Embedded Insurance # 4: Financial Wellness and the Arrival of a Global Pandemic

Sibylle Fischer
April 14, 2020
Innovation, Startups, Products
For an understandably anxious public, access to robust financial wellness platforms could provide the kind of remote guidance they need to weather an uncertain storm.

In the first three parts of this blog series we explored how embedded insurance was already transforming the insurance distribution model – part 1 focused on the overall impact for insurers and their customers, while parts 2 and 3 looked more closely at recent innovations in the home and mobility ecosystems, respectively. Now, in a matter of weeks, the coronavirus crisis has brought on dramatic and unprecedented fluctuations in global markets, forcing many individuals and organizations to reassess their economic fortitude and confront the hard reality of their overall financial health. In this post, we look at the financial wellness respectively financial needs ecosystem from the customer perspective and how an embedded approach might be of use in the aftermath of the pandemic.

What is financial wellness?

“Financial wellness” is an industry catchall term for evaluating how effectively individuals are managing their economic life. This is usually quantified as an individual’s ability to spend within their means, plan for the future, prepare for emergency situations, and access the tools they need to make good financial decisions. To date, much innovation in the financial wellness ecosystem has focused on developing resources for individuals that improve their overall financial wellbeing, including platforms and tools with personalized content, services and products.

Embedded products and financial wellness

In the broadest sense, financial wellness platforms can provide rich content experiences that attract a wide base of users. These platforms can be customized per a specific audience, but many are typically structured around life events, providing useful features, experiences and guidance for users. These platforms are built for return visits and the kind of “stickiness” that encourages regular customer interaction.

Once users are engaged on a platform, embedded services and products can be more readily introduced. Some financial wellness platforms use recommendations engines to suggest specific actions or individual products based on data insights. The result is a kind of hybrid advisory model, where customers can experience a seamless transition between the recommendation stage and product or service purchase. From the advisor perspective, these platforms also offer the added benefit of lead generation and numerous cross-sell and up-sell opportunities.

Insurers must begin thinking about what financial wellness tools they can make available to their employees and their customers in order to help streamline and support this effort.

Sibylle Fischer, Strategic Venturing & Startup Scouting

Financial wellness, embedded insurance and COVID-19

As COVID-19 continues to create unprecedented turbulence around the world, concerns about our personal health, the health of our loved ones, and the implications of sudden economic instability have moved to the forefront of our lives. From reduced and lost income from unemployment and stock market turbulence, to increased spending on food and supplies, many are feeling the pinch from strained budgets, realizing also that their emergency savings account won’t necessarily be enough to wait out an unknown period of quarantine and indefinite economic shutdown.

There are already a slew of great financial wellness tools in use, many of which can be refocused during this crisis to help employees, small business owners, and other customers take stock of their circumstances and make the most of their existing assets. The embedded model which creates new digital propositions through automation, personalization, and data sharing is one that could be enormously useful at a time when most of our “real life” interactions have been moved to the digital sphere out of sheer necessity. What does that look like practically for insurers and their customers? Tools for everything from streamlining the claims process, to money management and financial coaching, to limiting debt, to recommending products, programs and services for qualifying individuals.

Navigating the rough waters in the aftermath of a crisis like COVID-19 will require the creativity, cooperation and coordination of the masses. For an understandably anxious public, having access to digital platforms that can provide useful guidance and qualified recommendations for relevant programs and services will be of enormous benefit. Insurers must begin thinking about what financial wellness tools they can make available to their employees and their customers in order to help streamline and support this effort.

We hope our readers are staying safe and healthy! Next month we continue the embedded insurance conversation with a look at how SMEs are weathering the coronavirus storm.