B2B2C insurance is the activity of distributing Life and P&C policies through non-insurance intermediaries. Such activity is nothing new to insurers who have been successfully selling insurance policies through other financial institutions –mainly retail banks and wealth managers – for years. Insurers have also been offering policies through affinity groups (e.g., car dealerships), and more and more companies are currently looking to participate in partnerships with non-financial institutions.
The B2B2C distribution model has, however, shown rapid evolution in the last years and is gaining the attention of an increasing number of players operating both inside and outside of the insurance industry. Banks, utilities, e-commerce, retailers and others (e.g., professional associations) are showing interest in proposing insurance coverages to their customers or members, in order to differentiate their value propositions and increase margins. In this context, “digital attackers” are occupying a white space currently not fully served by traditional companies. For example, a Belgian fintech has developed a unique embedded insurance solution for a leading challenger bank that the large part of traditional insurers would not have been able to achieve: by subscribing to each of banks’ plans – plus, premium, metal – the customer automatically activates insurance coverages for travel, purchases, events, etc. While such business opportunities were mostly concepts some years ago, this way of distributing policies is by far showing one of the fastest growth in the market and becoming more common for customers.
The opportunity of being present at the “right moment of need” and often side by side with a brand that is trusted by a large client base is becoming increasingly attractive to traditional insurers aiming to overcome many of the barriers that have stalled the penetration of insurance products so far. Furthermore, these B2B2C distribution models offer the opportunity to insure groups of customers with strong commonalities of insurance needs, and hence render the underwriting more efficient and cost effective.
This article is a guide for industry practitioners who want to consider the opportunity, understand its relevance to their businesses and, possibly, design a strategy to develop or re-organize their approach to B2B2C.
The opportunity to address the large protection gap (estimated at $1.8 trillion in 2020 for P&C), that insurers have not been able to effectively reduce over the years leveraging on traditional distribution channels.
The need to overcome barriers of supply and demand (e.g., on the demand side: appeal, awareness, affordability, trust; on the supply side: transaction cost, limits to insurability, adverse selection/ moral hazard, etc.).
The necessity to address new customer habits. Companies operating in the “sharing economy” (e.g., crowdfunding, home sharing, car sharing, …) are expected to reach $335 Bn of revenue worldwide (up from $15 Bn of 2013).