ask the other guys to give some other case studies and news cases that they’re seeing in the market.
[00:23:50] Sriram: Sure, I can first. I think when we looked at embedded insurance as a brand as Omio, the first thing that we wanted to do was look at user research and understand what users particularly think about insurance. It came to be one of the top concerns. I think it was also driven by the fact that we had a pandemic, and a lot of cancellations and people lost a lot of money on different travel tickets. Insurance and flexibility was top of minds for our customers.
Once we decided that we were going to be investing in this area, what we looked at was the fact that accessibility was very important. We wanted all the customers to have access to one insurance product, at least. The second thing was, we are also a digital first platform. We placed very strong emphasis on tech fidelity. We wanted the APIs to be up all the time, even if they’re down, so we can reach out to teams and then get them back up and running. We had issues in the past when working with traditional insurers, when APIs were down, sometimes for months. That was the second important thing that we looked at. Thirdly, we also innovate in the travel sector. We tried to provide unique travel products to our customers. For example, we tried to stitch together a journey. We wanted somebody to work along with us in offering unique insurance solutions for this, like a guaranteeing, a connection between a trade and a bus. This is not something that you can take off the shelf, but you need to work along with somebody to build these products. These were the things that we looked at when we considered investing in embedded insurance and why it made sense for us.
[00:25:26] Simon: You were telling me that something like 10% of the journeys that you enable people take is insurance, is that correct?
[00:25:37] Sriram: Yes. A little more than 10% of our journeys that we enable currently have an insurance attached to them. This metric, we worked on it for the last six to eight months along in a partnership with Cover Genius. We brought different value additions, we changed the customer experience, we gave them data products. Currently more than 1 in 10 Omio customers traveled with an insurance.
[00:26:02] Simon: Is it convenient that makes it attractive to the customer? Would you say it’s just there when you need it and it’s easy to access, and if you’ve done it once because the claims process is nice, you’ll do it again? Is that it?
[00:26:18] Sriram: I think it’s convenience, and also the fact that it is also relevant, because we are offering relevant insurance products that tailor to their particular journey. We also believe that our customers trust our brand. When we are offering an insurance at the right point, we believe it also extends to them that we are saying that this is a relevant product for you to be using right now, given that there’s a little bit of flux in the travel industry. I think both put together.
[00:26:48] Simon: It’s very commercially attractive to you, isn’t it? Because if you’re doing 10 million journeys, 10% of a million journeys that are covered, you charge about 10 or 15 euros, isn’t it? That’s a lot of money. Then you take your revenue share, which is quite significant as well. That’s quite a lot of high margin new business for you, isn’t it?
[00:27:13] Sriram: Yes, exactly. Not just for the customers, like I said for the customers it’s very relevant and it’s top of mind, top of needs, but even for us as a company it’s a significant source of revenue. That warrants the investment that we had. We have teams working behind this that make sure the product is serviced in the most relevant way, and customers have the most relevant experience. To do that, we need case study and we need some numbers to back this up. Like you said, with the current numbers there is quite a significant addition to the bottom line, because margins on journeys with insurance attached is quite high.
[00:27:53] Simon: I think you said also when you moved to a more modern, what I call operating system, in this case working with Cover Genius, you quite dramatically increased your attach rates of insurance as well?
[00:28:07] Sriram: Yes. I think that is because we worked on the product in close partnership, and then we decided that this is the right product strategy and the right product to be offering to this particular set of customers. We do multiple transport; we have like trains, buses and flights, and we need to be offering relevant products. Also the way we service it up, at what point we do, we needed somebody who work along with us in data mining and making sure that we have the right tools for this. This is very important for us. This was quite an equal partnership right from the beginning.
I think that helped us improve this metric, which was quite stagnant when we worked with more traditional insurers before. Post this, we managed to more than double our rates with this.
