Enhancing Banking Services with Embedded Insurance

Project Information

Client Name: Digital & Cooperative Bank

Industry: Banking & Financial Services

Service Provider: CoverSync – Insurance Solutions

Enhancing Banking Services with Embedded Insurance

Background

In an increasingly digital financial ecosystem, banks are facing growing challenges in risk management, loan defaults, customer retention, and fraud prevention. While traditional banking services focus on financial transactions, customers are demanding additional financial security through insurance integration.

A leading digital & cooperative bank partnered with CoverSync to embed insurance into its core banking and lending products, enhancing customer protection and minimizing financial risks.

Challenges Faced by the Banking Industry

1. High Loan Default Rates

Loan defaults due to unforeseen events like job loss, disability, or death.

Increased NPAs (Non-Performing Assets), reducing profitability.

2. Rising Fraud & Cybersecurity Risks

Increased cases of unauthorized transactions, identity theft, and payment fraud.

Customers losing trust in online banking security measures.

3. Lack of Value-Added Services for Customer Retention

Banks facing competition from fintech platforms offering personalized financial security solutions.

Customers shifting to alternative banking solutions that bundle insurance benefits.

4. Limited Protection for Digital Transactions

No financial protection for customers in case of failed transactions, fraudulent debits, or UPI fraud.

High volume of dispute resolution cases causing delays in claim settlements.

Solution: Embedded Insurance for Banking by CoverSync

CoverSync partnered with the bank to embed tailored insurance solutions directly into their banking services, ensuring that customers are protected at every financial touchpoint.

Key Embedded Insurance Solutions:

1. Loan-Linked Insurance

Loan Protection Insurance: Settles outstanding loan amounts in case of borrower’s death or permanent disability.

Loss of Job EMI Protection: Covers EMIs for up to 6 months in case of involuntary job loss.

Income Protection Cover: Ensures customers can continue loan payments during sudden income disruptions.

2. Fraud & Cybersecurity Protection

Fraudulent Transaction Reimbursement: Covers unauthorized bank transfers, UPI fraud, and payment gateway breaches.

Credit/Debit Card Fraud Insurance: Provides financial compensation for stolen card details and fraudulent charges.

Identity Theft Protection: Covers financial losses due to hacked accounts, SIM swap fraud, and phishing attacks.

3. Digital Transaction Protection:

Failed Transaction Refund Cover: Automatically compensates customers for failed UPI or online banking transactions.

Merchant Chargeback Insurance: Protects merchants from fraudulent chargebacks, reducing financial losses.

4. Customer Retention & Loyalty Programs

Free Health & Life Insurance for priority customers.

Travel Insurance bundled with international debit/credit cards.

Personal Accident Insurance for salaried customers.

Implementation Strategy

1. Seamless API Integration

CoverSync’s insurance platform integrated into the bank’s core banking system (CBS) and digital banking app.

Customers could opt for insurance while applying for loans, using cards, or performing transactions.

2. Automated Claims Processing

Digital claims submission via banking app, with instant tracking & status updates.

Fraud protection claims settled within 48 hours.

3. Targeted Customer Awareness Campaigns

Educated customers on the importance of transaction security & loan protection.

Enabled seamless insurance opt-in at ATM kiosks & mobile banking apps.

Results & Impact

1. Reduced Loan Defaults

20% decrease in NPAs as customers used insurance to pay off loans during financial hardships.

Higher recovery rates for unsecured personal loans.

2. Faster Fraud Resolution

80% reduction in unresolved fraudulent transaction claims.

Customers reimbursed within 2 business days for unauthorized transactions.

3. Increased Digital Banking Adoption

35% growth in digital banking users, as embedded insurance enhanced customer trust.

40% increase in card transactions after introducing fraud protection benefits.

4. Higher Customer Retention

Premium account holders stayed 2.5x longer due to bundled insurance services.

25% increase in loan renewals & cross-selling of insurance-backed financial products.

5. New Revenue Stream for the Bank

Generated ₹50 Cr+ additional revenue from embedded insurance premiums.

Increased transaction volumes due to insurance-backed security.

Key Benefits of CoverSync’s Embedded Insurance for Banks

For the Bank

Lower Risk of Loan Defaults – Insurance-backed loan protection ensures customers repay obligations.

Higher Customer Retention – Offering embedded insurance builds long-term customer loyalty.

Fraud Risk Mitigation – Instant transaction protection enhances digital banking security.

Additional Revenue Stream – Earn commission from embedded insurance sales with no operational burden.

Key Benefits of CoverSync’s Embedded Insurance for Banks

Financial Security for Loans & Transactions – Ensuring safety in banking activities.

Peace of Mind from Fraud Protection – Immediate reimbursement for unauthorized transactions.

Convenient Digital Claim Process – No paperwork, fully digital settlements.

Better Loan Accessibility – Customers feel confident taking loans due to built-in protection.

What Legal papers needed for opening insurance policy?

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