What’s new about ‘embedded insurance’?
By Clemens Reidel
Auto insurance is old – almost as old as the automobile. Following its first appearances around 1900, auto insurance became a requirement to operate a vehicle in many countries starting in the 1930’s.
Fast forward to today: modern cars are owned and used in very different ways than in the last century. Instead of buying and keeping cars for years, they’re mostly leased and even shared.
Other than for transportation, today’s vehicles are connected to the online world and offer a full infotainment experience by integrating our closest life companion: the cell phone. Whilst no one would trade Apple CarPlay or Android Auto for buying a car stereo in the electronics store like in the old days, consumers – for some reason – are still expected to buy insurance separately from the cars.
Insurance companies – and so-called price comparison websites – spend billions on advertising and sales commission to sell something that is not only highly standardized but also something you don’t have a choice over. Isn’t it obvious that cars that already come everything you need, including insurance, is the natural next step? That’s what embedded insurance is all about.
An important point in embedded insurance is the seamless and invisible integration that can be achieved while throughout the customer experience.
Modern vehicles are equipped with many safety features that help prevent accidents. In case you’re involved an accident, embedded insurance ensures immediate assistance can be provided to you and your car is brought to a repair facility authorized by your vehicle’s manufacturer using original parts and equipment. This is important because modern vehicles feature complex and sensitive electronic devices and sensors whose repair and maintenance require high level of expertise and training. Obviously, the imminent transition to hybrid and fully electric vehicles as well as the advent of autonomous driving is accelerating the need for using authorized repair facilities. At the ‘moment of truth’ customers need to know where and how to get that assistance promptly. The car insurance of yesterday cannot meet these pressing demands.
The time is now to drastically rethink how we’ve been doing auto insurance. Cars have evolved from mechanic means of transportation to an integrated mobility experience predominantly controlled by technology. Let’s stop treating insurance like long gone auto radios and make it an invisible part of individual mobility of the future.