[00:28:49] Simon: Brilliant. Well, thank you for that. Let me just ask Roberto, can you tell us a bit more about how in practice your proposition works, and then the benefits because you’ve got the agents and you’ve got the end customer and then you’ve got you as well. Just tell us a bit about how that works in practice.
[00:29:09] Roberto: Like you’re mentioning, from our perspective for Keller Williams, I think it’s a very unique position because every initiative that we undertake at KWX the first question that we have to answer is: how does this benefit the agent? Because at the end of the day, that is our core business. Keller Williams is a brokerage, it’s a training company. We help agents succeed, build large businesses, successful businesses, and provide the tools so that they can do that.
We also have to keep in mind that whatever service that has the Keller brand attached to it has to have the highest quality of service, the highest quality of products. These are all the things that we have to look at. KWX has different companies that have been created with the goal of forming a home ownership experience that helps the realtor remain at the center of the transaction, and be able to like compete with other realtors from other brokerages because they have access to additional tools. Additional to Keller Covered, there’s Keller Mortgage Keller Offers, Keller Manage, Keller Title. There’s other companies that are out there or in the making to help this this whole ecosystem succeed.
Going back to insurance, how does insurance help the realtor? When you buy a home and you’re using a mortgage, like Jim mentioned, you need to have insurance. That is just one additional hurdle that everybody needs to go over in order to complete the purchase transaction. Having a tool like Keller Covered, the idea originally was helping the end user have a very streamlined, very efficient, very effective, very unintrusive experience where they could go into a website, they could answer a few questions that everybody knows, not ask anything random or that. You wouldn’t know about a hazard you don’t even know, like how far away are you from a fire station or how far away are you from a fire hydrant, which are questions you need to answer in order to get a quote from an insurance carrier. We built this website that is very streamlined. We ask only seven questions. We use third party data to prepopulate the rest of the questionnaire. We send all that over to Bolt. We leverage their insurance exchange to get back the quotes and populate the quotes.
Basically a realtor doing a transaction with a customer is able to get that customer in less than three minutes, most of the time real accurate quotes on what insurance would cost and what protection they would have for that new property. It makes the realtor seem more knowledgeable, makes them seem more efficient. It provides additional value to the end user. It’s just part of the ecosystem where you bring this additional value. Where we insert Keller Covered, and that’s really my job, we integrate in our own CRM so that realtors have an easy way to invite customers to shop for insurance. We we’re embedded with our Keller Mortgage affiliated business so that every loan that comes through also gets invited to shop for insurance, and make sure that when the loan goes through that insurance is already there and it’s not something that’s going to hold off on the actual approval of the loan.
We’re trying to find these spots where people are going to need insurance, and make sure that we service the solution at that point in time while we work with Bolt to provide the quotes for the customer.
[00:32:32] Simon: That’s very good for the agent, because it’s also an excuse after the sale of a house to get in touch in a year’s time. You might want to change your insurance, let me get in touch with you about that. You keep in touch every year until the time when they want to move house again. It’s a nice way of keeping in touch, isn’t it? I guess also for you it’s a great product, because typically the average lifetime of a house insurance is about eight years. It’s a nice recurring revenue, if you can retain them for that time.
[00:33:09] Roberto: Absolutely, what you’re mentioning is very valuable because for us providing the agents with an additional touchpoint, like you’re saying, outside of the transaction, that’s something that none of the other affiliated businesses in Keller Williams universe do right now. That’s a really nice piece of insurance right there. You’re absolutely correct.
[00:33:26] Simon: Great. Well, I want to ask Jim and Graeme about maybe another case study in other sectors that you are seeing, that you think demonstrates the art of the possible. Graeme, would you like to go first? Give us an example.
[00:33:39] Graeme: Sure, I could give you a couple of examples that that might be interesting. What we’ve found is that when we’ve embedded insurance to be sold alongside another product or service at a point of sale type scenario, that the actual underlying product or service conversion rate has increased by the mere fact of having the insurance offered. We’ve tested this in various products and various markets. It’s a really interesting case for the brands to be able to not only potentially making money for yourself from a commission point of view of the insurance, but your underlying product and service by offering the insurance is increased as well. I thought that’s an interesting case to share.
