Kiss and sell

Kissandselland

Simon Bentholm, Chief Customer Officer of Penni.io, explains why digital partnerships are key to the new insurance distribution model

“We still hear, now and then, insurance companies saying ‘are we sure that consumers are interested in taking this insurance digitally?’,” says Simon Bentholm, chief customer officer of insurtech Penni.io.

It must be difficult to know how to respond to that, given evidence of consumer demand for digital financial make poor solutions which the customer does not want.”

He believes that, as the consumer knowledge gap in technology dissolves, and more services are enabled online, digital selling is an imperative. And, according to Penni.io’s most recent Embedded Insurance Index, customers don’t just want to purchase products digitally – they don’t even want to have to go looking for them.

Embedded insurance has been a frenzied topic of debate among insurers for a while now, but consumers are perhaps better acquainted with it than they’re given credit for. After all, from British Airways to Ryanair, the travel industry has been offering insurance,

services has been staring the industry in the face for a while now. According to findings from the EY Global Insurance Consumer Survey, while only 28 per cent of consumers in Europe favoured digital contact with their agents before 2020, that increased to 43 per cent during the pandemic. And, most telling perhaps – insurance being, historically, a product sought by an older demographic – 65 per cent of 45- to 64-year-olds said they would now happily use an app to manage their policy.

“We have an industry that for 20 years has been enacting a self-fulfilling prophecy, thinking that the end user does not want to interact with them digitally,” says Bentholm. “They then

bundled into flights, since long before the pandemic. So, fully integrating insurance into the user experience is not as big a behavioural leap for them as it is, perhaps, for the industry.

Simply put, embedding products is a tool that insurers can use to directly hack into someone else’s established customer base, from car buyers to jet-setters. In the automotive sector, manufacturers are already teaming up with insurers to provide usage-based driver cover, making use of onboard connected vehicle technology; and you can now find end-to-end product warranties embedded with purchases of general consumer goods over e-commerce platforms such as Amazon. It is a consequential innovation for the digital consumer’s needs.

But, the challenge for carriers and brokers is how to develop this new sales model while not surrendering their relationship with the insured at point-of- sale – the kiss and dismiss scenario.

“If you’re only looking at the point-of- sale, you are only looking at a transaction between a partner, or embedder, and an end-customer, where you only have one shot at selling the insurance,” says Bentholm. “Rather, it’s about looking at the extended value chain of the product and saying ‘what are the digital touchpoints around that?’.”

Penni.io’s embedded distribution solution for insurers helps to address that issue by putting insurance clients in control of the way their services are integrated into other providers’ channels, and in such a way that they don’t lose their identity and can capture the client for the longer term. The data-backed Penni Connect platform uses customisable widgets and built-in plugs; its API-driven and Cloud-native architecture creating an ecosystem for personalised insurance integration, designed to future-proof clients against what might otherwise be one of the perils of open finance – creeping disintermediation – while at the same time maximising the opportunities.

“With embedded insurance, presentation and customer needs are key; if they cannot buy insurance tactfully and digitally, they are less likely to engage with the product at all,” says Bentholm.

Understanding why consumers decline insurance is as important as gathering data on those who select it, and the Penni Connect Studio tool does both. Insurance is all about context, says Bentholm. “So, it’s about what it’s connected to, where it’s placed, what it’s embedded with. Banks already know that it is hard to sell a bank loan. It’s a lot easier for the one selling the car to sell the car loan because nobody wants a loan, but they want the car,” he adds.

THE NUMBERS GAME

In other words, insurers can expand their reach by surfacing a whole new segment of customers who are sensitised to protecting their investment at key moments in someone else’s customer experience journey, then replicating that with multiple distribution partners without changing the IT or the underwriting process – and at a lower cost of customer acquisition. Partnerships with third-party providers like Pennio.io are becoming increasingly attractive in the insurance industry. In February this year, US insurer Travelers While, according to last year’s acquired the assets of the insurtech and Accenture Insurance Consumer Study, embedded insurance provider Trōv; the the traditional insurance agent will following month, another embedder, always have a higher conversion rate INSHUR, expanded its partnership with because customers are more likely to buy Cloud-native CMS provider Five Sigma to a complex product from a trusted advisor, handle its claims operations. While all the ‘that single agent is extremely expensive indications are that the industry thrives and not scalable’, observes Bentholm. and innovates when such partnerships are “With embedded insurance, you can hit formed, Penni.io’s report also revealed millions of consumers a day for the same that the success of a partnership with cost of one agent, and, while you may an embedder is heavily determined by have a lower conversion the input of the insurer. rate, the numbers Insurance companies are higher.” cannot enter partnerships There’s good evidence with the burden of that these customers antiquated legacy systems are highly sensitised holding everyone back. to the product, too. A “Insurers must go into 2021 report, The Global it with a digital mindset, Risk Landscape After one where the top found COVID-19: What Role For numbers are most Insurance?, published by important; maintaining the Geneva Association, found that 40 partnerships on a scale that is one-to-many per cent of retail customers considered rather than one-to-one,” says Bentholm. life and health insurance more important That embedded insurance is becoming now, while 50 per cent of business owners increasingly popular with retail customers place higher value on having business is beyond doubt. The 2021 Embedded interruption cover, group life and health Insurance Report from Cover Genius, and liability insurance. Meanwhile, a found that, globally, 70 per cent of 600 per cent post-COVID increase in bank customers are interested in cyberattacks has sparked a surge in the bank-embedded insurance, based on cyberinsurance market, from $5.25billion transactional data. With the market in 2019 to $11.09billion in 2022, projected to be worth $722billion by according to GlobalData. 2030, it’s is likely to become a standard

Bentholm points out: “Embedded touchpoint for all online buyers’ journeys. insurance is the only distribution The end-goal is not to make people methodology where the costs are hyper-aware of insurance with every diminishing for the next policy… the only transaction, as that would do more to distribution methodology where your irritate than reassure them, but to be impact on the result will be more than visible to people where there is a just your top line because you’re looking perception of risk, says Bentholm. at cutting five, 10, and in some of our “It’s about saying ‘here, I give you cases, 15 per cent off the cost of sale.” peace of mind. Go live your life’.”

It’s the only distribution methodology we have where the costs are diminishing for the next policy