Fintech insurance guide: 5 strategies to grow, retain and monetise users
In a nutshell
- Insurance plays a major role in helping fintechs acquire and retain customers, particularly in a crowded market.
- Embedding insurance into user accounts is an easy way to differentiate your offer and build the legitimacy to cross-sell insurance.
- In more mature cases, transactional or standalone insurance products can bolster a fintech's embedded insurance strategy.
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Fintech insurance is no longer a nice-to-have — it's one of the most powerful tools available to grow your user base, drive loyalty and unlock new revenue streams.
But not all fintech insurance strategies are created equal. Even some of the most successful fintechs are still offering insurance products that generate little value for users and even less return for the business.
Here are 5 practical aysbuilding a fintech insurance strategy that actually works.
See how your fintech company can leverage insurance →
1. Embedded fintech insurance: the smartest place to start
Embedding insurance into user plans is the most accessible way for fintech startups to offer insurance – and it has major advantages.
What is fintech insurance and how does it work?
Fintech insurance refers to insurance products distributed by or embedded within fintech platforms – including neobanks, BNPL providers and payment apps – to add value for users and drive revenue for the business.
Embedding insurance at no-additional-cost to the user, means it’s included in a particular plan or payment card, so fintech customers are automatically covered when they use their card or account.
So let’s say a Revolut customer pays €9.99 a month for their Premium plan. Because this plan includes purchase protection, purchases made with their Revolut card are already insured. Users don’t have to buy insurance separately.
And who would want to? Most people don’t (want to) think about insurance, but it can make a huge difference in someone’s life when things take an unexpected turn.
Key benefits of embedded fintech insurance
Tailored insurance products boost transactions
Unlike selling transactional or standalone insurance products in B2C retail (more on that later), insurance regulation is much more flexible in a B2B partnership.
This flexibility means you can develop insurance products that are tailored to your users’ unique behaviours and needs.
For example, European law prohibits joint offers (see article 24 on cross-selling) with one exception: a joint offer is allowed when it's linked to a paid bank account.
This is a game changer! By identifying the right insurance products with the right partner, fintech companies have the power to significantly increase transactions.
A good example is the aforementioned purchase protection solution that we developed for Revolut, which allows the fintech giant to create value for its customers by protecting their everyday purchases – thus encouraging them to use their accounts more frequently.
The more they use their account, the more they're covered. It's a win-win: your customers get peace of mind, while you increase the amount of banking transactions.
Read more about how Revolut users embedded insurance to grow their user base →
Reduced cost and concern for your users
In a B2B contract, fintechs can leverage targeted insurance products as an integral part of paid accounts. This solution provides numerous benefits for your users, including reducing the cost of insurance.
Rather than paying a premium for specific cover, users pay a small monthly fee for one of your paid plans that comes with insurance, which is way more friendly on their wallet.
It’s such an easy way to be there for your users when something bad happens, which leads to positive, long-lasting customer relationships.
Stand out from the competition
For many traditional or digital banks, insurance is a must-have. But for fintechs like neobanks and BNPL providers, the market is still maturing.
That means that insurance is a key way to differentiate your offering and stand out from the competition in order to acquire more users.
You can offer a variety of insurance solutions depending on the needs of your audience, ranging from purchase to lifestyle to business cover:
- Purchase protection
- Refund protection
- Delivery protection
- Extended warranty
- Ticket cancellation
- Mobile devices
- Income/bill protection
- Accident protection
- Travel insurance
See the 7 most popular insurance products for neobanks →
With the right embedded insurance partner, you can decide which products add the most value for your users.
For neobank bunq, they decided to embed travel insurance as a way to meet the needs of its growing international user base. This added benefit was a way to attract more users to their top-tier plan while providing a seamless digital experience.
‘We’re making travel insurance effortless. It’s exactly the peace of mind we want our users to have, whether they spend, save or travel with bunq’. – Ali Niknam, Founder and CEO of bunq
Monetise your user base
Insurance is also a way to increase buyer satisfaction and confidence, which leads to customer retention.
Think about it: when users know that their purchases, belongings or even their livelihoods are covered, their minds are more at ease and they’re more likely to purchase freely (and with you).
And happy customers are not only loyal customers, but also more willing to pay for better benefits.