Also what we found is by giving a little bit more choice to customers, rather than ramming down their throat a really big comprehensive type policy, actually breaking it up and what we call unbundling that a little bit and allowing a little more choice to customers, builds a higher attach rate in the long term and yield as well, because they want that little bit more flexibility and the ability to say, “I want a little bit more control. I don’t want you to tell me that I need everything and I don’t feel that I do.” Or having that negativity around, I bought this policy but I don’t even need these sections so now I feel like I’m getting ripped off. It’s having that little bit more control back to the customer. We’ve found it increases the conversion rate as well.
[00:35:18] Simon: Good, thank you. Jim, any good examples that you are seeing at the moment?
[00:35:23] Jim: Listen, but one of the exciting things about embedded insurance in the future of embedded insurance, Simon, as you touched on in your opening is there feels like there’s a limitless opportunity for, the way I say it is the intersection of commerce and risk. It’s constantly changing where commerce, some type of a commercial or personal transaction intersects with some moment of risk or some identification of risk. We joke around at Bolt, about how every week we wake up and we find a place that might be appropriate to sell insurance. We think about it in the context of commerce and risk. That creates lots and lots of different scenarios. That’s the first thing.
I like what Sriram said before, and I think Graeme touched on it as well, this whole continuum of simplicity to choice. There will always be a robust market for the simpler type products. I almost analogize them to the point of purchase display when you’re checking out of the grocery store. You get to the end and they say, would you like this? They’re not giving you choice, but it’s a simple, seamless pleasant experience that just catches you on your way out. However, on the other end of the perspective, you’ve got choice. Graeme is exactly right. For the insurance geeks among us, this is some of the exciting stuff around optimizing conversion. At the end of the day, it’s about economics as well as protection. Figuring out what that optimal combination of choice generally for the more complex products; the more complex the product the more beneficial choice is as it relates to conversions. That’s something that we consider important, and something that at this juncture of the embedded journey 2.0 is something I think we’re all learning more and more every day.
One of the things that I think is the next frontier is services. Right now many of the insurance offerings are oriented around indemnification with not as much services. Again, it depends, obviously something like travel is service. But I think we’re going to see a proliferation of services as well here in the future. It’s almost like a three act play. Act one was the simple line, act two is the choice, and act three is the service oriented offerings on a much broader scale.
[00:38:04] Simon: Do you mean services in terms of risk services, to help prevent risk or mitigate them?
[00:38:09] Jim: Exactly. Risk services, response services et cetera.
The last thing I’ll say Simon is, I think what the industry’s beginning to learn, and when I say industry it’s everybody, it’s Sriram, it’s Roberto, it’s Graeme, it’s myself, we all do slightly different things, but at the end of the day we’re all part of this journey, roper intent wins the day. What does that mean? You can plug insurance into a bunch of different situations. But if you haven’t plugged it in at a place in a moment where the intent is high or where the intent is appropriate, you’re really not going to accomplish a whole lot. It’s one thing to actually run around embedding the insurance purchase opportunities, whether it be choice based or more simple based. The true winners are the ones who are going to figure out how to optimize, not just the where, but the when of that journey.
Finally, along those lines there’s something else I say called the myth of the digital journey. I think we all know that insurance purchasing is going more and more human-less. The current hypothesis is the companies that are going to win are not the companies that are going to force their consumers into a completely digital journey. The companies that are going to win are the ones that perfect when exactly someone might need to be plucked out of that journey and carried across the finish line. Technology can’t front run human behavior and human comfort. As human beings become more and more comfortable with the digital journey, the companies that are succeeding are the ones that know, this person’s about to abandon, pluck them out, carry them across. I think that’s also something we have to keep an eye on.
