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7
MINUTE READ TIME
Published
March 7, 2024
|
Alex Champagne
|
Partner Spotlight

The Future of Ecommerce Insurance: A Deep Dive into Insurtech

The Future of Ecommerce Insurance: A Deep Dive into Insurtech

Table of Contents

During huge innovation shifts, it's inevitable that there will be winners, losers, and those who need to adapt to new ways of doing things. The insurance sector is no exception.

Traditional insurance models have struggled to keep pace with the unique needs and risks associated with ecommerce and the digital space in general.

Within this context, Insurtech has emerged as a critical player, addressing the challenges faced by traditional insurance models by catering to the unique needs of ecommerce businesses.

In this post, we'll delve into the shortcomings of traditional insurance models for ecommerce, and explore how insurtech is revolutionizing how ecommerce businesses manage risks.

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Traditional Insurance is Failing Ecommerce Sellers

Here’s why:

  • Annual forecasts: Let's face it, these are at best, educated guesses. Estimates that you’re confident in today could be thrown out of the water with a single viral video or a shipping delay that changes the trajectory of your entire year.
  • Inflexible contracts: Those annual forecasts also come tied to annual contracts, leading to the risk of being underinsured or overinsured if you have a particularly good, or bad, year.
  • Lump-sum premiums or high-interest financing: Amazon sellers have two standard payment options, upfront payment or monthly financing with interest attached. The financial burden of either can be particularly challenging for smaller sellers.
  • One-size-fits-all approach: Traditional insurance models often categorize unique products into generic categories, leading to misaligned coverage or high premiums if low-risk products are classified under ‘risky’ categories.
  • Manual systems and processes: These can significantly slow down the application, renewals, and claims process, delaying payments and adding unnecessary stress.
Team meeting, making annual forecasts

The inaccuracy and inflexibility that Amazon sellers are facing in the insurance market are creating huge risks of inaccurate coverage whenever sellers launch a new product – adding to the strain on sellers in an already competitive world. 

Fortunately, there’s a new wave of insurtech companies challenging this status quo and reshaping the ecommerce insurance landscape to the benefit of sellers.

How Insurtech is Reshaping the Ecommerce Insurance Space

The comparison of traditional pay-as-you-sell insurance models
Source: Assureful

Ecommerce-specific insurtech companies have entered the industry with a modern approach that puts the client first. Advances in insurtech have made way for on-demand coverage options like pay-as-you-sell insurance that offer the flexibility and scalability that ecommerce businesses need.

These companies are tackling the risks associated with the traditional insurance industry head-on by replacing inaccurate, manual processes with policies driven by real-time data and monthly premiums.

The rise of artificial intelligence and machine learning capabilities has paved the way for this. Insurtech can analyze thousands of data points for every customer and product like historic sales data, product type, seasonality, claims history, and so much more.

What’s more, the capability to price and rate products based on individual merit rather than broad categories means that products that might previously have been deemed ‘high-risk’ can be rated with an accuracy that saves sellers hundreds, if not thousands, of dollars in annual insurance costs.

For example, a simple sports bottle may seem harmless, but traditional insurance classifications could categorize it as sports equipment, making it a high-risk item with an expensive premium attached.

Machine learning means we’re seeing all of these insights improving exponentially, with models integrated directly into seller accounts to gather the data in real-time and auto-adjust premiums accordingly.  

Pay-As-You-Sell Liability Insurance for Amazon Sellers

The most important thing to remember is that your insurance as an Amazon seller must comply with Amazon’s requirements. 

Amazon requires all professional selling accounts that reach $10,000 in revenue in any given month to secure $1M in commercial general liability coverage. 

Companies like Assureful are pioneering the application of insurtech in the ecommerce sector with its unique pay-as-you-sell insurance model designed specifically for Amazon sellers.

“Ecommerce entrepreneurs are focused on growing their business. They have to be flexible and adjust quickly. They have so many other things to think about so we built a product that allows sellers to mitigate their risk and makes sure they’re always adequately covered without extra work. Sellers don't want to notify their insurer every time they launch a new product. Our connected solution helps them rest easy and focus on growing their business.”

- Rohit Nair, Assureful Founder & CEO

So what does this actually mean for sellers?

It means flexible cover for what you sell when you sell it

  • No need for annual forecasting: With policies designed specifically to handle the fluctuations and fluid nature of selling on Amazon.
  • Seamlessly digital processes: Applications, policy updates, and paperwork are all managed online to reduce the work and time involved in getting a quote and making policy changes.
  • Products categorized with more precision than we’ve ever seen: Resulting in lower, more accurate premiums based on the risk profile of individual products rather than broad categories.
  • Insurance products designed specifically for Amazon: Insuring products like Chinese imports that are usually deemed as high-risk by traditional insurance providers and guaranteeing compliance with Amazon’s insurance requirements.

With its innovative approach, Assureful is truly leading the way in the application of Insurtech in the ecommerce sector. By offering flexible, accurate, and automated insurance solutions, Assureful is empowering ecommerce businesses to tackle the unique risks and challenges of the industry with confidence.

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Insurtech: A New Wave of Ecommerce Insurance

Traditional insurance models, with their rigid projections and inflated costs, aren't serving the needs of Amazon sellers. It's clear that yesterday's models are old news. So why should your insurance remain static?

In this post, we’ve shed light on how insurtech is reshaping ecommerce insurance. Companies like Assureful are leading the charge, providing businesses with tailored, flexible, and accurate insurance coverage. With its Pay-As-You-Sell model, real-time tracking of product categories, and seamless integration with major platforms, Assureful is part of a new wave of insurance providers.

Hopefully, we’ll see more companies follow their lead and create products that use actual sales to determine appropriate pricing. To find out more about Assureful’s commercial general liability insurance, head to their website to request a free quote today.

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