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How insurance-as-a-service can transform your business model

Insurance has endured a laggard reputation for decades. However, as reluctant as it's been to adapt, the industry is finally ready to step out of the dark ages. In fact, many in the space have already experienced a paradigm shift, proving insurance will soon be fully digital.
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Time to read
7 minutes
Last updated
December 21, 2022
In a nutshell
  • The insurance industry is finally stepping out of the dark ages.
  • Insurance-as-a-service is a 100% digital insurance offering that covers end-to-end requirements for simpler onboarding, claims management and customer support.
  • The result for consumers: simple, fair and transparent insurance.

The question is no longer if other insurers will follow, but when the rest of the market will catch up. The insurance industry is on the cusp of transformation – finally offering insurance as insurance should be: simple, transparent and fair.

Man works on a computer showing insurance API code
Digitally enhanced services are reinventing the insurance value chain.

How did insurance-as-a-service come to be?

Digitally enhanced services are no longer a nice-to-have. Slick interfaces – whether on a desktop, laptop, iPad or mobile phone – are commonplace. These perfected user experiences have reshaped customer expectations – a shift no industry can ignore.

This has led to a reimagining of the insurance value chain, leveraging previously unexplored capabilities to produce a new type of digital insurance: products that prize transparency over opaqueness; mass availability over limited access; and streamlined efficiency over a painfully slow process.

Just as other ‘as-a-service’ models have taken over, insurance-as-a-service is part of this digital innovation.

What is insurance-as-a-service?

Insurance-as-a-service is a fully digital insurance offering that covers end-to-end requirements for simpler onboarding, claims management and customer support.

Now more commonly called 'embedded insurance', the flexibility of a service-based, data-driven solution enables a dynamic operating model that fits any business type, with a modular product that's perfectly suited to digital platforms and ecosystems.

Insurance-as-a-service companies, namely insurtechs, provide embedded insurance solutions that are fully compliant with legal requirements – including the European Union’s most recent Insurance Distribution Directive

With this, global enterprises can leverage a platform that’s built-to-scale, especially given that the service already includes the required risk capacity. This avoids having to engage in long and complicated discussions with traditional insurers.

‘Embedded finance in the broader sense has been around for many decades’, says Timm Schipporeit, Partner at Perella Weinberg Partners. ‘But what is really different today is the technological sophistication, the modularity by which it can be provided and the ease of integration. It used to be very monolithic – companies were usually partnering with one large provider who could do all of that, but in a very inflexible way.’

‘What we’re seeing today is seamless integration between insurance and software platforms and marketplaces, thereby enabling minimum friction and ultimately a better proposition that drives customer experience, increases access to financial services and reduces the cost for the consumer.’

Qover's insurance as a service value chain
Qover's embedded insurance orchestration platform at the forefront of the insurance-as-a-service model.

‘As-a-service’ explained

In truth, there’s little innovation in the ‘as-a-service’ mindset; the model exists across industries.

It’s become so widespread that stalwarts have coined an everything-as-a-service mantra that ‘facilitates the flexibility for users and companies to customise their computing environments to craft the experiences they desire, all on demand.’

As-a-service models are characterised by low barriers to entry.

They require little-to-no capital expenditure by the client as the service is made available to many via infrastructure owned by a single provider, with costs shared across users. The intrinsic strength of the platform lies in its inherent scalability with few obstacles to rollout once established.

Software-as-a-service is the most common model: as businesses build complex applications, then offer them as simple web services where clients pay only for what they use.

close-up of a hand pointing at an embedded insurance website
As-a-service models are characterised by low barriers to entry.

That is, until finance thought leader Chris Skinner adapted the model to banking-as-a-service, envisioning a more user-friendly finance sector that caters to customers’ needs.

As he discussed in the Life.SREDA report, ‘You’re probably all familiar with SaaS – it’s basically paying for applications as you use them, rather than buying them. These services used to cost you a fortune, but are now free or near enough.’

‘That’s where banking is going. Banking becomes plug-and-play apps you stitch together to suit your business or lifestyle. There’s no logical reason why banking shouldn't be delivered as SaaS.'

In today’s day and age, is there any logical reason why insurance shouldn’t be delivered as SaaS too?