[00:40:06] Simon: Yeah. There’s a great example during COVID, where some Uber operations just couldn’t get anybody to drive because people were worried they were in a catch COVID, they’d be ill, they could die, they couldn’t work, and so on, particularly in emerging markets. In the middle east, they gave insurance for free to their drivers to enable their business to operate at all. That encouraged people to. We talk about products, selling products, but there’s also the component of risk mitigation or risk transfer capabilities that you can insert into a proposition, like the example I just gave there.
Let’s ask the audience again, a poll. Could we put the next poll up please, Diana? Here it is. If we think about brands and maybe think about a brand that you know well, what’s the most attractive proposition to non-insurance brands for adopting embedded insurance? Is it to create new revenue streams from insurance sales? Is it about making our core business offerings more attractive by adding insurance components to them, a bit like the example I gave? Or is it retaining existing customers by integrating insurance solutions into loyalty programs, things like extended warranties, for example? Or is it a mix of the above? Let’s get your thoughts on this. Again, I’m going to give you 15 seconds this time to give your vote on that. We’ll see what you think about the value to brands. Just use one of those and we’ll see what you think. I’m going to ask you separately about value to consumers in a minute, but let’s just see what you think.
You’ve got another five seconds to make your vote, and that is just about up now. Let’s see, Diana, what do people think? Well, yeah, a mix of all of the above. I think that’s exactly right. Because the examples we’ve just talked about are not just about reselling insurance or about making the core business offerings attractive or about retaining. It’s mix of all of that. That’s a great result there. Good.
A quick other poll, thinking about consumers now. If we can put the next poll up. This is from the consumer point of view. What is the most compelling aspect of embedded insurance proposition to end consumers? So they could be business customers, or individual consumers, but which of these three? Is it convenience? Like Sriram was saying, I’ve booked my trip and now I’m going to buy some travel insurance. It’s so convenient to access that solution at the right place and time. Is it price? Because maybe the brand will make it cheaper because they’re trying to package it up with other propositions. Or is it simplicity? It’s just so easy to understand, to access, to manage; and particularly what these guys do is to make the claims experience really easy as well. Is it just, I don’t want any hassle, it’s so simple to do because brands have worked with companies like the ones that are with us today to make it a much better experience.
What are your thoughts on that? Again, I’m going to give you another five seconds now to get your final thoughts on that, or is it a blend of all of those three? Let’s just see what you’ve said to that. Convenience. This is really interesting Graeme, isn’t it? Because I know you always say convenience is really important. Price is less of the driver. In fact, people are happy to pay for something that’s good. Graeme, any comments from you on that one.
[00:43:54] Graeme: That’s right, you probably heard me say it before. Convenience is the number one driver. It isn’t about price, and it isn’t about the insurance brand per se either because it really is about the brand that’s actually offering it, which is the distribution brand. It’s at the right time, the pricing is likely right because you’ve probably had some smarts in there, but it’s not the main driver. It really is convenience.
[00:44:22] Simon: Any other comments from anybody else on this one to tally with your experiences?
Good. Let’s move to the next section about creating a business case. Part of the reason for us writing that big report recently is to try and educate and engage brands about the art of the possible. It feels to me that this is a very Greenfield market still. You’ve had big companies in the past that, like retailers or banks that have sold or resold insurance. Telcos have done that to some degree with handset insurance. Then there’s big manufacturers or retailers that have sold extended warranties.
But what it seems to me is that that’s just part of the market. There’s a huge sway of the rest of the market that doesn’t even realize what they can do, the sorts of things we’re talking about, particularly non-digital companies. There’s a lot of small companies that never thought they could embed insurance. Small retailers of e-bikes, as a classic example, which it’s great to offer at point of sale theft, injury, warranties, and so on. But in the past, it was just way too expensive to do that. Now through technologies any company can do this.
