There are multiple ways to approach and sell embedded insurance, but the most effective approach is white-labeling. Not only is white label insurance the fastest and most cost-effective option, but it also keeps the insurance under your brand, expands your product offerings (and potential customer pool), and creates more points of sale with your customers which leads to higher retention rates.
A white-label insurance product is one that’s been developed by one company, then rebranded and sold by other companies. White label insurance can be used by insurance companies and insurtechs whose primary business is to cross-sell a variety of insurance products, or it can be used by non-insurance companies as an additional stream of income.
An easy way to understand the concept of white-labeling is to consider white-labeled products that exist outside of the insurance world. For example, consider the Costco brand: Kirkland Signature. When you see food, paper towels, denim jeans, and various other items sold under the Kirkland Signature logo, you probably don’t think about the fact that they were most likely not produced by Costco itself. In most cases, they were manufactured in various factories by various companies, white-labeled, and then sold under the Kirkland Signature brand. The same can be done with insurance.
A white-label, embedded insurance product is one that is completely integrated not only into your website so that your customers don’t have to leave your website in order to make a purchase, but it’s also integrated into your brand. Customers will have no indication that the product was not created by your company.
When it comes to the question of “white-label or build from scratch?” there are several benefits to white-labeling insurance products– namely, it will save you time, labor, and money.
In order to build an insurance product yourself, you would need to get licensed as an insurance agency, fulfill the requirements to become a Managing General Agency (MGA), create your insurance forms, rates, and underwriting guidelines, get a carrier to provide capital backing for your product, be appointed as a producer/agent broker by that insurance carrier, build technology to sell your product through your website, and finally create or outsource claims administration capability. And that is telling a long story short.
All in all, you would be looking at a multi-year timeline. Building an insurance product from scratch would not only be lengthy and complex, but it would also be a considerable financial investment with long-term, ongoing expenses and maintenance required.
Instead of hiring an internal engineering team, educating yourself on each state’s insurance regulations, requirements, and laws, and navigating the complicated process in-house, you can outsource that labor to a company that has already done that work for you. Without losing any of the benefits of adding an insurance product to your business, you can save yourself time, money, and effort.
Besides building from scratch, you could potentially work with an affinity insurance partner, where you would redirect your customers to the insurance provider’s website to buy the insurance product from them, but there are several downsides to that kind of partnership. First, you wouldn’t have the benefit of a trusted customer experience with your brand. In affinity partnerships, after your customers click through to your provider’s website, you lose ownership over customer relationships or brand management. Additionally, affinity partnerships primarily generate leads for the insurance provider, not for you.
White-labeling insurance can benefit both non-insurance companies who want to start offering embedded insurance, and insurtechs looking to add or expand their offerings. We’ll look at both scenarios below.
For a non-insurance company, the benefits of adding white-label insurance to your offerings include increased revenue, greater customer engagement and retention, and competitor differentiation.
White-labeled, embedded insurance is a big opportunity for your non-insurance business to build new streams of recurring revenue. In 2021 alone, the insurance market amassed over $700B in gross written premium, and that number is only projected to grow. 60% of consumers are looking to buy insurance from new entrants, which means that there’s never been a better time for companies outside the traditional insurance industry to enter the market. If your business could tap into even just a fraction of the insurance market value, it could lead to significant revenue.
Additionally, insurance premiums are recurring revenue, which creates lifetime customers, rather than one-time purchasers. When your customers purchase insurance through your website, they buy the policy directly from you, you collect the premium payments, and your business profits from the recurring income. And because the transaction will take place on your site or app, you will have full ownership over your customer experience and data, which helps you to better sell to them in the future.
Following that train of thought is customer retention and experience. Insurance is a very “sticky” product with an average 84% customer retention rate. An important point to remember with embedded, white-label insurance is that you are not selling to new customers. You would be selling to the same audience with whom you’ve already invested effort and acquisition costs. White-label insurance gives you the opportunity to connect with your customers on a new level.
Let’s say that you own a company that sells goods or services to home renters, and you are looking for a way to deepen your customer relationships while increasing revenue. You can leverage your existing customer relationships to sell them renters insurance.
As a non-insurance company, you would be able to white-label and embed the product directly into your website. Without ever having to leave your website, your customers can add insurance to their existing purchases. Because you have already done the hard work of building a positive, trusting relationship with your customers, the addition of this new, beneficial protection that they know they can trust can only increase their brand loyalty.
White-labeling an insurance product is a great way to set your company apart from competitors within your industry and also from competitors in the insurance market.
As a different example, let’s say that you own a company that caters to pet owners and you take the initiative to sell pet insurance alongside your other products. Because pet insurance is still relatively new in the US, some of your customers may not even be aware that it’s an option. By offering it to them, you demonstrate that your company is forward-thinking and ahead of the competition. You can anticipate your customers’ needs and solve legitimate problems that they face as pet owners.
By selling insurance, you will also be entering a new market, which may sound intimidating if you are not familiar with the insurance industry. However, the good news is that you have an edge in that market too. Customers are far more likely to purchase from a company that they are already familiar with and trust than one that they’ve never worked with before. Because you would be selling to customers with whom you already have a relationship, you would have an advantage over traditional insurance providers marketing similar products.
For an insurtech, the benefits of white-labeling insurance include access to insurance capacity, a much faster GTM rate, and the ability to focus on serving your customer instead of reinventing the wheel.
If you choose to white-label, you would have access to your partner’s insurance capacity. This is the maximum amount of value that an insurance program can insure, determined by the amount of capital available to cover its losses.
Capacity can be difficult for many insurtechs to come by. The most practical option is to partner with an insurer or reinsurer who can provide what they need, but securing those partnerships can be challenging. This is especially true for insurtechs without established connections to insurance carriers. Getting in front of the right people at a carrier company and convincing them to provide the needed capacity can be a years-long process (which often ends in failure).
As previously stated, building an insurance product from scratch is a long, complicated process. Partnering with a white-label insurance partner cuts all of that work and extra cost down so that you can get to market faster.
You could also partner with an insurance-as-a-service provider who would provide everything you would need to start offering insurance to their customers from technology to insurance capacity, operational infrastructure, regulatory approvals, and the embedded product itself. Insurance-as-a-service partners make the process even more streamlined and worthwhile. For example, if you were to work with Boost, an insurance-as-a-service company, instead of wading through a multi-year process to build a product yourself, you would experience a full-service partnership and get to market in as little as one month.
Customers want convenience. Instead of getting every kind of insurance from a different provider, you can become a one-stop shop for their insurance needs.
An important aspect of customer engagement and retention for insurtechs is the ability to cross-sell. You need a variety of products that complement each other to encourage customers to buy more than one policy, for example, you could sell renters and white label pet insurance. If you work with a white-label insurance provider like Boost, you would have access to a wide variety of already-built products to choose from, so you can choose products that align with your business goals. You can simply select products that would cross-sell well with your existing lineup.
The more products, the more points of sale, and the stickier your customers. By engaging with them through multiple policies, your retention will naturally increase.
You don’t need to reinvent the wheel in order to sell a great insurance product that will appeal to your customers. In fact, it is much faster and more cost-effective not to. Whether you are a non-insurance business or an insurtech looking to expand its product lineup, white-labeling allows you to outsource the difficult, lengthy aspects of building an insurance product so you can focus on what really matters: growing your revenue, increasing engagement and retention, and setting yourself apart.