How Cover Genius has successfully embedded digital insurance into the car purchase customer journey

Embedded insurance is not only here, but also here to stay. And in a form that is set to proliferate and will potentially touch every digital interaction we have in the future. See this month’s in-depth article here for more.

One sector that is rapidly becoming digitalised is the auto sector. It has been possible to order and pay online for a car for some years. There’s nothing new in that. In fact, research from Autotrader showed that more than half of the time committed to making a car purchase was taken up with online research.

Auto goes digital

However, the COVID-19 pandemic made it impossible for people to buy cars in person, and so digital platforms to buy and sell cars remotely did very good business. Car configurators have given consumers the power to test the specs of the car they might choose without any need to visit a showroom.

It is also a touch point where OEMs (manufacturers) can begin to introduce the overall cost of running a car, with inclusive servicing deals, such as those being run by Ford, Jaguar Land Rover and Volvo.

“Consumers don’t want to take a distinct ‘second step’ to purchase protection or be linked out to a third party,” says Arijit Chakraborty, managing director for APAC at Cover Genius. “Instead, they want insurance offers embedded at the point of sale or sign up.”

OEMs build bridges with customers

 Just like online retailers, auto OEMs have significant capacity for credit lending and captive banking, as people now use a personal contract purchase (PCP) – a form of hire purchase agreement – to buy their car. In the UK, 80% of new cars were bought through a PCP in 2021, according to What Car?

The OEMs want digital – in other words, captive – relationships with their customer base. The path to purchase is the configurator, where a partner app can be embedded seamlessly and offer insurance, says Nimesh Patel, CEO of Wrisk, which provides embedded insurance for OEMs such as BMW and Mini, the RAC and recently, auto platform heycar.

“We’ve partnered very closely and embedded the insurance offer during the customer journey,” says Patel. “We are implementing indicative quote tools that can be placed within a car configurator solution or elsewhere on the journey, so that once you’ve captured a couple of data points, you can provide an indicative quote, offering people cover before completing their journey.”

Protecting the consumer

 The multi-touchpoint strategy across the path to purchase and beyond is now a reality. Data is being captured on these customers, eg about renewal dates, and improving the customer journey.

But it isn’t ever likely to be a totally seamless transaction, though. A pure embedded play would have the insurance as part of the price of the car.

“I don’t know whether we will truly be able to overcome that regulatory hurdle of giving the customer a choice,” says Patel. “If the customer is going into a finance contract, you can have an opt-in. But that is more difficult if part of a subscription product – and I believe that’s really where we’re headed. And that will require transparency.”

In time, that consumer protection conundrum will be resolved as cars become autonomous and fewer consumers own their own vehicles, rather than rent one in a transport-as-a-service transaction.

Getting the right mindset

 But insurers are going to have to learn that in this new world, the brand or platform they partner with will always own the customer. Even if they are joint data controllers under GDPR, the customer generally sticks with brands or the partners that insurers work with.

“We provide an atomically branded insurance product, not a risk product,” says Patel. “It’s a BMW insurance product that people have an affinity with. And in the case of BMW, the big USP is that the BMW insurance guarantees other parts of the OEM’s relationship, like servicing and parts. And that’s about more than just pricing.”