Embedded Insurance: Opportunity Exists for Independent Agents as Consumers Drive Industry Change

August 11, 2022

A hardened insurance market, digital competition and changing consumer behavior has disrupted the industry over the last two years. However, this isn’t the first time the independent agent has heard they will soon be wiped out, like dinosaurs. Direct writers, the internet, insurtech (and now embedded insurance) have all threatened but still the independent agent remains. How? Evolving. All things that were once threats (the internet) became opportunities for the agent who evolved and adapted to change.

The emergence of a digital economy and changing consumer demographics has affected virtually all aspects of life today. People are accustomed to online, rapid and streamlined purchasing experiences. As expected, the insurance industry is working to adapt to these changing needs. Enter embedded insurance.

The concept of embedded insurance is not new. Anyone who purchased AppleCare when buying the latest iPhone or opted for additional rental car coverage knows consumers have always had access, however limited, to embedded insurance products.

What’s changing is the number of insurers working with more and more company partners — online and off — to add insurance products within the sales ecosystem. This can include everything from extended warranties, life and health or small business, homeowners and even auto insurance, among other products.

The Risk to Independent Agents
As seen earlier this year when Root Insurance created an embedded insurance partnership with online car dealer Carvana, embedded insurance can, in some ways, cut independent agents out of the process. In this case, agents were cut from the point of sale of a product. As consumers gravitate toward this purchasing process, the risk to independent agents who fail to take action is real.

Meeting consumers where they live with meaningful embedded insurance products provides a frictionless experience, convenience and often a realized cost savings if the insurer scales across a large consumer-facing company. More importantly, this type of coverage addresses a well-known insurance coverage gap, protecting consumers from uninsured losses and creates new revenue and reduced distribution costs.

Embedded insurance may prove to be of benefit to the independent agent by providing a more efficient way to generate leads. This B2B2C partnership model of lead generation leaves an agent to focus on what many do best: advising their clients and building relationships. It also opens the independent agent to consumers that would not normally engage with an agent—digital natives, defined as a person who grew up during the information age and to whom technology is innate.

Developing relationships with other outlets is important to making embedded insurance work. These can include outlets that cater to commercial insureds, like electronic franchise locations or big-box stores, or personal insureds’ purchasing destinations, like residential mortgage brokers or the local auto dealership. These new relationships can assist with lead generation as well, creating a go-to-resource relationship that benefits all parties.

Agents will need to continue to demonstrate their value to the consumer in this changing landscape. Engaging with a client when and how the client wants is essential as consumers will continue to seek the expertise and insight only an experienced insurance agent can provide. This means a modern website, a mobile app, 24/7/365-customer service, easy to use/submit online forms and ease of communication.

A Digital Future
As consumers drive the change towards a digital economy, meeting them where they choose to spend their time and money is key for the independent insurance agent looking to secure their future. Learning about embedded insurance and the carriers that provide such offerings could play a critical role. Also, critical as always, is the independent agent’s ability to keep their policyholders informed of the products and services they provide, and to make sure their policyholders come to them first as a trusted advisor before making any insurance decision.