Integrated digital insurance, a 30 billion euro market by 2030 – Corriere.it

The era of “all you can ensure” has inexorably begun. No longer just home, car and life insurance: now insurance also covers bicycles, pets, consumer electronics, musical instruments and much more. the new era of the insurance sector in which it is possible to protect everything that has sentimental value. In recent years, the concept of risk has taken on a new meaning: the pandemic, the global economic situation and widespread uncertainty about the future have prompted the insurance sector to find new ways to reach the end customer and give life to the embedded insurance market or integrated insurance. In practice, with a single click, the consumer will be able to buy insurance coverage as an integrated product in the purchase of another good or service. All this made possible by the digital transformation that has allowed the streamlining of many procedures within the insurance services sector: artificial intelligence, the circulation of APIs, big data and cloud platforms have brought economic and efficiency benefits for everyone players who want to scale the embedded insurance market which is currently worth 1,800 billion dollars globally with a potential to grow by 60% in a few years according to what reported by the Open & Embedded Insurance Observatory Report 2022.

The most requested services

Within this market, the most requested services are “bancassurance” services, i.e. the integration between banking and insurance activities, which cover 70% of the market, followed by personal protection products with 19%. affinity insurance with 9% and closes the travel sector with less than 1%. The market also has excellent growth potential in Italy: the Italian Insurtech Association has estimated that the embedded insurance market will grow up to 20% of the value of the total insurance sector over the next 10 years. In detail, this is a turnover that could be worth almost 30 billion euros by 2030, bearing in mind that for KPMG the Italian insurance market, with reference only to companies with registered offices in Italy, is worth 144 billion euros end of 2021. “The insurance sector is set to change radically in a few years. In the past, the companies aimed to build an exclusive relationship with the end customer within which to carry out the sale of the insurance, while now, thanks to embedded insurance, insurance is just a click away to integrate a purchase even from companies operating in a sector other than insurance. Let’s think, for example, of the purchase of an insurance policy integrated with a trip or a ski pass. For this reason, the need is emerging for large companies to invest in multifunctional platforms to allow the distribution of insurance products that can be integrated according to the needs of end users. It is evident that considerable market opportunities arise for the new innovative technological players which have doubled over the last year”, explains Luigi Alicante, Insurance Senior Account of Mia-Platform, a 100% Italian tech company specialized in the construction of digital applications and platforms cloud-native.

Reduced costs and new customer engagement methods

This new method of purchasing policies breaks down numerous barriers for insurance companies: distribution costs are reduced given that it is to all intents and purposes a purchase integrated into a vendor’s or third-party software, a new method of The engagement with the customer who is offered an insurance offer in target with his needs at the most appropriate moment and allows to expand the sale of these products to a part of the market that previously did not have direct access to these policies. This innovative sales method has been very well received by the market, especially by younger generations such as Millennials and Gen Z: from the research Embedded insurance: a proven consumer desire and business growth enabler (carried out at the end of 2021 by Companjon Research Center and Dynata on a panel of over 5,000 people in Europe) found that 69% and 68% respectively of these target customers would consider purchasing an integrated insurance policy compared to 58% of Boomers. Leading the way among the reasons that push young people to choose this new type of insurance, tied with 20% is the speed in reporting claims that can be sent digitally and the compensation that will be paid in a short time; followed by ease of purchase (17%) and the fact that even less traditional risks can be covered with these policies (still with 17%).

Italy is the first nation to request integrated insurance

Going into the details of the study, it can be seen that 46% of Italians (first nation in Europe ahead of the French with 38% and the Spanish with 36%) are willing to pay up to 15% more for integrated insurance against to have a high quality in the service offered. “At present there is room to enhance the digital capabilities of traditional insurance players and the expectations of the digital partners through which these new embedded policies are sold – analyzes Luigi Alicante – This represents an enormous business opportunity for all startups in the world insurtech ready to become protagonists of this highly scalable market: thanks to innovative technologies they will be able to facilitate the integration of the insurance offer and automate processes to offer a much more fluid and agile experience that consumers not only prefer but expect . The challenge that awaits these new realities will concern compliance and regulation, above all from the point of view of data compliance, an always very delicate issue for the insurance sector”. The OTT (Over The Top) players are dictating the new rules: Tesla, Amazon, AirBnB were the first global companies that moved to anticipate the embedded insurance market by enabling their offer with new types of insurance policies.

The 5 trends of 2023

So let’s see what the 5 trends of this sector will be in 2023 according to an analysis conducted by Espresso Communication for Mia-Platform on the main international newspapers:
OMNI & INSTANT INSURANCE – Thanks to embedded insurance technologies, consumers are now able to manage risk directly when purchasing goods or services. From protection for a flight delay, to a new household appliance or a pet: everything can be insured in just a few clicks and at a very low cost.
PLATFORM ORCHESTRATOR – In the new integrated insurance panorama there will no longer be room for the “first violins” but it will be necessary to work like an orchestra. Insurance companies will select the best partners (startups, VCs, cloud-based platforms, accelerators, etc.) to gain the maximum competitive advantage in this new market and meet customers’ needs.
HUMAN CENTERED EXPERIENCE – The large amount of data and analytics available will allow more and more customization of the offer to customers. Living in a digital world means being accustomed to service standards that are different from those to which the insurance sector is accustomed with immediate response times and tailor-made policies in the name of maximum transparency.
PEOPLE & TECH ALIGNMENT – The insurance sector is facing a significant technological change with the aim of streamlining processes and conquering new markets. This involves the need/ability to leverage a winning mix of human and technological resources as well as a cultural change that many companies are working on internally.
CLIMATE CHANGE INSURANCE – The growing frequency of extreme weather events has brought attention to the insurance risk associated with climate change. The trend for the future premier is those players who will be able to offer policies that can guarantee a positive environmental impact.