When conversing with platforms who are considering embedding insurance, one hesitation we hear from time to time is: “My customers aren’t asking for this.” The misconception is that a supposed lack of demand equals a lack of value. We’re here to explain why this line of thinking misses the real question: “Are we helping customers solve a problem they already have but don’t know how to solve?”
Embedded Insurance Addresses a Latent Need
Embedding insurance within software platforms addresses a latent need, even when the platform isn’t seeing users actively search for coverage. Additionally, embedded coverage provides value for the software’s direct users that the platforms may not even be aware of. Here’s how.Your end users are already taking on risk.
When completing an online purchase, signing up for a membership, booking a venue, or traveling, consumers take on risk. The concert they bought tickets for could be cancelled, accidental damage could happen during a wedding reception, the weather could ruin a trip planned months in advance. Financial risk exists around every corner, which means there are opportunities for coverage.
If you’re not offering coverage for end users, the risk falls squarely on them. With embedded insurance, it doesn’t have to.
They don’t know a better option exists.
Consumers simply accept that there is risk involved with these kinds of transactions, not knowing there’s a better solution. They’re used to accepting that if circumstances don’t go as planned, they’ll just have to eat the financial loss. That, or they bank on strict refund policies that might not apply to their situation.
If customers aren’t willing to accept the risk, or they’re required to have insurance for certain situations, they’re forced to go out and find insurance coverage for themselves. Many end users are unaware of the wide variety of embedded, in-platform insurance options that exist: they don’t know it’s something they can ask for.
- Cancellation & postponement
- Illness & emergency
- Severe weather
You Can’t Measure Demand without Creating Awareness
According to a retail product insurance study, 60.1% of consumers would add insurance to their online purchases if it was offered at checkout. When insurance coverage is presented within the context of their purchase, consumers see the value and are likely to convert.
Additionally, simplicity plays a major role in conversion. If an offer is not only relevant to their needs but simple to add on, consumers will purchase the policy. In fact, conversion rates for Embedded insurance are 10x higher than those of traditional insurance models.
The Proof: What Our Partners Have Experienced
Embedded insurance provides value for more than just the end user. Platforms’ direct customers across a range of industries have experienced compounding benefits from embedding insurance with Vertical Insure, including:%
decrease in refunds and chargebacks
%
increase in revenue per transaction
%