As our world and economy becomes rapidly digitized, customers increasingly expect businesses to create experiences that match their level of engagement on the platforms they prefer to use. Keeping up with consumer trends now means speaking to them in their preferred way and breakthrough research reports on Embedded Insurance by Cover Genius focusing on the US, in addition to 13 other countries, shines a light on how banks, neobanks and fintechs will play a role in making insurance distribution more convenient and satisfying for their customers. 

Findings from the US report match similar insights from comparative studies for Canada, Brazil, UK, Germany, Spain, Italy, France, Australia, Singapore, India, Thailand, Korea and Indonesia.

The US report, titled “Embedded Insurance – Leveraging Transaction Data To Expand Coverage In A Digital-First Market” was commissioned by Cover Genius and conducted by PYMNTS.com on a census-balanced sample of 3,551 American consumers who bank with either a conventional or digital-only bank. It is the first of its kind to examine consumer interest in embedded insurance for the financial services industry and it follows last year’s Embedded Insurance in Retail Report.

The US study of embedded insurance for financial institutions examined 13 types of life events or activities that lead to insurance consideration, such as child birth, purchases of car, property, pets and expensive items, contracting for a wage and becoming a lessee, homeowner or landlord, and proposed the following:

Suppose your bank, with your permission, monitored your transactions and offered a prompt for purchasing protection products based on your purchase history inside of your banking app. Please indicate how interested you would be in allowing them to make these offers.

The research revealed that 45% of bank customers are highly interested in at least one insurance offer relevant to their purchases and events. Digital bank customers top the charts with 70% highly interested compared to 44% for conventional bank customers. Interest varies by product however the most significant interest is for homeowners, auto, renters and pet insurance plus extended warranties.

 Embedded insurance is an alternative to the current paradigm where insurance is taken as a “second step” after the underlying asset or event is confirmed. In the study, consumers who recently made major purchases or experienced life-changing events showed a strong preference for transaction-based offers, with twice as many “highly” interested compared to those who haven’t (56% vs 27%). Rates are similar (51%) for those who purchased from “traditional” insurance companies (carriers or brokers/agents) in the last 12 months, which may portend an embedded insurance future that helps to resolve chronic underinsurance, a structural problem derived in part from the “second step” distribution method.

When asked why they’re interested in receiving transaction-based offers, the response was unequivocal: “Convenience” was marked as the primary reason by 49% of customers, followed by “trust” (44%). By conveniently tying protection offers directly within the sale or signup of any underlying item or activity, seamlessness looks a lot less of a pipedream for companies of every stripe, from retail, property, B2B Software and payments to auto, mobility and the share economy, plus sectors where embedded insurance has played a more prominent role such as travel, deliveries and events.

This new study bolsters the findings that there is considerable consumer appetite for tailored protection offers made at the right time and place. A previous study by PYMNTS.com showed that 60% of consumers prefer to buy protection from their favorite online retailer, and that 32% of customers would buy more items and spend more on them if they were offered protection at the checkout.

With pre-eminence as trusted brands, customers of financial institutions see the merit in hyper-relevant policies tailored to their needs and made available in convenient ways. With convenience as the baseline expectation there’s an interesting future in line for banks and fintechs of any stripe.