New Report: Transaction Activity Offers Digital Banks New Channel For Insurance Sales

The insurance market today offers a wide array of coverage options, from health and home insurance to pet policies. At the same time, the market is complicated and fragmented, which can often make it difficult for consumers to obtain protection when and where the need arises. PYMNTS’ latest research captures this complexity. Consumers get coverage from no fewer than five types of providers, including carriers, brokers, banks and product manufacturers.

Our research reveals something else: Consumers are hungry for more direct and seamless ways of obtaining coverage. Forty-five percent of consumers would be “very” or “extremely” interested in offers from their banks for specific types of coverage based on their bank transaction data. These bank-embedded offers — provided with customers’ consent — would thus be responsive to the major events and purchases that could give rise to a need for protection. Our research shows the interest levels are even higher for an important set of consumers: digital bank customers. Seventy percent of these consumers would be highly interested in at least one type of bank-embedded offer, in fact.

These are among the key findings from Embedded Insurance Report: Leveraging Transaction Data To Expand Coverage In A Digital-First Market, a PYMNTS and Cover Genius collaboration based on a survey of 3,551 U.S. consumers. The report examines consumers’ attitudes and practices about obtaining insurance in a marketplace that is becoming predominantly digital.

One big-picture pattern emerges clearly from our research: Consumers have not put their lives on hold despite the tumultuous events of the past year. Sixty-two percent of consumers experienced major events or made significant purchases over the past 12 months — and 41 percent obtained insurance to cover them. This means that a large share of consumers who experienced potentially risky events or made large purchases went uncovered.

Our research further shows that not all consumers are getting covered equally. There is a strong connection not only between digital financial habits and interest in bank-embedded offers, but also the likelihood of having obtained coverage under wide-ranging circumstances. Digital bank customers were more likely to get coverage than those at traditional banks in 10 out of 13 coverage categories we examined.

Digital financial habits are not the only driver of interest in bank-embedded insurance options. Another key factor is having recently experienced a potentially insurable event. Fifty-three percent of those who recently purchased a home would be highly interested in bank coverage offers, for example, which is close to double the level of interest among those who did not.

This points to the inherently contextual nature of insurance coverage. Plans to obtain insurance can easily slip from consumers’ minds if opportunities to obtain coverage are not available around the time an important purchase is made or when an event is experienced. A loss or disaster — whether in the form of theft, fire or some other unanticipated event — can be a cruel reminder.

For more insights from our extensive research, download the report.