Panelists at the Insuretech Connect conference at Mandalay Bay in Las Vegas this month claimed embedded insurance is the hottest topic in the insurance industry right now.
While opinions may vary, it was almost certainly the hottest topic at the conference this year. Just don’t tell Keith Moore, co-founder of the new InsurTech Embedded Insurance, which Carrier Management previously reported has a trademark on that term. (Moore, who also attended Insuretech Connect this year, has said the trademark is actually just for marketing purposes, and they won’t be keeping anyone else from using it. “We’re proud of [the trademark], but we’re not going to be jerks about it,” he joked.)
In fact, one Wednesday Insuretech Connect breakout session on embedded insurance partnerships saw attendees spilling out the door into the hallway in order to hear what panelists from Cover Genius, Turtlemint, bolt, Mutual of Omaha and Everest Re had to say, and during a panel of InsurTech CEOs earlier that morning, bolttech CEO Rob Schimek said if attendees at an Insuretech event don’t hear the words “embedded insurance,” then they’re not really listening.
“It’s the hottest topic out there right now,” he said.
Embedded insurance is an emerging area of the insurance industry in which insurance is wrapped into the purchase of a product, such as a home or a car, bringing coverage directly to consumers at the point of sale. For Schimek, the topic calls to mind images of a kids soccer game.
“The ball goes to the left, and [all of the kids] run to the left, and then the ball goes to the right, and everyone runs to the right,” he said. “I think sometimes when people think about embedded insurance, they’re still playing that kids soccer game. But we think that the embedded insurance story is much deeper than this.”
Indeed, Schimek likes to think of embedded insurance instead as a story with chapters. He said most players in the insurance industry are still reading chapter one right now.
“It’s where the soccer ball is today, and everyone has chased it,” he said. “That’s this concept of a very simple product and a very affordable price, and that’s provided a very seamless customer journey.”
He gave familiar examples of embedded insurance that have been around for a while, such as clicking to buy travel insurance when booking a flight or purchasing cellphone insurance with a new mobile phone.
“We believe that this is the beginning of the journey, and if everyone thinks only about this single product, single provider, single simple user journey as being the full definition of embedded insurance, I think you’re really missing a big part of what embedded insurance will really be,” he said.
Schimek added that moving past what he called “simple impulse culture purchases”—equating these to buying a pack of chewing gum in the checkout line at the supermarket—and toward higher-ticket items, such as protecting a home with homeowners insurance, means embracing chapter two of the embedded insurance story. Hippo CEO Rick McCathron agreed.
“I think it’s the future of insurance,” he said, “where you’re buying a home, and they say, ‘You know you need insurance. It’s a requirement. The quote’s already there. You don’t have to answer a single question.’ You say ‘yes,’ and you’re done.”
In an effort to broaden its reach in embedded insurance, Hippo recently announced during its investor day earlier in the month that half of its new policies will come from some form of an embedded insurance product through partnerships, whether it’s with a home builder, loan originator, home service or title company, among others.
“It’s important to meet the customers where the customer wants to be met, and that’s where partnerships, I think, are super important,” McCathron said. “Long gone are the days where companies can tell customers how they should be doing business with us. Amazon didn’t immediately try to figure out how they were going to monetize the scenario, but they said, ‘What do customers want? How do we engage?'”
However, building the future of any industry—including insurance—is a challenge, said Schimek.
“You’re going to have to have the ability to withstand a lot of uncertainty,” he said. “You’re employing yourself, right? For anyone who knows me, I spent 12 years at a 100-year-old insurance company, and they have challenges too. So, whether you are an InsurTech or whether you’re an established player, it is really, really tough. But this is an industry as a whole that is so important to society. We are working really hard to make sure that we can help people find more ways to protect the things that they need in their life.”
Schimek said he believes the winners in the space will have a good business model with stats to demonstrate financial discipline and sustainable high growth, as well as a clear path to profitability.
“Anyone who thinks that book ends [at chapter two], I think, isn’t being visionary enough. Chapter three is even cooler. The chapter three story focuses on innovation and the whole idea of bringing service and capabilities that go well beyond choice.”
— Rob Schimek
“The companies that are able to do those things and do them well, they are positively going to succeed,” he said.
McCathron added that beyond business models, it’s important for InsurTechs to stick together despite their differences.
“Every InsurTech company is different, so comparing Hippo to Corvus or Next or bolt is just a bad comparison because they’re different companies,” he said. “We have almost nothing in common with Root or Lemonade, surprisingly, and everybody thinks that we’re all the same companies. We’re not. It’s the uniqueness of all that we’re doing to modernize the insurance industry, and I think we need to do a better job of explaining to the street. We all as insurance tech really do need to stick together, because as long as we’re all painted by the same broad brush, if one fails, we all fail in the minds of the investors.”
All of this, Schimek said, will go a long way in moving the insurance industry toward chapter three of embedded insurance innovation.
“Anyone who thinks that book ends [at chapter two], I think, isn’t being visionary enough. Chapter three is even cooler,” he said. “The chapter three story focuses on innovation and the whole idea of bringing service and capabilities that go well beyond choice.”
He gave the example of bringing Internet of Things detection sensors into a home to give consumers not only a choice in homeowners policies but also to help avoid loss in the first place.
“Long gone are the days where companies can tell customers how they should be doing business with us. Amazon didn’t immediately try to figure out how they were going to monetize the scenario, but they said, ‘What do customers want? How do we engage?”
“Using that data, using that technology, you can actually have first responders come in and tell you they see that you have a problem before that problem becomes a loss on the books of the insurance company, and before that problem becomes a loss to the insured,” he said.
With this in mind, he encouraged all of those in the InsurTech community to embrace embedded insurance and look beyond chapter one or even chapter two as they seek to innovate toward the future of insurance, which happened to be the theme of this year’s ITC conference.
“The focus shouldn’t be just around chasing chapter one. Chapter one’s important. Chapter two is really cool,” he said. “Chapter three is going be the real game, and it’s going be a lot of fun. So, watch this evolve over the course of the next few years, and if you keep coming to this event, I think next year we’ll be talking much more about chapter three.”
Correction: A previous version of this story incorrectly attributed some quotes to Hippo CEO Rick McCathron. The story has been updated to properly attribute these quotes to bolttech CEO Rob Schimek.