We asked Parker Crockford, Chief Revenue Officer at Qover, where the growth opportunities are in embedded insurance, about the new role of AI, and what insurers and distributors get wrong about the industry.

Hi Parker! Where do you see the big growth opportunities in embedded insurance right now? 

There are many reasons to be excited. The big opportunity is closing the gap between the insured and uninsured. I’m bullish about the impact embedded insurance can make. When we make it less daunting to acquire insurance, the gap begins to close. We see this when insurance is bundled with a product. For example, we have a partnership with Monzo to deliver travel insurance as part of their card scheme. Customers get the coverage for delayed departure, medical expenses, mugging, document damage, emergency dental treatment and other things, without thinking about it. With Revolut, card holders are given three types of cover: purchase protection, refund protection, and ticket cancellation. Again, these are not things many consumers buy for themselves. 

We can close the gap by offering insurance as close to the point of transaction as possible, which we achieve with InsureMyTesla. Tesla drivers can get their customised quote in less than a minute. We are finding new industries seeing the potential to add insurance at the checkout. We are working with Canyon, a maker of road and mountain bikes. Canyon customers can add insurance at checkout when they buy a bike to get theft, vandalism, and accident coverage. A lot of bike owners worry about crime and damage but don’t take the steps to acquire cover. This approach makes it so simple to get them the protection they need.

There are other themes we can talk about, such as AI, international markets, and the role technology can play. But embedded insurance is all about making life easier for the customer. 

What’s the secret to really effective embedded insurance?

The psychology of insurance is interesting. If people buy coverage and never use it, they feel robbed. But if something bad happens and they don’t have coverage, they regret it. So we need to make it easy for people to make the right decisions. 

My personal theory is to make it as seamless as possible. You want the insurance to be as close to, or involved with, the transaction as possible. People are intimidated by insurance. We need to make the process as smooth as possible. They don’t want to have to go to another website, or click through lots of offers, or enter lots of details. To close the insurance gap we need to make it effortless. 

The insurance industry should look to the payments industry. When I started working in Europe, I worked for a payments company and our dream was to complete a payment with a single click. That’s where payments is now. In an ideal world, that’s where insurance should be too. 

When should a brand bundle insurance so all customers are covered, and when to make insurance an optional extra? What’s the logic? 

They are different business models. Bundling is a way for a brand to communicate something to their user base. With fintechs we look at the personas of their user base. What matters to them? Is it travel? Is it income protection? The fintech brand is able to offer insurance as part of their service to communicate that they understand their user base, and are protecting their interests. 

Optional insurance embedded at checkout is different. The brand makes money through referrals and customer retention. Data plays a big role here. The brand knows what the customer has bought. They know the customer is likely to leave buying insurance to a later date, and they may forget to do so, therefore removes all the friction. The user information is already inputted. Their payment details are already registered. Of the two rewards for offering embedding insurance, revenue and retention, it’s the power of retention that gets overlooked. Embedding insurance is an incredible retention tool.

Distributors dream of launching in one country, and then rolling the same product out in other markets. How hard is an international strategy to execute?

The challenge is two-fold. One, every country has their own set of regulations you need to abide by. And these need to be mapped into your platform. Even going from France to Germany, both in the European Union, presents compliance challenges. Two, and the bigger challenge, is the way insurance companies are structured. You may see a brand operating internationally and think it’s a single operation, but it will have an entity for each country. Each entity can only underwrite in the country it is located in. A multi-country strategy needs a balance sheet able to underwrite risk across countries. Combine the two factors, and it’s complex. This is why you see insurtechs and MGAs coming into the market. They are trying to break down the more siloed corporate structures to make an international strategy more viable. 

Where errors and misunderstandings are there in the embedded insurance world?

On the insurance side, there is a deep understanding of the commercial potential. But there’s less knowledge of the tech side. How to actually build the infrastructure is one of the key barriers to adoption.

Distributors are on a spectrum when it comes to understanding insurance. Some know a lot about embedded insurance, others less so. A common aspect is a lack of appreciation for the time horizon for a project. If you launch a new embedded insurance programme there is a long time period until you see the full benefits. It’s not quarters. It’s two or three years. It takes time to market to the user-base, to get your first set of contracts sold, then to get to renewals. Slowly the gains compound. The distribution market does not fully appreciate the time for a return on investment. 

How are insurers addressing these issues?

Insurers have a choice. They can go to a tech partner like Qover which already has all the technology needed, or if they ask a management consultant will be told to build their own tech stack. I think it’s incredibly hard for insurers to compete with an in-house stack. First, digital companies are multi-country. Insurers tend to be more focused on a single country. So we see insurers building separate offerings for each country, and then struggling to create a unified user experience. As we discussed, multi-country is hard. You need a lot of flexibility to incorporate local payment methods and other variables. 

Second, for insurers and distributors, the tech aspect is not their primary business. You’ve got to be obsessed by it. Full time. Underwriting isn’t a core capability or focus area for us at Qover. . We are focused only on our area of expertise. It’s hard to compete with a specialist.

I actually encourage insurers to try and build some parts of what they need. You should not be relying entirely on a partner. Strategically, if you can in-source, you should. It makes you more ambitious, drives efficiency across the business, which is essential.

But if we’ve been building for nine years across 32 countries in Europe as Qover has, then I need to warn you, when you get into the details, it gets difficult very quickly. 

Qover recently announced the launch of BMW and Mini insurance in Ireland, the latest in a long list of vehicle launches. Why is automotive such a growth story for embedded insurance? 

A simple factor is that it’s a new source of revenue for OEMs. That’s clear. The more interesting reason is the use of data. Cars are rolling computers. The OEMs gather the telematics to create a driver score, and build dynamic insurance pricing. It’s the holy grail the industry has been trying to reach. We aren’t quite there yet, we need to crawl, then walk, then run. But it feels at our fingertips.

Loyalty is another motivation. OEMs are using insurance to create user experiences which differentiate them from the competition. For example, they have the objective, especially with electric vehicles, of keeping drivers returning to their garage network. Embedded insurance means the OEM and carrier can direct the vehicle owner to the right garage, equipped with the parts needed.

By being in control of the insurance product, the OEM can create a really tight user experience. When something happens to the car, the claims, servicing, and repair can all take place within their ecosystem. It keeps drivers close to the brand, making them more loyal.

And AI? Insurers and distributors are talking vocally about the potential for AI to help them scale, cut costs, and deliver new customer experiences. But AI is proving hard to tame

We are doubling down on AI. It’s part of the growth story in embedded insurance because of the superior experience AI can deliver. In customer care and claims AI helped us decrease handling time and cost by 66%. Insurance uses a lot of structured information. It’s incredibly easy to train a bot on Terms & Conditions. We configure and engineer the prompt and context the LLMs have access to.  and so in our more advanced uses cases, where we have sufficiently tested the AI, it will also autonomously respond to the customer when the confidence level is high enough 

You can see the impact in our TrustPilot score. We are 4.3 and rising over the past few months, whereas the industry average is between 1.5 to 3. It comes down to our responsiveness. The AI means we can get answers so quickly.

And final advice for companies wanting to improve the way they deliver embedded insurance?

I say to distributors and risk carriers, you should 100% be trying to build something. Sure you can partner with a platform like Qover, and it’s our aim to deliver value add and stay ahead, but we don’t expect you to use every feature or tie yourself forever to our platform. Being a builder means you learn. It becomes part of your DNA. We are confident you won’t replicate what we do at Qover, but there should be a clear distinction between what you are able to do yourself and what you outsource. 

Thank you Parker! 

It was a pleasure talking to you!