Increase e-commerce revenue with add-on insurance

Insurance As A Service
Global e-commerce sales are projected to reach 4.88 trillion U.S. dollars in 2021. In the meantime, evolving behavioural trends are having an impact on how consumers purchase insurance. Find out how these trends, when combined, present both insurers and online retail stores with new revenue-driven partnership opportunities.
 

E-commerce has a bright future ahead

 
Online shopping is one of the most popular online-based activities worldwide, with global e-commerce sales reaching 2.3 trillion U.S. dollars in 2017. This figure is projected to grow to 4.88 trillion U.S. dollars in 2021.
 
As a share of global retail sales, e-commerce is expected to reach 17.5% by 2021, up from 7.4% in 2015.

In the United Kingdom alone for example, online shoppers make 87% of their retail purchases (grocery shopping not included) online. (Ecommerce News)

This is certainly great news for operators of online stores. Notwithstanding the growth, however, most e-commerce sites operate in highly competitive environments. Not only are many markets crowded, but experience and research show us that online customers tend to be more price sensitive, less loyal and more prone to shopping around for the best price/value combination than their brick-and-mortar counterparts.
 

Improve your value proposition to stand out

 
So how do you differentiate your brand and offer from the rest of the operators? How do you increase revenue-per-order of your online retail business? How do you build trust and loyalty in this era of instant gratification, whilst reducing cart abandonment rates?
 
Whilst there are various optimisation techniques, which can be deployed, one way of achieving this goal whilst improving revenue and margins, is to improve your overall value proposition by offering add-on insurance.

You would be excused though if you were wondering why customers should buy insurance from you, rather than from their traditional insurance broker; especially when insurance is not your expertise.

 

Customer behaviour in purchasing insurance is changing

 
Mimicking other types of online activity, insurance purchasing behaviour is also changing. Many consumers are happy buying insurance through websites other than those of traditional insurance carriers or their agents. The digital mindset with an open attitude towards brands and buying behaviour, especially amongst younger audiences, is also spreading to the otherwise traditional insurance industry. Notwithstanding this, however, just like with other buying activities, audiences expect a seamlessly integrated, friction-less, omni-channel experience.
 
So what does this mean? How are the positive e-commerce and insurance buying trends related?
 
When combining these two factors, e-commerce sites and insurance providers have a unique opportunity for a win-win partnership. One that benefits all parties involved. E-commerce sites increase revenue per order and customer lifetime value, whilst customers have an overall more positive experience with the site.
 

It's a partnership, not a lead generation model

 
Add-on insurance is an insurance policy that is bought off the back of another purchase (whether a primary insurance policy or an unrelated product) and that complements that primary purchase. An example many of us are familiar with, is buying a Gap Insurance policy with your new car financing or adding a personal injury policy to your travel insurance.
 
Think of it as a “plug-and-play insurance”, built on a partnership between the insurer and e-commerce website, rather than a lead generation model which sees you sending high-CPA traffic from your website to that of an insurer or broker. With this model, an insurer teams up with a complementary business to offer the right insurance cover at the right time to the right audience.
 
 

Insurance as a service is a partnership, not a lead generation model

Insurance as a service rather than a disconnected product

 
When insurance is treated as a service that complements the primary purchase rather than a disconnected product, it can be easily integrated within the online retail store’s product page or shopping basket and both can be purchased with a single click. Moreover, it is offered exactly when needed, completely eliminating the friction of having to do all the research associated with purchasing a separate insurance policy which, either way, would not be tailor-made for the product purchased.
 

Benefits from add-on insurance

 
Incorporating add-on insurance is quick low-risk strategy for e-commerce sites to:
 
  1. Increase revenue per order/customer.
  2. Remove the friction associated with looking for adequate insurance cover for the product being purchased.
  3. Offer a more complete service and increase loyalty and trust.
  4. Expand their product portfolio with little to no risk.

Of course, insurance is never a simple service to offer. It is highly regulated and customer protection is paramount. But then, that’s where the right partner comes in.
 
 
 

Do you want to know more about add-on insurance?

 
 


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Recommended Reading
Ecommerce stores are embracing Insurance APIs. Here’s why. 26 February 2020
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