I wanted to ask you a bit about how even for very sophisticated digital companies like Omio and increasingly Keller Williams, how does your organization go out thinking about creating a business case? What are the key things that the CFO and the CEO and ultimately the board resonates with? I’m going to ask Sriram and then Roberto, and I’ll ask the other guys to come in with their experiences. Sriram, what made this compelling to your leaders?
[00:46:17] Sriram: I think the first thing, like I mentioned previously, is the fact that there has to be an inherent customer need. We saw in various user research that we did that there was this need to have flexibility and peace of mind. That was top of mind. Once we took that problem statement then we started understanding the economics behind it, we created the case in terms of, what is the potential reach that we can offer this product to? We wanted to offer, for example, on let’s say a hundred percent of our transactions, all our transactions have one insurance product attached to it. We took industry leading, we attached rates to these products, we had consultations with different partners. We understood what is the potential, attached it for these products. We also had historical data from working with traditional insurance partners, so know potentially what percentage of our transactions or bookings or journeys have or can potentially have an insurance with them.
Then we also know the market size of the insurance product. We have an estimate of what the value proposition for insurance. Then we took that into how it will affect the company’s bottom line and economics. We built a very simple business case using this, and when we looked at those numbers, they were very compelling. First, there was an inherent customer need to offset risk, especially in the industry. We looked at the numbers and the adapt rates and the market dynamics. Everything put together, I think it was a very compelling case both from the customer standpoint and from the company standpoint. While we are offering something that offsets risk, we are also adding significantly to our revenues.
[00:48:08] Simon: Great. The numbers stacked up quite easily once you put them down and work them through. Roberto, just tell us from your point of view. I’m just wondering, if I could ask, because once you’ve started to sell, you’re selling a certain type of insurance, maybe you could go on and sell other types of insurance to your customers given that you have this relationship with them. I was almost thinking, could you not sell insurance to the agents, liability insurance and so on? Tell us your thoughts on at least the business case, and how that might evolve.
[00:48:42] Roberto: In order to understand that, I’ll quickly go over how this whole thing started. Keller Covered has been around for four years. Originally, we had direct relationships with carriers, and we just had a legion website where we would collect the information, send that information to an array of different carriers, and just show the quotes. That was the end of it. We started to realize that there were some pain points, and this is where we started to create the business case for switching the business model. Some of the pain points that we had were complaints from our agents saying, I sent the customer through and I don’t know what happened. Can you tell me if they purchased a policy or not? Can you tell me what happened with this customer? We had no idea because all we were doing was collecting information, showing quotes and sending them off to 20 different call centers.
That’s when we started to analyze the possibility of not just being a legion website, but becoming an insurance agency. When we decided to become an agency, we had two options. We could become like a real agency or we could become a virtual agency. That’s when we started to look at the availability of how quickly are we able to scale to support 170,000 agents in all 50 states overnight. That’s really where we started to do the whole process of, let’s find a partner that can provide us with the technology to replace what we already have, which is a connection with carriers that shows quotes, but also allows us to have the servicing part of it and have the agency and have that human touch, which is still necessary.
That’s the history up to this point. We started with homeowners’ insurance because we are Keller Williams. We work with realtors, we work for realtors, and that’s initially the solution that they need. Today, through our partnership with Bolt, we’re able to sell auto insurance and an array of different policies, but we don’t have the online solution yet. When will we get there? Eventually. We’ll eventually have an auto flow, we’ll eventually have a bundle flow. But we’ll always add on top of the home ownership, because that is the sector that we’re in and that’s the starting point from where we will go forward.
[00:50:53] Simon: Great. Thank you for that. You touched on one thing, I know someone asked a question in the chat here about regulation. You explained it quite well there; you didn’t want to take on the burden of being a full agent and being regulated that way so you have this proxy approach, which essentially you’re outsourcing that licensing to Bolttech.
[00:51:16] Roberto: No. We are a licensed agency, but the operation is being handled by Bolt. The manpower is outsourced.
