Why embedded insurance is on the rise

Why embedded insurance is on the rise

Embedded protection products are proving increasingly popular among customers in the post-pandemic travel revival. Peter Smith, vice president, Strategic Partnerships – Travel, EMEA, at Cover Genius, outlines the reasons.

Travel is quickly reaching pre-pandemic levels, faster than anticipated. According to the UNWTO’s World Tourism Barometer, international tourist arrivals could reach 80 percent to 95 percent of pre-pandemic levels in 2023, with the Middle East seeing the fastest recovery. Arrivals have already climbed to 83 percent of pre-pandemic numbers.
That said, travelers’ needs have evolved, as have the options for how companies respond to their constantly changing needs – especially in the travel and hospitality sectors.

Customer expectations are changing
Today’s digital-savvy travelers have higher expectations. They are increasingly looking to the brands they trust for more relevant, convenient and cost-effective protection, avoiding the second step of seeking out protection from other sources. They want transparency and convenience from the get-go, including embedded protection for their flight, accommodation, products, events and services.
For example, the recently released ‘Refund Protection Report,’ conducted by Momentive.ai and commissioned by Cover Genius, found that consumers booking travel who are offered ‘Cancel for Any Reason’ (CFAR) protection are highly likely (60 percent) to make the purchase, more so than if they are offered a more limited refund protection option, or no protection at all. Travelers that purchased CFAR protection are also more satisfied with their experience, reporting a 12-point increase in average Net Promoter Score (NPS).

Providing protection
Overall, traditional insurers have let travelers down during the pandemic.
In the Embedded Insurance Travel Report, conducted by Momentive.ai and commissioned In Cover Genius’ ‘Embedded Insurance Travel Report,’ 20 percent of global customers who made a claim for pandemic-related reasons were not covered, despite purchasing travel insurance for pandemic protection. As such, the demand for more relevant embedded protection products has risen significantly as the industry emerges from the pandemic.
Companies wanting to provide a better, more convenient service need to ensure their customers are protected for the right reasons. Insurtech can help travel brands achieve this with easy-to-understand policies that can be bundled or unbundled, at optimal pricing and using automated claims processes with instant claim payments that support them when things go wrong.
Whilst the travel and hospitality industries have been embedding protection for many years, there are still opportunities for businesses to enhance the customer experience. By working with partners that share their focus on customers and have the ability to continue to innovate, they can offer more relevant solutions.

Being customer-centric
Customer sentiment toward travel protection has generally skewed negatively, based on their experience with the claims process. Increasingly, customers look for clarity, ease of use and quick resolutions, resulting in a higher level of service and post-claim NPS (Net Promoter Score).
Part of being customer-centric, means focusing on the customer experience from end to end. Since customers today are much more digital, their claims process should also be digital-first. For example, insurtechs offering embedded protection understand that customers are part of the digital ecosystem and likely want their entire service to be intuitive and online. More importantly, the embedded solutions being offered also need to be understood by the customer and relevant at the point of purchase.

AI, NLP and big data
The travel and airline industry is tied to a lot of legacy technologies that are still full of pain points. Insurtechs help travel brands modernize their offerings with AI and Natural Language Processing (NLP) to provide tailored products relevant to customer needs. The data captured at points of purchase are integral to this process.
Overall, the travel industry has realized the need to make it easy for customers to purchase relevant products that offer the right protection, at the right price. There is no magic ingredient that gives customers everything they want, but transparent, relevant offerings in a convenient package can give them just what they need.


Peter Smith,
vice president, Strategic Partnerships – Travel, EMEA,
Cover Genius
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