Embedded insurance delivers essential risk management to the just-in-time supply chain

Story by

Damith Chandrasekara

Tags /

  • Freight
  • Insurance
  • Logistics

Today, the barrier to entry for insurance is far too high for many cargo and freight SMBs.

In this highly competitive industry, freight and logistics professionals operate on razor-thin margins and must make decisions in seconds. Unfortunately, when they need spike and gap coverage, a game of phone tag with you could cost them a profitable load.

Additionally, as you rarely recover your investment in writing transactional insurance, a critical need in the spot freight market, SMBs are instead offered expensive annual policies—policies that cut too deeply into their own profitability.

All of this pain is further complicated by the fact that they likely don’t have the benefit of an in-house risk management team and statistical insights. As a result, they’re unable to accurately gauge the risks involved with any particular shipment—or understand exactly what they’re getting from the coverage they do purchase.

At the end of the day, it means they’re likely operating with broad risk exposure—and embedded insurance is the answer.

What is embedded insurance, exactly?

Leveraging API integrations, insurance networks can empower SMBs to opt into instant coverage with a single click, right from within their existing workflows.

It’s a seamless process you’ve most likely already experienced.

Consider shopping on Amazon, for example. When you decide this is the year to invest in a top-of-the-line blender for the frozen daiquiris your neighbors keep raving about, you can add a protection plan—it’s located right next to the Add to Cart button. Just click the checkbox to add the premium to your purchase price, and you’re covered.

Embedded insurance for the transportation industry can operate in much the same way.

Your clients have already done the heavy lifting of entering shipment details into their workflow. Embedded insurance simply harnesses this existing data to accurately price the risk at a granular level, and then enables them to instantly transfer that risk on-demand.

Just as important, embedded insurance enables the insurance industry to deliver critical insights right at the point of purchase—helping them better understand both their risks and coverage options. For example, a “risks and coverage details” link could launch a pop-up that highlights their exposure to Acts of God, theft, and General Average-related losses if they rely on carrier liability coverage alone—a fact misunderstood by many.

To be clear, embedded insurance shouldn’t employ scare tactics. Quite the contrary. When embedded insurance is done right, it should engage customers in an educational exercise that gives them more information and control so they can, in turn, make better decisions. The decision to then add coverage or not rests entirely with them.

Of course, it’s easy to speak to embedded insurance conceptually. Delivering a seamless solution is another matter entirely.

Taking a human-centric approach to embedded insurance

What we at Loadsure consider a good product is quite different from how it would be defined by the traditional insurance industry—and it’s all driven by our value system. We provide insurance coverage solutions for underserved cargo classes, and we ask ourselves: How can we provide the customer value in the most frictionless way?

It’s been an exciting journey for our team—and we’re proud of what we’re now able to deliver.

Our quote-based solution, which can be integrated in just a few weeks, enables shipment details to be sent to us through our API. Our AI learning engine then instantaneously prices the risk and sends back a quote with the premium, deductible, and terms and conditions—all from a single added step in the workflow. All the customer has to do is click, “Yes.”

We also developed a lightweight URL link API that allows insurance networks to deploy even more quickly. While this approach isn’t quite as seamless (it delivers the insurance purchase flow in an iframe pop-up or another tab), it’s a fast and simple way for you to deliver added value.

In either case, this is very different from the way insurance works today—creating delays and adding costs through traditional processes, printed forms, and multiple human touches.

That said, while technology provides answers to critical challenges in the global cargo and freight industry, it doesn’t deliver every answer. Insurance brokers, like you, will always have an important role to play, though your role will evolve. Going forward, sophisticated technologies will manage your mundane tasks and free you to attract new business, cultivate customer relationships, and provide the careful guidance your customers need.

Empowering SMBs to make informed, proactive decisions

Right now, when your customers need to protect their goods and merchandise, they purchase coverage and they’re done. End of value.

Unlike traditional insurance, embedded insurance solutions plug them into an entire ecosystem, giving them full visibility into everything they’ve insured. What’s more, these solutions can empower them to slice their data and create customizable, granular reports broken down by carrier, commodity, and limits. Able to now easily understand their insurance costs, claims history, and the value of their coverage, they can better manage their overall risk profile.

How so?

One part of the embedded insurance equation is providing liquidity when something goes wrong, and that’s critical. The other part is giving customers easy visibility into where their losses occur, insight that was labor-intensive and often cost-prohibitive to generate before—that is if they even had access to the data in the first place.

Even more exciting, with visibility into vast quantities of high-resolution data, embedded insurance solutions can deliver increasingly sophisticated risk management insights over time. AI learning engines will look for patterns in anonymized data and identify behaviors that create risk—and when they discover a pattern for a particular category, every customer will benefit from it. Think of it like crowdsourcing insurance insights—everyone in the environment will be empowered to suppress their losses.

Enabling you to seize new business

It’s not just assureds who will realize value from embedded insurance solutions, of course. It can benefit insurance brokers, like you, as well.

For starters, embedded solutions enable you to write business you couldn’t before, simply because you didn’t have capacity.

What’s more, where the cost of writing some business was once too high in terms of time, effort, and money, embedded insurance removes this friction. What was once not a profitable line of business, automation now turns into a profit center. Once a solution is launched into your wholesale and retail networks, or even into client workflows, it simply becomes a question of how much volume you can drive to the solution to boost revenue.

The future of transportation industry insurance is embedded

Labor-intensive traditional processes introduce inefficiencies and added costs. The result: Risk management that’s crucial to business sustainability becomes too slow and costly to be accessible to the SMB. By leveraging AI and automation, embedded insurance reduces the complexity once involved in delivering coverage to a single click.

When you consider the barriers many SMBs encounter, factors that contribute significantly to the massive underinsurance of cargo and freight, it’s clear that a new approach is needed. Embedded insurance offers this simple path forward, delivering anytime access to instant, cost-effective coverage, while empowering you to increase your service levels and grow your businesses.

It really is a win-win.