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January 6, 2022

From the Dais Research Team

The Big Trends in 2021: Embedded Insurance, Insurtech Funding, and APIs

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Over the past year we’ve covered everything from blockchain innovations and AI to funding trends and partnership models. Looking back on the year, three trends have emerged as the most impactful: Embedded Insurance, Insurtech Funding, and APIs.

Trend 1: Embedded Insurance

Embedded Insurance is Growing up

Over the past year we’ve covered everything from blockchain innovations and AI to funding trends and partnership models. Looking back on the year, three trends emerge as the most impactful: Embedded Insurance, Insurtech Funding, and APIs.

Stellantis Plans to Use Connected Car Services to Offer Usage-Based Auto Coverage

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What: Stellantis (formerly Fiat Chrysler) has been heavily investing in its tech and connected car services, generating 400 million euros annually from this technology.  Now it’s leveraging that connection to launch usage-based auto insurance. 

Chief Software Officer Yves Bonnefont said the group would move its vehicles from its current dedicated electronic architectures to an open software platform, leveraging partnerships. “We don’t want to do everything by ourselves,” he said.

Why it matters: Embedded insurance is just getting started. This automaker integration of insurance has at least 4 major benefits for consumers that are unique to embedded insurance: 

  1. Easy Signup: Because there’s a lot of information already known by the insurer, the insurance form can be quite concise. 
  2. Ready-to-go Payment: The insurance is integrated with an already-existing subscription service, with no need to set up payment.  
  3. Ready-to-go Tech: The consumer doesn’t need to do anything to get started – no new apps, just sign up and go. 
  4. Established Trust: The consumer already knows the car company and already trusts the brand. So Stellantis can leverage that trust to simplify the buying decision.   

Read: Jeep, Dodge, Fiat Automaker Stellantis Plans Usage-Based Insurance Offering

Consumers Worldwide are Ready for Transaction-Based Embedded Insurance

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What: Embedded insurance for financial products — such as auto and home loans — represents a great opportunity for both insurers and financial companies, due to worldwide consumer demand driven by the ease of obtaining the coverage they need. For banks, neobanks, and fintechs it offers a new revenue stream, and for insurers it significantly enhances distribution. 

Why it matters: It’s clear consumers are demanding transaction-based insurance. Consumers have higher trust in platforms they already know, and therefore are open to engaging those platforms for broader offerings. In this new world, it’s natural to buy insurance from the platforms one knows best. This sentiment is driving a growing trend of acceptance that will dislodge traditional markets. The real question is how well the incumbent insurance industry can keep pace, because if we don’t, someone else will fill the gap.

Read: Global Embedded Insurance Research Report

Trend 2: Insurtech Funding

Insurtech Funding is Way up

well on pace to make insurtech funding crest 20B in 2021. This is a continuing trend in insurance, with complex tech challenges facing insurance and significant rewards available to the companies that solve them.  

Read: Insurtech funding tops $15B in 2021: Forrester | Business Insurance

Insurtech Funding Trends are Showing the Value of Partnership Models

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What: The funds pouring into the insurtech sector haven’t slowed down, but there’s a changing of the guard around the focus of insurtechs. Insurtechs are trending toward favoring a partnership model with incumbent insurers, with the trend of insurtechs seeking to disintermediate/disrupt incumbents seeing a decline in traction.   

Why it matters: Partnerships are a big opportunity for both insurers and insurtechs. But alongside insurers seeking partnerships we’re seeing a flight to quality; insurers are looking for insurtechs that have robust technical capabilities and a deep understanding of insurance. 

Read: Insurtech sector continues to draw capital, investors

Trend 3: Insurance APIs

APIs are the Invisible Hero of Digitization

APIs are key to the future of insurance. To build a better understanding of APIs we recommend this short video. APIs are starting to become a dominant technology in the insurance industry. Commonly used for quoting, 2021 saw the emergence of APIs for the entire policy lifecycle.

Insurance as an API

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What: “There are moments that transform industries. Inflection points in which the future is less certain, yet everything feels newer. Insurers are in an industry that is undergoing one of these shifts right now. As technology invades a historically slow-moving industry, new possibilities are opening up and new opportunities are being presented. I believe that insurance is going through an ‘AWS Moment’ as insurance products themselves become API-enabled.”

Read: Insurance as an API – Jason Kolb

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