B2B2C Insurance: How Does This Novel Insurance Model Address the Evolving Consumer Needs?

Highlights:

• Introduction
• Benefits of B2B2C insurance
• Growth of the industry in the Asia-Pacific region

Since the past few decades, especially in the post-globalization era, the popularity of insurance services has grown exponentially due to rising awareness and financial literacy among people globally. Various types of insurance services have been devised which offer coverage for different risks and calamities, thus providing a safety net to the insurance policyholder. With the evolving needs of individual consumers and businesses, a new type of insurance model called B2B2C insurance has emerged which offers innovative insurance options to the customer.

Understanding the reasons behind the growing popularity of B2B2C insurance

B2B2C insurance or Business-to-Business-to-Consumer insurance is an insurance model in which a retail business or a commercial enterprise enters into a partnership with an insurance company. As part of this partnership agreement, the retailer or the company will sell the insurance policy directly to the customer along with its product. For example, BMW, a German automobile company, has partnered with several insurance companies to provide insurance coverage for their automobiles; when a customer buys a BMW car, BMW also sells the vehicle insurance plan to the customer directly without bringing in any third-party intermediary. Similarly, many e-commerce companies collaborate with insurance companies to offer insurance coverage for the products they are selling on their website.

The B2B2C insurance industry has been one of the most profitable sectors in the Banking, Financial Services, and Insurance (BFSI) domain. The first major reason behind the growth of this industry is the convenience that this insurance model offers to its customers. As explained in the BMW case study, the B2B2C model allows the automobile company to sell insurance services to the customer directly. Hence, the customer doesn’t need to buy a separate insurance policy from an insurance company or a third-party vendor. This becomes an extremely important advantage in today’s world as the awareness regarding insurance, though increasing, is still quite low. Thus, the B2B2C insurance model ensures that people who do not have any knowledge about insurance policies also get insured. Experts opine that in due course of time, B2B2C insurance models are expected to play a huge role in increasing financial awareness regarding insurance policies globally.

The emergence of innovative technologies such as Artificial Intelligence and machine learning have also increased the popularity of this novel insurance model. These technologies can help insurance companies and retailers develop tailor-made insurance policies that cater to the exact demands of the customer. Furthermore, advanced data analytics also aid the company in mitigating the risks associated with insurance coverage and proactively detecting insurance fraud.

Exploring the changing dynamics of the B2B2C insurance industry

Among all the major regions across the globe, the Asia-Pacific region is expected to have the highest growth in the B2B2C insurance sector. The rising middle class and increasing pace of digitalization in developing countries of this region are anticipated to be the two main factors influencing the growth of the industry in Asia-Pacific. Furthermore, countries like India have witnessed a massive rise in overall financial literacy, along with an increase in the disposable incomes of its people. As a result, customers are now increasingly preferring products that are insured, which is predicted to provide a major boost to the industry. The India B2B2C domain is estimated to surge ahead at a CAGR of 15.7% in the 2023-2032 period due to these factors.

Along with this, the alliances between multinational conglomerates of different sectors and insurance companies are also expected to contribute to this industry’s growth. For instance, in October 2023, Allianz Partners, a leading B2B2C insurance provider, announced a partnership with Bolttech, a global Insurtech company. As part of this partnership, both companies will launch an insurance coverage program for embedded devices and applications across the regions of Asia-Pacific and the US.

To summarize, the B2B2C insurance model has gained popularity in the past few years due to the evolving consumer needs and growing financial awareness across the globe. Furthermore, the convenience offered by this novel insurance model and the integration of advanced technologies like AI and ML are expected to increase the revenue share of this industry, especially in the Asia-Pacific region.

For insights into how your business can capitalize on the opportunities offered by the industry, feel free to contact us.

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