3 Important Insurance Industry Takeaways From the 2022 PIMA-Majesco Report
For decades, insurance underwent a steady evolution process. Yet, its evolutionary growth has taken a sudden leap in the past few years. Thanks to digital transformations fueled by everything from changing consumer buying behaviors to the rise of fintech and insurtech startups, insurers must rethink not only their products, but also their distribution strategies.
In the recently released PIMA and Majesco report “Expanding Channels for Insurance, a Spectrum From Traditional to Affinity and Embedded,” some of the more valuable evolutionary changes were brought to life. Overall, the findings point to a need for constant innovation, customer-centric exchanges, and more advanced distribution ecosystems.
Below are some of the most compelling patterns from the report. Use them to help your company brainstorm untapped ways to reach customers when buyer intent is highest amid a busy, interconnected world that can get noisy — yet will always benefit from high-quality insurance options.
1. Distributed channels for insurance are expanding rapidly.
Insurance purchasing and branding used to follow mostly linear and straightforward patterns. For instance, consumers or businesses in need of property and casualty insurance would shop around, often with the help of agents.
Today, buyers are more likely to use a variety of distribution channels for insurance needs. In response, insurers are leveraging different kinds of partnerships and marketing opportunities to stay relevant, build bonds, command more of the total value proposition, and create revenue pipelines. Some insurers are even collaborating to cross-sell each other’s products, showing the depth of creativity being applied to stay in front of customers at their greatest points of need.
This web of different, albeit interconnected, distribution ecosystem channels is helping insurers move away from conventional “inside” product and process approaches. Instead, insurers are setting themselves up to be the intuitive, natural option for buyers. This shift is allowing insurance providers to focus less on direct selling methodologies.
2. Embedded insurance is taking off.
Embedded insurance has enjoyed tremendous growth and is continuing to become one of the most attractive ways for insurers to get face time with potential customers. Typically, embedded insurance falls into three categories: Soft-embedded insurance requires a customer to opt in, whereas hard-embedded insurance requires a customer to opt out. Invisible embedded insurance is part of the transaction arrangement.
One of the greatest benefits of embedded insurance is that it can be valuable across a spectrum of channels. Additionally, embedded insurance forges partnerships between insurers and third-party entities. Airbnb, Tesla, and Uber are just some of the brands doing well with embedded insurance.
Which kinds of insurance coverage plans are leading the pack with embedded insurance? According to our report, travel, specialty, tuition reimbursement, auto, pet, and inland marine insurance are among the most popular. Others, such as RV and cyber insurance, are showing momentum yet have plenty of room to expand.
3. Investments in next-gen platforms and capabilities are increasing.
The fintech and insurtech markets are heating up. Fintech’s global worth is expected to reach $332.5 billion by 2028, and insurtech to reach $114 billion by 2030. Is it any wonder, then, that more entrepreneurs and investors are putting their capital and energy into technical solutions aimed at the insurance marketplace?
As a result of the technology boom, insurers have become more open to embracing digital transformations. Although digital transformation can be challenging, it should assist insurers in exploring more distribution channels and providing exceptional customer service to buyers.
Some ways insurers are folding fintech and insurtech into their operational workflows include adopting open, API-centric, cloud-based, and AI-driven platforms. With these platforms, insurers can more efficiently serve up great experiences.
Buyers are demanding a different type of relationship with insurance providers. They want to be introduced to brands in ways that feel intuitive. They’re also very willing to “meet” new insurance carriers and options through relationships they already have, such as with associations, large retailers, fitness organizations, or auto manufacturers. This allows insurers to move away from traditional practices and explore fresh avenues to attract, sell, and retain customers.
Become a PIMA member today to gain exclusive access to reports, such as the one discussed here, and stay on top of cutting-edge trends in the insurance industry.
Published on January, 27 2023.
PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the group-sponsored benefits market.