By: Daniel Guasco, co-founder Click2Sure
With the annual festive season spending spree all but forgotten and the impact of COVID-19 depleting levels of disposable income, where to next for under pressure retailers?
A relatively unexplored avenue is the embedding of insurance cover at the point of purchase in the ecommerce journey, to deliver a superior customer-centric service and to boost revenue for retailers. While risks can be mitigated with the accessibility of data on the platform.
With a fast and simple Gen Z-friendly click or two consumers should be able to access short- or longer-term insurance cover or extended warranties to protect the much-loved items purchased off their Wishlist – whether a new mobile phone, Bluetooth speaker, laptop or sports watch. Besides consumer electronics, embedded cover can be linked to the likes of pet, funeral and hospital plans. Globally we see everyone from car rental companies to airlines, motor finance to financial services companies, as well as the likes of Amazon and Alibaba offering insurance cover at the point of purchase.
Angela Strange, a FinTech general partner at Silicon Valley venture capitalist firm Andreessen Horowitz, in an article titled The Big Ideas Fintech Will Tackle in 2021 argues the current insurance system is outdated and inconvenient for consumers who have to go elsewhere to buy insurance cover for items just purchased. This is where insurtechs must pick up the dropped ball and make the play, by embedding insurance at the point of sale.
So how big an opportunity are we talking? Business transformation advisor Simon Torrance says embedded insurance is a $3 trillion opportunity globally and “insurers, banks, fintechs, investors, non-financial retailers, manufacturers, service providers, digital platforms and software companies should look carefully at this fast-emerging space”.
In the South African context, the local ecommerce market in 2020 was worth about $10 billion (R150 billion), so we can conservatively estimate that the embedded insurance opportunity is about R3.75 billion per year.
Click2Sure has been at the forefront of this insurtech revolution in South Africa. We identified an opportunity associated with incremental non-core financial services products: that insurance cover could be accessed in a way similar to how credit is offered at the time of purchase.
We don’t sell insurance. We provide our clients who sell insurance with a comprehensive cloud-based, digital platform for the distribution, management and purchasing of insurance at the point of sale. Our customer-centric offering lets customers buy insurance through any digital channel, depending on their preferences to satisfy their need for convenience and speed.
These products, including extended warranties and damaged shipping, theft and cancellation insurance, can be for very small amounts opted into by a tick box at checkout online or at the point of sale in store. Every transaction adds value to the consumer as well as the retailer.
Retailers need to be asking customers if they would like a serving of insurance with their orders. The time is now to get your company riding this wave.
To continue the conversation join a masterclass entitled Embedded Insurance: The Next Big Wave from 10am on 23 February 2021, where Guasco will address the topic Optimising Embedded Insurance. He will also contribute to a masterclass entitled Partnerships, Collaboration and Choice from 10am on 25 February 2021.