Three key insurance-as-a-service models

Multiple start-ups are working on their own version of the insurance-as-a-service model, resulting in three distinct approaches, as identified by Anton Verkhovodov.

  • Internal process digitisation: Companies like Corezoid are working with partners to rebuild internal processes within a contained digital ecosystem, helping streamline administration. However, these are neither licensed insurance products nor insurance-specific solutions.
  • Core service digitisation: Several companies have built products to service a core process within insurance. RiskPossible, for example, helps businesses with underwriting while other players support customer data management, fraud detection or claims.
    Some focus on building a digital solution without embedding the risk capacity, which requires the business partner to find its own insurance arrangement with traditional players. They offer efficiency in specific areas, but a limited ‘as-a-service’ model.
  • Full-stack digitisation: As an insurtech, Qover operates via a B2B2X model that we match to our partners’ needs, either through standalone product development or an overarching white-labeled backend with its own license. We’re a full-stack insurance provider with an end-to-end product, complemented by comprehensive digital insurance infrastructure.

a happy young person smiling as they talk to an insurer on their iPhone
By digitising the entire insurance process, businesses can deliver a more positive customer experience.

How consumers benefit from insurance-as-a-service

Regardless of the approach, the industry transformation means several things.

For one, insurance is becoming readily available to consumers by being directly embedded within the digital ecosystems they already use. For example: A customer could buy an e-bike online and add insurance to their cart in a single click.

According to Sifted, embedded insurance is a key area for growth among insurtechs in 2022. Technology acts as a guide by keeping coverage up-to-date and allowing people to enjoy life with one less thing to worry about.

Another advantage is that the insurance process is no longer a headache. It’s an intuitive one-click action underpinned by standard practice. Insurance products themselves have also become more personalised. Coverage can be adapted based on consumer interests and behaviours, therefore remaining relevant and tailored to their current needs.

And at their core, products are smarter thanks to data-driven insights. They’re more flexible – with usage-based pricing – and transparent, with the level of customer care that modern consumers have come to expect.

How companies can benefit from digital insurance

Businesses are equally reaping the rewards of insurance-as-a-service models. After all, one-stop-shops are a way to reduce cost and increase revenue

As-a-service delivery models ensure plug-in, scalable and consumption-based services that drive commercial growth, such as those experienced by Cowboy.

The Belgian e-bike brand leverages Qover’s open API for a fully digital integration where customers can simply tick the box for bike insurance.

Turnkey solutions like this also reduce barriers to entry, helping companies avoid the costs and complexities of partnering with traditional brokers.

As noted by McKinsey, digital ecosystems are forecasted to account for $60 trillion – a remarkable 30% – of global insurance revenues by 2025. So businesses have to act soon in order to capture a share of the market; and those who embrace the change will succeed.

As-a-service also enables speed and flexibility in implementation. By relying on the technical and insurance expertise of the insurance partner, companies can focus on their core business.

In the context of Belgium's largest real estate platform Immoweb, this meant launching Landlord's Insurance in a matter of weeks, courtesy of Qover's unique plug-and-play approach. By doing so, Immoweb killed two birds with one stone: they offered a one-stop-shop for their clients while also generating additional revenue.

The benefits of digital insurance are not limited to commercial growth. By bundling an insurance product within an existing ecosystem, service providers can uncover points of differentiation and stand out from the competition.

In 2017, food delivery app Deliveroo shifted toward a service-driven strategy. The company unveiled free Rider Insurance in an effort to establish itself as the best meal delivery service on the market.

With its vast community of couriers, Deliveroo used the bundled insurance coverage to gain a competitive edge over an industry incumbent. Today, Qover protects nearly 45,000 Deliveroo riders across Europe. 

Insurance-as-a-service is a win-win

As the world becomes increasingly connected, it’s clear that those who embrace change will succeed. Thankfully, insurance is finally stepping into the 21st century to seize the opportunity.

The industry is uniting around the insurance-as-a-service model: one that’s community-focused and set up to capitalise on the flourishing digital ecosystems that now dominate our daily lives.

There’s incredible opportunity in technology, not least in its ability to re-imagine the way we access traditional products, but to shape those products to fit our modern needs.

By partnering with the right ecosystem, insurance-as-a-service could transform your business model by increasing revenue, customer satisfaction and more.

To see what our innovative insurance products can do for your business, get in touch with us.