What is embedded insurance?
Embedded insurance integrates insurance coverage into the purchase, use, or maintenance of goods and services.
Embedding insurance into the purchases offers new revenue streams for retailers amid evolving consumer expectations, as well as new growth opportunities for insurers.
Why does embedded insurance matter?
According to 2020 research by Simon Torrance “In Property & Casualty alone, Embedded Insurance could account for over $700 Billion in Gross Written Premiums by 2030, or 25% of the total market worldwide.”
Insurers must leverage digital transformation, predictive analytics, and partnerships with industries like automotive, healthcare, and financial services to remain competitive.
Addressing challenges like undifferentiated products, high costs, and legacy systems is essential for insurers to capitalize on embedded insurance's potential.
Why is embedded insurance inevitable?
The shift towards embedded insurance is driven by changing consumer expectations, technological advancements, and the industry's need to tap into new revenue streams and customer segments.
Embedded insurance fundamentally redefines the consumer experience with insurance. The model's seamless integration into products and services, offers convenience, relevance, and personalization that traditional delivery methods do not.
It aligns perfectly with broader digital transformation trends and its potential to address significant market opportunities and societal needs. And by seamlessly integrating insurance into everyday transactions, it offers a more accessible, relevant, and personalized insurance experience.
Embedded insurance can also address the growing protection gap, leverage technology to reduce distribution costs, and open new avenues for innovation in product offerings.
*2024 Polly Embedded Auto Insurance Study
What is embedded auto insurance?
Embedded auto insurance is a way to compare rates and purchase auto insurance completely digitally.
In an embedded auto insurance program, customers can input a few details on their smartphone, connect with an independent, licensed agent, and receive their coverage documents electronically all within a few short minutes.
Customers take advantage of this during the car-buying process; the coverage offered does not compete with any dealer products.
It's part of a broader trend towards embedding financial services into consumer transactions, aiming to close protection gaps and adapt to modern consumer behaviors and expectations.
Find a deeper dive here.
What are the benefits of having an embedded insurance program in a dealership?
Three reasons dealers choose to provide their customers with access to an embedded insurance platform:
Additional Income Source
Improved Customer Experience
Potential to save money and Increase Customer Budgets.
An additional income source: dealerships can earn recurring income with embedded auto insurance
Embedded auto insurance offers an additional income source by enabling dealerships to earn recurring revenue through insurance policy sales integrated into their product offerings.
All drivers need insurance, so this model not only enhances customer value but also opens new revenue channels for businesses by tapping into the insurance market, offering a win-win situation for providers and consumers alike.
Successful embedded auto insurance programs can help dealerships create a new income stream.
Some platforms offer licensed models (where a dealership must have an insurance license) while others may offer referral payment programs that don’t require dealerships to hold an insurance license. Some offer a choice of options.
Improved customer experience
Customers have come to expect a seamless buying process. In fact, our 2024 embedded auto insurance study found that four out of five of Gen Z and Millennials view insurance as an integral part of the car-buying process.
An embedded insurance platform is an advantage over traditional models as it integrates into dealership processes and tools to make it quick and easy for a customer to take care of their auto insurance needs at the same time they’re buying their car.
Thousands of dealerships across the nation, including an ever-increasing number of top-20 groups, provide their customers with access to an embedded auto insurance program. Learn more.
Embedded auto insurance can increase customer budgets
When customers can easily access multiple, competing insurance quotes, there is a greater chance they’ll be able to find savings than if they simply call one insurance company or update their existing policy to add their new car. And if they do, that savings means they’ll have more room in their budget and more purchasing power to put toward their car and dealership protection products.
This is especially valuable in an economic environment where customers are extremely price sensitive.
When a deal is on the line and $50 a month payment makes the difference between a car sale and a customer walking out the door, savings on insurance premiums might save that sale. In fact, our 2023 data shows that car buyers who saved on insurance in the dealership, saved an average of $75 per month.
**National average annual savings of $906 by new customers surveyed who saved with Polly in 2023. Actual savings may vary.
How do most dealerships use an embedded insurance program?
100% of car buyers need insurance. To get the maximum value out of embedded auto insurance program, dealers who offer every single interested customer the opportunity to see if they can save some money on their insurance will get the most out of an embedded auto insurance program.
Embedded insurance can be introduced at any point in the customer journey, so it’s important to find a solution that has the integrations you’re seeking.
The most common time for a customer to shop insurance is after the customer has agreed to a car, but before they enter the F&I office.
If your embedded insurance solution has a menu integration, this allows an F&I Manager to see if a customer has saved money, and if so, what those savings are right in their F&I menu software. That allows them to further tailor the products they suggest to the customer based on the customer’s increased budget.
How much does it cost?
This may vary by the partner and program, but there are solutions that cost dealers absolutely nothing.
Check out Polly's embedded insurance platform
Schedule a demo with Polly to learn more about embedded auto insurance and its place in the dealership.
