The business-to-business-to-consumer (B2B2C) insurance market is “booming” – but what is it, and why is B2B2C having a moment right now?
What is B2B2C insurance?
Business to business to consumer, or B2B2C for short, describes an insurance distribution method in which one business (an insurer) uses another business (a retailer, for example) to sell insurance to the end consumer.
How is B2B2C insurance different?
In the traditional insurance distribution channel, insurers either sell directly to their customers or use intermediaries like independent agents, MGAs, MGUs, or others to get their products into customers’ hands. Because the insurance industry is so heavily regulated, it isn’t typically possible for any old business to offer insurance to customers.
By definition, B2B2C insurance – also known as embedded insurance – is a distribution method that uses anyone other than traditional insurance intermediaries to help get products from insurer to insured.
Who sells B2B2C insurance?
In the past, retailers often used a B2B2C distribution method to sell insurance products that supplemented their core products. Like when you buy insurance for your cellphone at the same time and from the same company as the phone itself. Some of the early partners in the B2B2C insurance game were banks, financial advisors, auto dealerships, and car rental companies. Now, B2B2C insurance seems to be everywhere. Utility companies, retailers, ecommerce giants, professional associations, and more are getting in on the action.
Why is embedded insurance appealing to the industry?
Embedded insurance products, distributed in a B2B2C manner, have a number of appeals – not just for insurance professionals but also for consumers. A few of these include:
1. An opportunity for the right product in the right place at the right time
When a consumer is buying something that they likely need or want insurance for, offering insurance at the point of sale is convenient. Embedded insurance can create a seamless customer experience and lets insurers and their business partners seize the moment when a consumer is most aware of their need to get insurance for their new purchase.
2. B2B2C insurance is sold alongside a trusted brand
Insurers can benefit from the reputation of their partners in the embedded insurance realm. When insurance is presented alongside the purchase itself, a bit of the brand reputation can rub off onto the insurance product and insurer.
3. Embedded insurance improves customer experience in an industry that really needs it
The insurance industry as a whole grapples with creating a great customer experience and meeting customer expectations in the digital age. By partnering with (potentially more advanced) retailers and other businesses, insurers can create a simple and clean customer experience for shoppers.
4. B2B2C insurance channels help simplify underwriting
One method of B2B2C insurance is marketing an insurance product to a large group of people with similar risk profiles by partnering with professional associations or even employers. For example, if Uber wanted to promote an insurance product to its drivers, or to its customers for that matter, underwriters know of some baseline commonalities and can make generalizations about the potential insured population. This helps them simplify underwriting, and makes the products less expensive for consumers, more profitable to insurers, or both.
5. Embedding insurance at the point of sale helps with education and awareness
Despite the industry’s overall success and growth, property and casualty (P&C) insurance struggles with the gap between the value of assets, and how much insurance exists on those assets. Namely: There just isn’t nearly enough insurance in place to cover the types of losses we’re seeing these days.
There are many reasons people can’t, don’t, or won’t purchase insurance when they perhaps should. Not only are people often lacking education and awareness about what insurance products are appropriate for their situation, but also the lack of opportunities to easily purchase those products can be a barrier to adoption.
Embedding insurance at the point of sale provides an opportunity to educate consumers on the insurance protection they may need for the asset they’re purchasing. It also allows insurers to “meet consumers where they are and provide coverage within a channel they are already comfortable using.” These aspects of B2B2C insurance can help close the coverage gap.
Why B2B2C insurance is having its moment
We’re at the intersection of huge levels of investment in insurtech, a changing economy with increasing gig work, and a highly under-insured population.
Think about this scenario: A consumer needs insurance for a five-minute scooter ride while renting an electric scooter, which they obtain using an app on their mobile phone that they’ve paid for using cryptocurrency. Just a few decades ago, that entire sentence would have sounded like science fiction! Today, it’s just one example of how insurance needs to be able to plug into our daily lives, turn off and on by the minute, be affordable for consumers, and be offered when, where, and how people need to access it.
Embedded, or B2B2C insurance, solves that problem. It gives businesses and consumers the ability to purchase appropriate and necessary insurance coverage easily and conveniently, when they need it, and only for as long as they need it. It also simplifies underwriting and creates a high-volume distribution channel for insurers to capture otherwise uncapturable sales. All of these reasons and more explain why B2B2C insurance is projected to be a $1.8 trillion business by 2031.
Whether you’re focusing on B2B2C insurance, or more traditional modes of delivery, AgentSync can help power your growth by streamlining compliance across your distribution channels. Learn more about our solutions for carriers, agencies, and MGAs today.