[00:51:23] Simon: Exactly. One of the questions we had was, do brands then need to take on all the balance sheet overheads and license, and so on? What we’re saying is that these new operating systems that are in available now take that worry away. They can manage that for a brand if it doesn’t want to take on some of those regulatory overhead.
[00:51:49] Roberto: That’s correct. A lot of the overhead is absorbed by their operations. But because of the existing regulations, if you have an entity and you want to sell or promote or solicit insurance, in the US you need to be licensed. That’s why we got the license in place.
[00:52:03] Simon: Perfect. I want to ask Jim and Graeme, in terms of creating business cases, are there any other things that you’ve seen that have been really compelling beyond what we’ve just heard now?
[00:52:16] Jim: I might just add something to what Roberto just said. It goes to how we got where we were as partners. Our view of it is in terms of building a successful embedded insurance strategy over a long term, a durable strategy over a long term, there’s a continuum. On one end of the continuum, our companies that want to be digital, but are not. On the other end of the continuum, you’ve got companies that are completely digital already. But the reality of it is the vast majority of companies either by preference or just where they are in their journey, are somewhere along that continuum.
Our philosophy is we can deliver the best in class technology, however you’ve got to have that human element. Regardless of where a company drops in along that continuum, you essentially catch them and help them along their digital journey, wherever that may be. Not everyone wants to be completely digital, not every business orients itself toward digital. That’s an important part of the broader embedded insurance story, is having as minimal amount of human intervention as possible, but not abandoning it. At the end of the day, and it gets into the business case question you asked Simon, which was why do people do this, there’s more than this but I think about it in three very simple buckets. The first one is, and Graeme touched on this earlier, it’s the economics. There’s direct economic benefit to doing something like this, and there’s indirect economic benefit to doing something like this. Graeme used a great example of when you sell a product alongside another product, the other product gets a lift from a conversion perspective. We all have data that proves that. The second one is just brand and product value. By having a more comprehensive offering, you create extra value and tangible value in the product you’re offering. Finally, and this really is where the technology works as magic, is creating a great experience. You could argue that that’s not terribly dissimilar from point number two, but I think it’s important that creating that beautiful experience and that easy convenient experience is really important. I think when people are putting business cases together, they think about it among other things across those three dimension.
[00:54:48] Simon: Yeah, that’s great. Graeme, your perspective.
[00:54:52] Graeme: I think it’s actually about understanding the motivations of that brand, because each vertical has quite different motivations. It might be a case of just wanting to make money, and that’s fine pretty early on. Or it might be a case of maybe they need to offer some coverage because there’s some regulations around those customers having, or their members needing some cover, or maybe they want to increase the total basket price of what they’re selling. There’s many different motivations. You’ve got to understand that to then build the business case for that partner that you’re talking to for their internal purposes.
But on top of that, and going further from what Jim was saying, you’ve got to be able to service these brands. They want to know, can you service them now, but also for their growth plans. They obviously have growth plans. It might be expanding internationally. It might be expanding to different verticals and things. From a Cover Genius’s point of view, we identified that pretty early on. We’re very big on making sure that we have that global framework to then service those big global brands. then the technology, can you service, can you do multi lines, multi products? because part of the business case, they don’t want to have to do multiple integrations with multiple contracts and things like that. You’re actually solving a real issue there. It’s just simple and they can actually go, I’ve got the provider of choice now and in the future. That’s where we come from.
[00:56:24] Simon: It’s very important because often some of the digital companies that you’re working with, they might be quite small today, but they’re growing fast, you want to latch onto that. If you are there at the beginning and you are helping them to do that, it’s a collaboration because it’s a revenue share, then you can really take off with their success as well, which is good. Of course traditional insurers say, we must make this profit margin or we’re not going to do the deal if we can’t do that. But often that can be a bit shortsighted.
