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July, 08 2021

From the Dais Research Team

Embedded insurance & the underinsured problem

Almost everyone has experienced an embedded insurance sales pitch at this point — such as when buying a phone or a plane ticket. Embedded insurance is one of the fastest growing and most exciting ways the industry is tackling the underinsured problem. 

The world is dramatically underinsured. There are new perils emerging as technology creates new opportunities and new risks, and it is estimated that the world is at least one-third underinsured. Embedded insurance is one of the ways the industry can fix this problem; it’s a win-win-win for customers, brands, and insurers: customers get the insurance they need, brands get a commission, and insurers get additional premiums.

Embedded insurance takes advantage of the fact that people trust the source from which they buy products. For insurance agencies to compete, they need that same proximity with customers. The world is underinsured by more than a third, and embedded insurance will bring insurance in front of people when they need it to help close that gap. 

Industry Challenge

Customers are feeling more comfortable with embedded insurance

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What: Embedded insurance presents an attractive opportunity for companies, and a recent research report found that customers are getting more comfortable with it. 

Why it matters: As digital insurance capabilities improve, expect consumer confidence in it to continue to grow. One way insurers can benefit is by finding opportunities to partner with startups and trusted companies that are close to consumers to provide the backend of the embedded insurance. 

Read: Embedded Insurance report – PYMNT.com

Industry Challenge

Embedded insurance is a $3 trillion opportunity

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What: Embedded insurance is emerging as a new way to distribute insurance services efficiently. It doesn’t completely solve the protection gap, but it addresses many of the supply and demand issues and could act as a catalyst for wider industry business model transformation.

It is part of a broader movement toward embedded finance and goes well beyond today’s affinity and partner distribution approaches. It is enabled by APIs, modular software and artificial intelligence (AI), as well as the emergence of new innovative intermediaries.

Why it matters: Insurance companies are changing the way insurance gets distributed, and our take is that everybody who advertises at the Super Bowl will eventually sell insurance. Example: Budweiser BBQ Insurance

Read: Embedded insurance: a $3tn market opportunity, that could also help close the protection gap

Industry Challenge

Only 55% of North American households can handle the loss of the primary breadwinner's income

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What: We have a global underinsurance problem. For just life insurance, recent research shows that the gap between what is needed and what is provided is about $408 billion.

Why it matters: This is just one segment of the market, and one example of the world’s underinsurance problem and the opportunity available to those who can solve it. 

Read: Swiss Re Sees $408 Billion Mortality Protection Gap

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