Embedded Insurance – A Game Changer for Online Retailers

Meitav Harpaz, co-founder and CEO of Pattern, explains how embedded insurance is transforming the online purchasing experience for customers and retailers alike.


It’s not new information that the Coronavirus pandemic has fundamentally changed consumer behavior. The pandemic acted as a catalyst, accelerating technological advances and creating new ways for businesses to interact with their customers. Now, following more than two years of upheaval, we know for a fact that:

  • All consumers, including those who were previously skeptical, have become more comfortable shopping online
  • eCommerce platforms, such as Shopify and others, enable every business to set up an online store quickly and easily
  • Consumers want relevant offers presented to them where they shop
  • There is more consumer resistance to generic ad-tech offers
  • Consumers expect higher levels of service, certainty and flexibility from the businesses they buy from.

Consumers want to know that they can make changes to their orders, return the goods or cancel them altogether before they make a purchase. The challenge for many businesses is convincing customers that they are in control, giving them the reassurance to complete their purchases. This is where embedded insurance comes in.

The embedded insurance model allows insurance products to meet consumers when and where it makes the most sense to them, delivering highly personalized protections relevant to their needs. It transforms the traditional insurance model, transitioning it from a 3rd party (insurer) selling model, to a 1st party (consumer) buying from a 2nd party (business) that’s providing the cover. It’s implications for businesses and consumers are vast, as this example shows:

A family is researching where to go on holiday this year via an online travel agent. It’s been two years since they’ve been able to get away so they’re planning to go to a beach resort in the Maldives. However, they will not click ‘book’ until they are sure that there is little-to-no risk to their travel plans. Pre-pandemic, they might have worried about having good weather or hoped that their luggage wouldn’t get lost. Now, they are more likely to be concerned about having medical cover, real-time alerts about local infection rates and the flexibility to cancel without being out of pocket if something should go wrong. Embedding those insurance covers into the purchasing journey provides reassurance to the family that they are in control, allowing them to add-on the protections they want and pushing them over the purchasing line. It’s a win-win for customers and retailers alike.



Embedding Insurance builds consumer trust


It’s the retailers selling the goods who truly understand their customers and their purchasing behavior. Overseeing the customer journey provides them with a full picture of what products are in demand, the conversion rates and any areas of concern. But, each consumer’s idea of risk is different. Embedding insurance into the online buying journey creates reassurance, alleviating customer concerns and building their trust with the business. Using AI and machine learning allows for additional value-adding protections to be tailored to the needs of each individual. This in turn creates a seamless purchasing experience as the customer has already entered the relevant details so is presented with a range of covers personalized to them, in real-time.

Including embedded insurance into the service or product offering gives today’s customers the kind of digital, streamlined experience which they not only prefer, but expect. Personalization and convenience can help further boost customer engagement and loyalty: protection policies can be bought as a subscription service or set to auto-renew to ensure customers keep coming back. Embedding insurance is a surefire way to offer confidence to customers, encouraging them to return for products and services and helping retailers navigate their way through these undoubtedly turbulent times.