We’ve got just three minutes left. I’m going to ask the audience about the barriers to this. Then I’m going to ask you for a very quick comment to all of you if I could. In the interest of time, let’s put up the final poll, which says: what are the barriers to embedded insurance? The biggest barrier, you have to just choose one if you had to, to more widespread adoption of Embedded insurance 2.0.
I’ll read it out for you and please make your vote. Is the biggest barrier awareness and understanding by brands about what is possible? Is it that business cases are quite difficult to create? Is it regulation? Is it about the incumbent insurance industry being slow to develop this market? Is it there aren’t enough insurance techs like the guys with us today, to help develop the market? Is it technology? Or is it end customer willingness to adopt?
I want you to choose one. You can do it in order, but just choose one now. In the next five seconds, we’ll show the results. Then I’ll ask the panelists to give a very brief summary of what they think the future might look like, if I can ask you to think about that. Then we’ll finish right on time. Let’s see the result now. Here we go. Quite interesting. The one that’s got the most, interestingly, is the ability of the incumbent insurance industry to develop this market. I guess the point being that the incumbents have all the power today, and we need to co-op them and enable them to, to drive this market. We probably can’t do it round them or without them. The second highest was just the awareness and understanding of this topic by leaders of brands. There doesn’t seem to any be any problem with VC investment in startups to develop the market.
I’m just going to ask it, we’ve got one minute left. If I could just ask you to have a brief statement; you could either respond to this in some way, or how you think the market is likely to develop, which will be useful for our participants and listeners today. Let’s start with you, Roberto.
[00:59:20] Roberto: I agree with the poll; I think it’s the incumbent. I think it’s the legacy carriers, because even if we have companies like Cover Genius and Bolt facilitating and enabling technology, we still rely on those carriers to update, to be sure that they’re on track to provide these services. That that’s my perspective as well.
[00:59:36] Simon: Brilliant. Sriram.
[00:59:40] Sriram: I tend to agree with the poll too, but I think I’m more in the awareness category. It is more awareness that prevented us from doing it, but once we were aware we did this case study and then it was an open and shut case for us.
[00:59:58] Simon: Brilliant, thank you. Graeme?
[01:00:00] Graeme: Well, I’ll give you final thoughts. I think what needs to evolve with the future is just making sure that that customer experience is optimized the whole way through, right from the buying and through to claims. If the claims fall down and is poor, it’ll reflect on the embedded insurance generally, because they’ll go, I bought it from this brand, I had a bad claims experience. They won’t want to buy again from that brand or perhaps even others. I think we just need to optimize the whole thing.
[01:00:28] Simon: Brilliant. Jim, final thoughts from you?
[01:00:30] Jim: I think what will be interesting to watch over the coming years, and it’s not today, it’s not next year, but it’s into the future, is this blending together and the seamlessness that’s going to occur between either a purchasing experience or an experience of a coverable type situation and the actual insurance offering itself. You see it in some of the OEMs now in the auto industry, when you buy the car the insurance can come along with it. I think we’re going to see that proliferate over the next 10 years. I don’t know exactly where it’s going to go first, what’s going to happen, but just watching the blending of the insurance into the actual daily lives of people in terms of providing that protection. Essentially they will become one and cease to become two things.
[01:01:16] Simon: Yeah, baked into the everyday lives of everyone. That’s great. Thank you, lovely sum up. There’s a few questions people have asked, I should say the report does answer many of those questions and it’s in the chat. The link to the report is in the chat if you want to have that details of that. I know that a lot of you who are here today can be startups, smaller companies. Although it’s a payable report, get in touch with me if you’d like a special often.
Finally, thank you very much to the panelists. I’ve really enjoyed it today. Thanks for your expertise and sharing that with the world. Thank you who’ve joined and listening in, and we will be in touch. Please do connect with me on LinkedIn for more access to useful information, insights, and knowledge. Thanks to everybody for their time today. It’s been a great pleasure to be with you. Thank you.
[01:02:10] Jim: Thanks Simon.
