By Megan Bingham-Walker, Co-founder and CEO of Anansi
Small and Medium-sized Enterprises (SMEs) have championed embedded insurance for years now; relying on it as a fundamental tool to protect their assets and enhance value for their customers. This insurance instils confidence in businesses, giving them a robust safeguard against unexpected events like theft or loss. Recently, at Anansi, we’ve observed a growing trend: larger retailers are also recognising the benefits of this technology, once the exclusive domain of smaller businesses. With 70% of customers expecting businesses to offer embedded insurance, it’s evident that this trend is more than a fleeting phase.
The shift from SMEs to large corporations
Retail giants that are a permanent fixture on the digital high street all have challenges around last-mile parcel shipments. Transit-related issues remain a dominant cause of customer discontent, with 58% of negative reviews targeting the delivery process. With customer loyalty hanging by a thread, a single negative experience can be the difference between retaining a customer or them looking elsewhere and then never looking back. Historically, these retailers have been reliant on basic compensation provided by delivery entities; but the cumbersome task of juggling claims processes across various delivery partners underscored the pressing need for a streamlined solution.
The introduction of embedded insurance solutions was initially met with a fair amount of scepticism. Retailers, accustomed to recouping just a small portion of their losses, were presented with a new insurance product that came with a pricing structure they hadn’t encountered before. Considering that 45% of businesses experience significant delivery-related losses, this was a much-needed change. Adding to the initial hurdles was the need for workflow integration. However, as these larger corporations began to understand the extensive advantages of this service, their perspective shifted. The shift from partial compensation to receiving the full value has been a game-changer, easing pressures on teams handling customer service, finance, and fraud. Customised advice on choosing the right courier and pinpointing fraud was also a value add, and operational risks have notably decreased.
A customer-centric approach to insurance
Trust is the linchpin of customer loyalty, regardless of the size of your business, especially during peak e-commerce seasons. Embedded insurance fortifies this trust by ensuring swift compensation processes, clarifying potential ambiguities, and consistently delivering top-tier service. Given that 62% of customers state that prompt compensation is vital in cultivating trust, it’s clear that the aim is to weave this assurance seamlessly into the shopping journey, rendering it virtually invisible yet profoundly impactful.
The last and middle mile sectors represent a crucial phase in the retail journey, especially for larger retailers. It’s here that embedded insurance offers significant financial advantages. By adopting flexible compensation structures, these retailers can select models perfectly tailored to their unique requirements. With 80% of businesses acknowledging the limitations of traditional insurance, it’s evident that while they might continue to lean on traditional insurance for bulk cargo transport, there’s no denying that embedded insurance is emerging as a leading choice, especially in addressing the challenges of the last and middle mile stages.
The future of embedded insurance for big business
Embedded insurance has moved beyond just being a promising concept on paper and is now producing tangible results in the real world. Many of the leading e-commerce platforms have embraced this model, seeing its value in providing comprehensive coverage. This is particularly crucial during the last-mile delivery, a stage fraught with challenges. With embedded insurance, these platforms can quickly address any shipping discrepancies, ensuring that they recover the full value of any lost goods. This not only improves the overall customer delivery experience but also instils greater confidence in the service. The shift towards automated risk management is also proving transformative, especially for premium products. Gone are the days of heavy reliance on manual processes; automation is streamlining operations and revolutionising the way businesses handle risk.
For embedded insurance to be truly universal, it needs to scale effectively. Sturdy platforms that can handle enormous daily consignments showcase the growing prowess in this field. The expanding horizon sees increased partnerships with esteemed retailers and Third-party Logistics providers (3PLs), all aiming to emulate successful frameworks worldwide.
Embedded insurance is the future, and the progression from small businesses to colossal corporations is promising. As the industry stands at the brink of significant growth and transformation, it’s time for large retailers to recognise this potential.
