The Future of Distribution: Embedded Insurance

[0:49] My name is Julio Castellón. I am responsible for the partnerships development at Cover Genius, with a special focus in Latin America.

[1:03] Cover Genius is a company that is embedded into the insurtech area, and we have been in business for about nine years now and have been one of the fastest-growing companies in this sector, especially in the Asia-Pacific region.

[1:18] The development of the internet, the growth and deployment of fast internet access networks, and the affordability to use this network, and the proliferation of intelligent devices, have brought about the emergence and growth and worldwide reach of a vast distribution channel through eCommerce and digital companies.

[1:44] Today, I’m here to speak to you about the future of distribution: embedded insurance, as we call it.

[1:51] And all of this is a result of what I just said: this incredible growth that reaches vast amounts of people all over the world.

[2:00] We have seen this growth occur in the past two decades, which has provided all the ingredients that customers today like, enjoy, and have grown accustomed to, such as convenience and trust.

[2:15] The previous presentation, made by Minas Kulisanes, was right on point in addressing a few of the interesting areas that I’m about to talk to you about when it comes to distribution, and how the digital world really is playing an important role in how customers are now being exposed to, or are interested in, evaluating and purchasing insurance.

[2:39] We all know what happened in the past almost 18 months, maybe a little bit more than that, with the pandemic, and the kind of impact that that has had in many areas of our lives.

[2:54] Some of them are very negative, but in some areas it has actually accelerated an already rapid growth in eCommerce.

[3:03] For our industry, it has brought to the forefront and top of mind of people the need to find, to evaluate, and to purchase protection products.

[3:12] All of this has made eCommerce sites such as Amazon, eBay, Skyscanner, and Booking.com, to name a few, some of which work with us, a great place to actually embed those products.

[3:34] In terms of what I just explained, what we are trying to do in this space is to enable the world’s largest digital companies to protect their global customers at the point of sale or sign-up.

[3:42] As a result of that, we understand that there is a new way in terms of purchasing insurance.

[3:57] The traditional way insurance has been purchased for many, many years has been to basically directly sell policies to customers as a second step, as a result of a particular purchase or need a customer has acted on, and then there is a protection associated with it.

[4:18] Especially in developing areas such as Latin America, that is a way business is still being conducted very heavily.

[4:26] But with the pandemic, what we see is the need for people to use what’s available to them in terms of technology, with the use of their laptops, computers at home, or their cell phones, to interact with companies that they find trustworthy and that they use on a daily basis.

[4:42] As a result of that, we are seeing a value shift in which customers are conducting their business more and more in a digital way.

[4:52] Customers are now being reached in a quicker and more convenient way through a digital site, and as a result, those who are using technology to make sure they use this channel as an important channel to distribute their products will realize amazing growth and the opportunity to catch customers now where they’re choosing to be, rather than where they used to be, maybe purchasing something at a store and then getting some sort of protection layer.

[5:34] I wanted to share with you a few data points to highlight what I have been explaining so far, that has to do with how customers perceive insurance and how customers are actually migrating to these platforms to conduct their commerce, retail needs, or to purchase different products and items.

[5:57] Customers are seeking protection products, and as you know, the pandemic has basically opened up people’s attention to the need to be protected, not just from the standpoint of health, but from the standpoint of everything around them.

[6:12] We have conducted a number of surveys around the world, one of which is going to be published tomorrow at Payments.com, that focuses on digital purchases specific to fintech.

[6:35] With it, we have seen that 70% of customers and 44% of traditional bank users are highly interested in receiving embedded insurance offers.

[6:43] This is a result of what we call context, and the convenience that we see customers continue to talk about when you present them with the opportunity to receive those offers, those insurance protection offers, while they are purchasing something online.

[7:07] Customers trust those sites. They go there to buy products, they have a relationship with those sites, and for obvious reasons it’s extremely convenient.

[7:14] Context comes into play here in a very strong way, because the customer is already predisposed to purchase a particular item, and if in the process of doing so they see a protection, warranty, or coverage offer that resonates with what they’re already doing, then they’re more likely to evaluate and purchase that particular offer.

[7:45] As a result, we see companies like Amazon, Skyscanner, airlines, and different types of e-retailers include insurance in the purchase flow, taking advantage of that.

[8:09] In addition to this, 60% of customers prefer to buy insurance from their favorite brands, and this is a very high percentage.

[8:16] It has to do again with convenience and trust, and having the ability to quickly look at a policy that makes sense to them, without having to be pressured to do anything; they can make that decision on their own.

[8:32] 48% of those consumers would make more online purchases if they were offered insurance at checkout.

[8:41] This is an important and quite high number to pay attention to, which is something a lot of eCommerce companies are taking advantage of, or are working on ways to include as part of their ancillary revenue.

[8:59] One of the most important things the digital world provides is the information that exists when customers interact with those sites.

[9:09] At this point, technology companies are using data through machine learning and data science to better understand their customers, and as a result, to provide them with the right type of insurance, at the right time and at the right price, regardless of device.

[9:31] That’s an important point to understand, because the way traditional insurance works doesn’t provide much opportunity to get a deeper understanding of customers, their needs, what they like, and actually the price they’re willing to pay for a particular insurance product.

[9:56] When you’re able to embed insurance in the purchase flow, you have an opportunity for what we call responsive insurance, where customers can react to that offer at the very same time they’re going through the process.

[10:04] What this does is bring an opportunity to include all types of different policies in that interaction with the customer, whether it’s through a website they choose to use or their own cell phone to purchase or acquire something.

[10:29] There are opportunities here to provide warranties, service guarantees, protection, travel insurance, and medical insurance when customers are interacting with a website, and even after that, opportunities around shipping, protection for the delivery of goods, and guarantees.

[11:01] Data also allows for the creation of new policies and coverages that customers are more interested in than a particular already-made policy that may or may not provide what they’re looking for.

[11:21] This kind of environment allows for trial and error, for understanding customers better, and for using technology to quickly provide the right type of product customers actually need, as well as a better understanding of the price point that will let customers purchase more.

[11:55] When it comes to bringing all of this together for these global eCommerce sites worldwide, doing business at that scale presents all kinds of challenges, because each country has its own insurance regulation, and here in the United States, each state has a different regulation, so doing business in the U.S. is basically doing business in what could be considered 50 different countries.

[12:37] For local, global, or regional companies trying to deploy products and services across many geographies, dealing with an insurance company can become extremely difficult; they’d otherwise need to sign 20, 30, 40 different contracts for the same product.

[12:51] The way we do business is that we have all the regulatory requirements covered for the customer, and the partner signs one master agreement with us and moves on.

[13:08] The other important aspect is that most of these companies are technology-based companies, so you’ve got to have the right technology to work with them seamlessly, technology that’s developer-friendly, so that when doing that API integration, there isn’t a heavy ask on the side of the partner.

[13:40] Having an API that’s simple to use, one that can deploy products at the same time in different geographies, scale products, switch products, and introduce enhancements or new products quickly across geographies, is key.

[13:56] Another important aspect is having an end-to-end system that also provides claims capabilities, which adds real value to the partner because it supports a strong customer experience.

[14:12] In a nutshell: one insurance platform, connecting customers to the world.

[14:20] This is where we believe distribution is going, as we see amazing growth catapulted by the pandemic worldwide, and this isn’t something happening in just one particular region.

[14:35] Thank you for your time. I hope I was able to add food for thought here on how technology is impacting insurance. Thank you very much.