In an age where financial services are evolving to match the pace of consumers’ dynamic lifestyles, embedded insurance is gaining traction as a transformative approach to offering protection. 

Unlike the traditional standalone policies, the essence of embedded insurance lies in integrating insurance protection into everyday transactions or activities, making it more accessible and less intrusive to consumers.

In an interview with Fintech News Malaysia, Wilson Beh, Co-founder and Chief Operating Officer of PolicyStreet, shared how the company embraces embedded insurance and protection and what this means for its customers.

The insurtech, which also recently secured US$15.3 million (RM67 million) in its Series B funding under Khazanah Nasional Berhad’s Dana Impak, has set goals of serving 2.5 million gig workers and 300,000 small and medium-sized enterprises over the next five years.

Bridging the protection gap in the digital economy

The idea of venturing into embedded insurance originated from PolicyStreet’s commitment to making insurance more accessible, especially for traditionally underserved communities. 

“About 30 million Malaysians, or 90 percent of the population, are underinsured,” Wilson shared. This statistic propelled PolicyStreet to venture into embedded insurance, driven by a commitment to narrow this significant protection gap. 

The insurtech recognised the need to extend protection to the digital and gig economies now prevalent in the consumer market and adapted its platform accordingly.

Wilson noted that despite the reopening of the economy, research shows that most Malaysian consumers prefer to shop online. Recognising this shift in consumer behaviour, PolicyStreet saw an opportunity to embed insurance protection within the online purchasing journey. 

This led to a partnership with Shopee, an e-commerce platform in the region where the insurtech introduced the Damage Protection Plan to ensure affordable and comprehensive coverage to online shoppers, thereby bringing insurance protection directly to consumers’ fingertips.

Rethinking traditional insurance models

Embedded insurance presents a distinct approach compared to traditional standalone insurance policies. 

While standalone insurance policies often offer comprehensive coverage that may include unnecessary elements, embedded insurance is bite-sized and tailor-made to address users’ needs at the moment of need.

Embedded insurance transforms the journey, making it more accessible and appealing to the average consumer. Simplifying the acquisition process removes the traditional barriers that often discourage individuals from obtaining insurance coverage.

With its emphasis on convenience, affordability, and seamless integration into daily life, embedded insurance offers significant advantages for both insurers and consumers.

“Insurance is traditionally sold, not bought,” Wilson explained, highlighting the common perception of insurance as a complex and daunting purchase. By simplifying the acquisition process and making it a seamless part of transactions, embedded insurance can encourage greater uptake of insurance protection among Malaysians.

Designing embedded insurance solutions: key considerations

The primary considerations for insurance providers in developing embedded insurance solutions include understanding the specific needs of users, creating a user-friendly claims process, and ensuring efficient communication channels. 

However, challenges may arise during the embedding process, such as aligning technical integrations, designing products that inspire trust, and managing complex claims processing.

Wilson also stressed the importance of understanding the end consumer when designing these solutions. “We constantly ask ourselves – does the product actually solve the issue at hand? Would we, as consumers ourselves, purchase this protection? These questions guide our product development process, ensuring we create insurance offerings that truly meet the consumer’s needs.”

Seamless integration for a smooth user experience

Ensuring a smooth user experience for Shopee’s sellers and buyers was central to PolicyStreet’s strategy in integrating insurance offerings. By partnering closely with Shopee, the insurtech succeeded in embedding its technology into the e-commerce platform’s online and mobile interfaces.

The integration process was designed to be intuitive and user-friendly. Shoppers can simply opt-in for protection at the checkout stage by checking a box, providing them with easy access to insurance coverage. 

After opting in, shoppers receive a confirmation email from PolicyStreet, guiding them to a dedicated claims management portal. This portal lets users view, submit, and track claims anytime, anywhere, ensuring a seamless claims process.

By collaborating with e-commerce platforms, PolicyStreet ensures that insurance products are seamlessly integrated into the shopping journey. This integration enhances the user experience and increases the accessibility and convenience of insurance protection.

Transforming the shopping experience

Integrating insurance into the shopping journey can positively influence user experience and conversion rates. Shoppers who opt for the Damage Protection Plan offered by PolicyStreet gain increased confidence in their purchases. This plan covers all-risk damages, including wear and tear, for up to six months, acting as a quality assurance policy.

For example, if a shopper purchases a piece of furniture and it starts deteriorating rapidly just a few months after purchase, the Damage Protection Plan provides compensation of up to RM10,000. 

Additionally, the plan covers accidental damage caused by lightning strikes, burglary and theft, flash floods, and fires. This increased sense of security fosters customer loyalty and helps enhance financial security amid life’s uncertainties.

In the event of a flood caused by the monsoon season, Malaysians will not have to worry about the financial implications of replacing their belongings purchased from e-commerce platforms if they have opted for the Damage Protection Plan. 

This coverage helps promote financial stability and inclusion among vulnerable communities, as annual floods in 2021 resulted in RM1.6 billion in losses in living quarters.

Considering the vast number of items Malaysians buy online, the protection offered by embedded insurance provides peace of mind, ensuring consumers can shop confidently. This enhances the overall shopping experience and contributes to a culture of financial security among online shoppers.

“By transforming the insurance shopping experience, we’re helping our consumers better manage life’s uncertainties. This peace of mind is invaluable and contributes to the overall shopping experience,” Wilson concluded.

Future of embedded insurance in Malaysia

The future of embedded insurance in Malaysia may depend on several key factors. Firstly, the regulatory environment and the authorities’ support level play a vital role in fostering innovation and collaboration within the insurance sector.

 A conducive regulatory framework encouraging developing and implementing of embedded insurance solutions will drive its growth and adoption.

Secondly, consumer demand and preferences for insurance products that are tailored, convenient, and affordable will shape the future of embedded insurance. As customers seek personalised and easily accessible coverage, insurance providers must adapt to these evolving needs and offer solutions that meet their expectations.

Thirdly, the availability and adoption of technology platforms that enable seamless integration and distribution of embedded insurance solutions will be a determining factor. The advancement and widespread use of technology platforms will facilitate insurance integration into various touchpoints, making it more accessible and convenient for consumers.

Lastly, the future landscape will shape the competition and collaboration among insurance providers, embedded insurance enablers, and distribution partners. Insurance providers can differentiate themselves in a competitive market by offering value-added services and enhancing the customer experience. 

Collaboration between various stakeholders is also essential to leverage expertise and resources, ultimately driving the growth of embedded insurance in Malaysia.

Considering these factors and addressing the opportunities and challenges, the future of embedded insurance in Malaysia holds great potential to bridge the protection gap and provide Malaysians with accessible insurance solutions.

PolicyStreet’s venture into this space marks a promising start to a more customer-centric future for the insurance industry. It will be exciting to see how this approach continues to evolve and impact the broader market in the years to come.