Chubb Report Gauges the Embedded Insurance Opportunity

Results in emerging markets prefigure a significant growth opportunity for banks and insurers in North America, with executives globally expecting to generate more than 10% of their revenue through embedded products.

(Image source: Chubb.)

Embedded insurance has been gaining steam as a potential avenue of growth, and a new report from Chubb (Warren, N.J.), the world’s largest publicly traded property/casualty insurer, validates global consumer demand for such products and quantifies some of the threats and opportunities insurers face. Insurers and banks are ramping up to meet rising consumer demand for insurance bought through the digital channel, a trend led by emerging markets in Latin America and Asia, but also gaining steam in North America and elsewhere.

Among the findings of the report, “Banks and the Digital Wallet Race: The Embedded Insurance Strategy,” are that 56 percent of consumers are interested in purchasing more insurance, and 81 percent of financial executives that make decisions about insurance products believe that embedded insurance will change from a “nice to have” to a “must have.” The study found that 56 percent of those executives expect to generate more than 10 percent of their revenue from embedded insurance within three years. Today, just one in five firms reports that level of revenue.

New Avenues for Growth

Sean Ringsted, Chief Digital Business Officer, Chubb.

“The race to win a greater share of consumer digital wallets is intensifying–banks and fintechs are advancing with expanded offerings of insurance products to deepen customer relationships, drive growth and narrow the protection gaps of their customers,” comments Sean Ringsted, Chief Digital Business Officer, Chubb. “Digitized insurance is already widely popular with global consumers, and financial service providers are building trust and loyalty while unlocking new avenues for growth by offering customers simple, relevant and affordable insurance protection options embedded in their digital customer journey. As highlighted in the report, this is a global phenomenon, with companies in Asia and Latin America investing heavily in these digital insurance capabilities. Banks and fintechs in North America are in the race too, but not yet at the pace of their counterparts in other regions.”

Embedding insurance in someone else’s transaction flow can create endless opportunities for large-scale insurers, like Chubb, according to Amy McNeece, SVP, Digital Consumer Partnerships, Chubb. And the consumer need is there, she stresses:

“Over half of the consumers included in our recent survey told us that they are interested in purchasing more insurance and 46 percent believe that digital is the obvious way to buy it,” McNeece comments. “Embedded insurance offers a competitive advantage in the B2B2C environment and is helping to expand products and services into emerging ecosystems—creating an opportunity for insurance to exist in consumer’s day to day lives in a new, modular way.”

Amy McNeece, SVP, Digital Consumer Partnerships, Chubb.

To the extent the embedded insurance trend represents a competition for wallet share, that contest is between banks and other banks, insurers and other insurers, McNeece suggests. She sees the embedded opportunity as a manifestation of the “bancassurance” phenomenon, representing a fruitful partnership relationship between banks and insurance carriers.

“We see tremendous opportunity in this channel, and according to our survey findings, it’s yielding strong results for financial organizations,” McNeece says. “In a hyper-competitive market, building trust, increasing customer satisfaction, and attracting new customers are key components to success, and embedded insurance can help banks and fintechs get there.”

The growth opportunity is impossible to ignore. The study found that 56 percent of executives responsible for decisions about insurance expect to generate more than 10 percent of their revenue from embedded insurance within three years. Today, just one in five firms reports that level of revenue.

“From my perspective, choosing an experienced and digitally savvy insurance carrier who will bring collaboration and technology, product depth, and geographic reach to the table are key ingredients for success,” McNeece insists.

Incumbents’ Trust Advantage

Established banks and insurers have a unique opportunity to leverage these trends, according to the study, especially in developed markets. Chubb found that nearly 60 percent of consumers expressed high levels of trust purchasing insurance from established banks, and 58 percent indicated the same for established insurers. This compares with 45 percent expressing high levels of trust in insurance purchases with digital-only insurers and 31 percent with digital-only banks. Fifty-five percent of financial executives agree that established insurers have an edge over digitally native InsurTechs because they enjoy consumers’ trust.

Gabriel Lázaro, Head of Digital, Chubb Overseas General Insurance.

“Markets in Asia and Latin America already demonstrate the massive growth opportunity for banks and fintechs with embedded insurance,” comments Gabriel Lázaro, Head of Digital, Chubb Overseas General Insurance. “Consumers view legacy banks and insurers as the benchmark in this space, and as a result, we have seen our network of digital distribution partners around the world continue to scale. Global consumer demand is massive for embedded insurance, and we believe the next stage of expansion will come in developed regions and from established financial institutions.”

Making the Most of the Embedded Insurance Opportunity

To make the most of the embedded insurance market opportunity, Chubb’s McNeece says that carriers must adopt a customer-obsessed, data-driven approach to digital insurance B2B2C partnerships.

“Successfully embedding insurance into a customer journey at the right time and with the right product requires a deep understanding of customer needs, which vary from partner to partner, industry to industry, and across geographies,” McNeece elaborates. “Additionally, recognizing the need for an omni-channel, ‘phygital’ approach to the customer experience is important—the human touch remains a critical element of the insurance journey, and it can’t be one-size-fits-all.”

It’s essential to take a customer-centric approach, from purchase through to claim resolution, McNeece adds. “At Chubb, we collaborate with our partners to get a deep understanding of their customer base, look for ways to minimize or solve a customer pain point, tailor the insurance product, and present it when it’s contextually relevant,” she explains. “By making the purchase process and claims experience easy and frictionless, companies drive increased engagement, loyalty and trust.”

Opportunity Knocks

Insurers should not delay their response to the embedded insurance trend, McNeece advises. “Embedded insurance has the potential to transform the insurance distribution model and Chubb is an incumbent insurer demonstrating it can be monetized at scale—through the use of our innovative digital integration platform, Chubb Studio, which powers our partnerships,” she comments. “At Chubb, we started on the embedded insurance journey several years ago and are now rapidly expanding our footprint in a meaningful way across geographies and verticals—with flexible products, services and experiences embedded into the digital ecosystems of our partners. North America, in particular is poised for growth.”

The Future of Embedded Insurance: Revolutionizing the Future of Coverage

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at or (503) 936-2803.

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