One Inc CEO Says Insurance Market Is Ripe for Embedded Payments

In the connected economy, there are simple business models (think subscriptions), complex business models (think platforms like Uber), and then there’s insurance.

The insurance sector is so large and complicated that it’s hard to get a read on how big it is. Some estimates put it at $12 trillion cutting across health ($1.3 trillion), property and casualty ($1.5 trillion) and auto ($652 billion). And that’s just three categories.

In terms of “pay and get paid,” take a simple auto accident. Funds flow as consumers pay premiums to insurance companies. Funds flow as insurance companies pay one another. Lien holders must be paid off in order to satisfy the terms of car loans. Adjusters, brokers and suppliers are all stakeholders, too. Things get even more complicated when there are multiple vehicles involved in a crash or multiple payment modalities in the mix.

“Insurance is one of the most complex markets on the planet,” One Inc CEO Ian Drysdale told PYMNTS, adding it is sorely in need of a digital overhaul — and there are still $500 million worth of paper checks flowing in the United States alone.

The goal is for providers such as One Inc to turn those paper payments into electronic ones, automatically reconciled in various back offices. In the meantime, the emergence of the company’s digital payments network, linking far-flung stakeholders, also improves the user experience, he said.

The industry has made some strides. Drysdale said that five years ago, insurers were 20 years behind any other verticals in terms of moving toward an eCommerce, mobile-focused and modern world. Now, with the emergence of InsurTechs, many of the leading and mid-market insurance companies are becoming more digital. But we’re still far from the Amazon or Netflix-like experience that so many people expect from the activities of everyday life.

Payments at the Center of It All

The digital shift has a significant touch point: payments. Embedded payments can help improve the overall user experience while helping to improve corporate margins, he said.

“You might pay your auto insurance 12 times a year, or you might pay for other insurance several times a year,” he said. “That’s when you really ‘experience’ your insurance company.”

One Inc provides client firms with the ability to remind people that it’s time to make a payment for their insurance.

And with a nod to payments, he said, “We make sure that modern wallets are there, we make sure it’s completely embedded in their core system” and that claims submissions and sign-offs are done digitally.

For the insurance companies, he said, “we’ve been able to reduce the cost of payouts by 60%.” That boost to margins comes as firms like Ernst and Young have estimated that by the end of the decade, 30% of insurance transactions will be done through embedded channels.

Consumers already have some experience with embedded channels, said Drysdale, who noted that in many commerce transactions, the opportunity is there to buy insurance along with a purchase (think electronics or airline tickets).

“If you’re in some digital portal, whether it’s buying a car or getting a lease on an apartment, more and more you’ll see that insurance is offered during that transaction,” said Drysdale.

Younger consumers, especially, are drawn to these options and find them convenient.

In the years ahead, One Inc estimates that $70 billion in premiums will be embedded — fast, easy and with no agent to be paid, Drysdale said. The promise of embedded insurance, too, is that data can be shared seamlessly between parties, and insurers can gain some top-line growth and momentum.

We’re headed toward a future where, rather than waiting for the check to arrive in the mail, a payment can be disbursed before the claims adjuster is even off the phone — deposited digitally into an account.

“Any kind of insurance that is completely online and seamless is hyper-attractive to an insurance company,” said Drysdale, who added that “the future of insurance is ‘instant.’”