Embedded insurance is a very powerful tool for converting free users into paid users, thus generating additional revenue. In designing and identifying smart bundled insurance products for your user base, you have the power to maximise customer retention and boost your bottom line.
Learn more about embedded insurance for banks and fintechs →
2. Transactional fintech insurance only works with the right triggers
Some fintechs try to cross-sell transactional insurance products, but unless they have a solid sales trigger and a high transaction volume, this strategy likely won’t convert.
Let’s consider travel insurance. When one of your users books a hotel online, the transaction is visible in their account. By building a smart digital ecosystem, you could push travel or cancellation insurance immediately after booking.
In this scenario, a user is more likely to purchase insurance rather than seek out a standalone travel product somewhere since it’s targeted and available at the right time.
However, many booking websites already offer travel insurance. If your users buy insurance elsewhere, it's already too late. And if they don't purchase insurance directly from the hotel provider, why would they buy it from you?
Offering embedded insurance is a much easier way to establish the legitimacy to sell insurance. After all, the distribution method is just as important as the product itself.
By including the insurance in user plans first, you introduce your customers to the idea of getting insurance through you, which can be leveraged to cross-sell transactional products later on.
For some fintech companies, like BNPL or lending platforms, transactional products could make sense since they have a good trigger for cross-selling insurance. Credit protection, for example, would cover the face value of the loan or credit line if something happens to the borrower. But again, the conversion rate for this type of product is typically low.
See how banks and fintechs are balancing embedded and transactional insurance →
3. Why most fintechs aren't ready for standalone insurance products
A common mistake in the fintech world is selling standalone insurance products such as car or home insurance.
Pushing additional products might seem like a good idea when you have a strong user base, but we don’t recommend approaching insurance this way – at least not at first.
Why? Fintechs lack the legitimacy to sell insurance; they simply don’t have the brand recognition, portfolio or experience to do so.
Traditional banks – even those that are pushing more digital services – can successfully distribute standalone products to support other key financial services. For example, when a traditional bank offers credit for a car, it can also offer car insurance. The same applies to a mortgage loan and mortgage insurance.
Essentially, the service you provide needs to be strongly linked to the insurance product. For instance, a B2B neobank could offer cyber insurance or key protection insurance to its SME user base.
Unlike traditional banks and more targeted neobanks however, most fintech startups don't offer these financial services (yet) and therefore lack the legitimacy to sell standalone insurance products successfully. In other words, you’re not the first place customers turn to for insurance.
More mature fintechs could successfully incorporate standalone products in the future, especially as they pursue super app strategies.
4. Cross-border fintech insurance: don't underestimate local compliance
Looking to distribute insurance globally? Don’t underestimate the complexity of local laws.
B2C insurance regulation is very strict, and navigating this stuff alone can eat into a business’s precious time and resources.
For example:
- In France, did you know that company’s have a legal obligation to give a complete overview of the contract before the user buys it? Did you also know that it's mandatory to collect the policyholder's place of birth?
- In Belgium, did you know that there's an obligation of price transparency, which means that you have to display the structure of your insurance premium – including the acquisition cost – before the customer buys the contract?
- In Spain, did you know that you're obliged by law to collect the client's identity number (i.e. their NIF)?
These are just some of the laws across different European countries, but imagine dealing with all 32 jurisdictions – that leaves very little wiggle room.
Due to this complexity, some fintechs make the mistake of selling insurance products that have little benefit for their users or their business. There’s always room to consider selling standalone or transactional insurance later on, but it shouldn’t be the core of your strategy.
Strategic insurance is much more than the product itself. It's about stimulating consumer interest through valuable, relevant solutions – and offering them in the right way.
Read more: what companies should know about insurance regulation & compliance →
5. The right insurance partner makes or breaks your fintech strategy
At the end of the day, the essence of insurance is to provide financial stability and peace of mind for your users; it’s a way to show your community you care.
Which is why – beyond having the right embedded insurance strategy – it's essential to work with a digital partner that can keep pace.
‘Speed is the name of the game’, says Stefano Bison, Group Head of Business Development & Innovation at Generali. ‘Building it yourself - even if you have the right people and money - will take years.’
At Qover, we bridge the complex world of insurance and technology through embedded insurance orchestration. We help Revolut, Monzo, bunq, ING and more incorporate embedded insurance into their strategies.
