Building Consumer Confidence With Embedded Protection


Consumer sentiment in Germany is set to rise with the general public expecting wages and salaries to grow this year. With that cautiously optimistic outlook, the willingness of consumers to begin buying will start to grow across e-commerce, retail, and consumer packaged goods. For example, revenue from the e-commerce market in Germany is projected to grow more than 11% to reach EU€106.5bn (US$116.80bn) in 2024. Yet, consumers are still very cautious about further economic developments that could impact their spending behaviors. Consumer confidence in Germany and the rest of Europe still rests well below its long-term average overall according to the European Commission. 

While consumers are starting to spend, they are doing so a little more selectively and looking to protect their purchases, from concert tickets to overseas travel to electronics. German consumers are looking for quality, durability and are very loyal to local brands, meaning they will expect more from the businesses they deal with everyday, from their retailers to their travel providers to their banks. They want more bang for their buck and will look for ways to protect the products they’re buying.


Value Added Services 

Brands are looking towards reaching their North Star goal with value-added services (VAS) that drive acquisition, loyalty, and share of wallet. These VAS are delivering on the core objective of driving incremental product sales and increasing cart size. One type of VAS is an Embedded Financial Service, including embedded protection. Similar to embedded credit, Buy Now Pay Later, or wallets, embedded protection solutions directly in the customer journey provide customers with an increased sense of security and drive further engagement from consumers. 

Across multiple studies conducted by and commissioned by Cover Genius, the findings consistently show that consumers are highly interested in embedded protection from their retailers (60%), favorite banks (61%), fintech apps (86%), and e-wallets (75%), travel companies and airlines (45%), short-term rental sites (98%), and realtors (22%) directly in their sales and sign up processes. The main reason they want these services is for convenience and having to skip the second step of finding protection for the purchases they have made. 


These embedded protection solutions (e.g. protection pocket, frictionless claims, payments as credits, deep integrations) can be a significant driver of incremental product sales, evidenced by the “Protection Effect.” This effect is established when adding relevant protection to purchases, brands provide customers with a sense of security and protection while growing revenue and increasing brand loyalty. 

Cover Genius examined data from a fintech partner that showed adding protection to the checkout experience increased purchase conversion rates. The significant boost in sales came from offering protection at the point of sale that’s directly relevant to the underlying purchase. This “Protection Effect” allows brands to benefit from more satisfied customers, which in turn increases confidence and willingness to make major purchases.

Protecting Customers 

For brands looking to cater to the German market, both online and off, they can look towards offering embedded protection as a tool to protect their customers. This embedded solution offers customers protection options specific to their needs directly through their online shopping experience, without having to go through a separate insurance provider. Embedded protection in Germany is on the rise and a report by InsTech London found that the global embedded insurance market could grow to $722bn in Gross Written Premiums by 2030, or 600% more than its size today. 

Embedded protection is a tech-forward solution that caters to the increasingly digital customer. In Germany, 94% of all internet users shop online, which equals approximately 55 million people. They will increasingly look to the brands they trust not only for value and quality but also for providing them with useful products and services that cater to their needs. 

With new consumer duty regulations across the EU, brands must now heavily invest, care, and respond to their customers needs. Insurance and protection are a large component of this. By offering protection embedded directly in the shopping experience, brands are inadvertently adding value to help protect customers. They are allowing their customers to skip the additional step of having to find a third-party insurer after their purchase and can offer personalised offerings on the item and its shipping. 

Protecting Shipments 

Providing protection along the shipping process is another opportunity for online retailers and marketplaces to help build confidence among shoppers. German consumers have the highest e-commerce return rates of any EU nation, according to a study by the University of Bamberg, irrespective of the types of goods purchased, and other German-speaking countries Switzerland and Austria follow closely behind. These online sellers are held accountable when parcels get lost or returned, often costing them a lot of time and money. 

Marketplaces like Catawiki are offering embedded protection to their sellers directly within the online shipping process for in-country and cross-border shipments. And shipping companies like nShift and Shippo are providing their merchants with comprehensive protection, global coverage and seamless claims handling. This protection for online retailers, at risk for significant revenue loss, helps them replace and reship items if accidents happen during the delivery process, and their customers benefit from better service. 


Amidst parcel losses, delays, damage, and thefts in today’s online shopping environment, giving both retailer and shopper confidence in the delivery process is essential to delivering e-commerce success. 


Consumers are now more connected than ever before and depend on technology to find the best possible protection products. Not only are they turning to online search engines and aggregators, but they are also expecting embedded solutions directly in their customer purchase path. As a result, companies need to look at innovations in distribution (e.g. tailored wordings, dynamic pricing, optimisations) to maximise uptake, which in and of itself can build a significant and highly profitable line of ancillary revenue.

Artificial Intelligence is driving this distribution of products by allowing companies to provide the right solutions to their customers at the right time and at the right price. More advanced AI can help provide customers with bundled and unbundled options that cater to the needs of each unique purchase. Through the power of AI-backed product and price recommendations, companies can not only better understand their customers but adapt their online and offline experiences accordingly. 

While technology and embedded protection may seem daunting to some companies, the simple API can be done relatively easily with minimal support. Companies don’t need a whole team of engineers to embed this technology onto their platforms nor do they require years of development. The technology provides co-created options to provide bespoke products to customers, wherever they may be. 

As more companies add digital services to their core business offerings, their focus on insurance will undoubtedly grow. Providing the technology-first offering to their customers for products and shipping will allow them to stand out from the competition, grow consumer confidence, and increase brand loyalty.

About the author

Danny Poole, Vice President, Strategic Partnerships – Retail, EMEA 

Danny is Vice President, Strategic Partnerships in retail for the EMEA region of Cover Genius, the insurtech for embedded protection. Together, Cover Genius and its partners protect the global customers of the world’s largest digital companies. In his role, Danny is responsible for the development of strategic partnerships that drive the growth of embedded protection in the retail sector. Prior to Cover Genius, Danny worked for more than 10 years in a variety of executive roles designing and implementing commercial partnerships at Amazon and The Telegraph.