In 2024, the retail landscape is witnessing the next phase of evolution in digital insurance distribution, with major supermarkets at the forefront of this transformative trend.
As large retail brands expand their insurance propositions, the focus is on digital distribution and relevance, and many are exploring the new horizons offered by embedded insurance not only in terms of diversifying their revenue streams but also enhancing relevance and value for their customers, writes Alex Astengo, UK Country Manager at Root.
Understanding Embedded Insurance
According to consultants EY, a combination of societal trends and market forces – from technology advancements and pervasive connectivity to shifting consumer needs and evolving growth strategies in a wide range of industries – led them to forecast that more than 30% of all insurance transactions will likely occur within embedded channels by 2028.
Embedded insurance involves seamlessly integrating insurance policies into existing products or services. The first lines of business being rolled out in embedded insurance for supermarkets often include popular offerings such as pet insurance and gadget insurance. These trends point to the unique advantage supermarkets have in understanding their customers’ needs and preferences, allowing them to tailor insurance solutions accordingly. However, there are challenges and pitfalls along the way. Compliance with insurance regulations is crucial, and navigating the complex landscape can be daunting for non-insurance brands. Additionally, ensuring transparency and value for customers is essential to building trust and loyalty.
Tech Architecture Advancements
Supermarkets are keen to own their insurance channels but are increasingly partnering with technology providers that can offer tried and tested, powerful, user friendly technology to help them unlock this growth channel. As a result, there is strong competition emerging between supermarkets for the best core technical infrastructure that is easy to adopt and use across an organisation. The idea is that the experts at the supermarket spend less time on the coding and development of their insurance proposition, and more time focused on crafting and launching exceptional user experiences, building brand loyalty and driving growth. Application programming interface (API)-first architectures are emerging as the leading infrastructure to optimise digital distribution channels. These advancements enable supermarkets to launch insurance products rapidly, streamline compliance processes, and enhance the overall customer experience.
The significance of APIs lies in their ability to facilitate integration and interoperability between different systems and applications. By providing standardised interfaces for communication, APIs enable supermarkets to connect with insurance providers, third-party platforms, and other stakeholders in the insurance ecosystem. This promotes collaboration, innovation and efficiency, connecting with customers at the point of sale be it online or at the till.
In practice, this means a non-financial firm like a supermarket, retailer or car dealer could use an API-first technology platform to seamlessly offer banking or insurance solutions that are on-brand and compliant for most jurisdictions.
API-first architecture also fits into a low-code environment by providing supermarkets with a modular and flexible solution for building and deploying insurance channels. Low-code platforms allow developers to quickly assemble pre-built components to create customised solutions without writing extensive code from scratch.
This accelerates the development process, reduces time to market, and empowers non-technical users to participate in the application development process. Additionally, APIs complement low-code platforms by providing ready-made integration points for connecting with external systems and services, further simplifying the development and deployment of insurance channels for supermarkets.
Seizing the Future
As supermarkets face increasing competition from online retailers and other disruptors, diversifying into financial services can provide a competitive advantage. By offering a wider range of services, supermarkets can differentiate themselves in the market and attract new customers who are looking for convenient and integrated solutions, including digital banking and insurance, that may link to offers and discounts elsewhere.
Overall, exploring digital banking and insurance propositions allows supermarkets to stay relevant in a rapidly evolving market, drive customer loyalty, and create new revenue opportunities in an increasingly digital world. Making the right technological choices is paramount. By partnering with established innovators and leveraging advanced platforms, supermarkets can unlock the full potential of digital insurance distribution and embedded insurance and stay ahead of the competition.
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