Embedded finance has brought about a multitude of innovative payment abilities that are not only aiming to shape the future payments landscape, but are also being used to help create other avenues for others to speed up their processes, such as embedded insurance.
HDI Embedded Chief Partnership Officer, Nelson Castellanos, spoke to Payment Expert on the principles of embedded finance, how it is already shaping the 120-year-old insurance sector and how it is learning from Artificial Intelligence (AI).
Payment Expert: Firstly Nelson, could you explain to the uninitiated who HDI Embedded are and what some of your core values and objectives are?
Nelson Castellanos: HDI Embedded is an embedded insurance provider at the forefront of innovation in the insurance industry. We combine 120 years of insurance experience with a partner-centric tech platform to deliver tailored embedded insurance solutions. Our platform is built to deliver three core benefits: ease of integration, seamless Pan-European roll out and cutting-edge user experience.
Forward looking, our aim is to see embedded insurance as an integral part of digital transactions. From consumer goods to financial services, our vision is to elevate embedded insurance to be a lynchpin of omnichannel commerce for every business that sells directly to customers. Making embedded insurance an integral part of digital transactions also means that the end customer is better protected too.
We’re working to deliver all this via a modular approach to product development. Ready-made, ‘off-the-shelf’ products no longer cut it, we co-create with our business partners, tailoring solutions to the unique needs of each customer with a single point of contact.
Through HDI Embedded, businesses can grow brand loyalty, increase the number of active customers, enhance customer interaction and open new revenue streams – truly leveraging the opportunities that embedded insurance has to offer. Long-term, our objective is to deliver any insurance product in an embedded format, anywhere in Europe.
PE: What are some of HDI Embedded’s services that are helping to bolster the insurance policies in sectors such as e-commerce, travel and for other financial services?
NC: We can offer and support these sectors with a wide-range of embedded insurance products. By providing tailored solutions for each sector, it means that consumers are better serviced and protected by our business partners whether that’s via single item protection, cancellation policies, mortgage, health, or cyber security insurance.
HDI Embedded operates via ‘Freedom to Provide Service’ rules, this enables us to tailor insurance products for the precise needs of our European partners and customers in these key verticals, accelerating time to market.
PE: Could you describe what elements are in Version 2.5 of embedded insurance and what digital products are helping to facilitate this?
NC: Regardless of whether we’re at embedded insurance 2.0, 2.5, or whatever else others in the industry have coined it, in their simplest form, these versions refer to the purchase of insurance via a digital good. Take plane tickets as an example, if you buy your plane ticket online there will be an option for you to buy insurance for this trip as well.
The reality is, we’re still in the very early stages of embedded insurance. At its most sophisticated, embedded insurance today allows for real dynamic pricing, to help providers deliver the right price to the end customer based on their risk profile. It can leverage AI and machine learning to streamline the claims assessment process and give providers the access to real-time data to help them continually improve services.
The key to embedded insurance is that it is contextual, and customers are aware of what they’re buying and why they’re buying it. It doesn’t just benefit insurance providers; it supports brands as well by increasing the interaction levels they have with their customers.
PE: Furthermore, insurance providers have always been integral to businesses, but why does their digitisation become an even more lucrative option for companies looking for a seamless insurance policy?
NC: Going digital increases accuracy, speed and efficiency, characteristics that have not always been associated with the insurance sector. This speed and efficiency improves customer service which in turn boosts profitability.
Insurance companies have digitised some of the core modules of the insurance lifecycle, as this has a direct impact on the cost of managing and servicing a policy or customer. However, at HDI Embedded, we have digitised the full insurance lifecycle to provide a superior and seamless experience, from having a fully digital claims process, to offering a digital issuing service.
It’s also important to note that while technology is the driver of embedded insurance, we must not forget the significance of partnerships. Partnerships are at the core of anything embedded and when it comes to the art of partnerships, it is all about understanding people, good relations, and flexibility.
PE: Lastly Nelson, and thank you for your time, we mentioned Version 2.5 of embedded insurance earlier, but what is or can be done to help set about a Version 3.0 of the financial service?
NC: As time goes on and businesses understand the concept of embedded insurance better, we’ll naturally progress to future versions, but before we get to this stage, the value and main elements of embedded insurance, right now, still need to be realised.
A future driver of embedded insurance will undoubtedly be AI and machine learning tools, as these technologies become more utilised to power and improve key insurance components.
From diversifying the portfolio of products a certain provider can offer, to further reducing processing times, not just for claims, but for policy issuance and management as well. To help the industry get to this stage faster, it’s the responsibility of the insurance provider to demonstrate the value of AI.
The biggest barrier in implementing AI currently is access to data. Often key data is missing, or partners are unwilling to share certain data with insurance providers and third-parties. Therefore, our role will be to convince partners of the value they and their customers would get from sharing data and that their data is safe with us.
Version 3.0 can build on the work of previous iterations, enabling insurers to truly leverage the power of data to unlock real dynamic pricing that better serves customers, and by creating simpler integrations that helps brands roll out new insurance offerings at speed.