Written by Dr. George Shelton

Whilst the fundamental offering of insurance remains consistent, how it is delivered is undergoing a seismic transformation. Embedded insurance and platform-based solutions are flipping the traditional model of insurance distribution on its head. Customers no longer have to seek out insurance as a separate product. Instead, insurance delivery is working for them, and assuming its place in the spaces that they hang out normally, being seamlessly integrated into the everyday services that they use.

Embedded Insurance: Transforming Delivery and Redefining Its Role in Our Digital Lives

Across various industries, businesses are leveraging embedded insurance and platform-based solutions to transform their operations, improve efficiency, and enhance customer experiences.

And, when you take a look at the big picture, the numbers are compelling. The global embedded insurance market, valued at $128.6 billion in 2023, is projected to rocket to $828.68 billion by 2030, in what would appear to be a revolution in how insurance is sold, consumed, and valued. Companies are making strategic decisions to adopt these new models as part of their digital transformation efforts.

What's Driving the Rise of Embedded Insurance?

The explosive growth of embedded insurance over the past 15 years is the result of a combination of a number of different forces converging at the right time. These include changes in consumer behavior, advances in technology, and the rise of digital ecosystems. These converging forces are opening up new possibilities for insurers and customers alike.

Let’s dive in.

Seamless Integration: Consumers Increasingly Expect an Easy, Slick Purchase Experience

Modern consumers, on the whole, demand convenience. Making extra time to wade through complex processes to purchase insurance can be a significant turn-off (although this may not be the case for higher-value offerings, where friction at the right points can be a value-add). Embedded insurance solves this challenge by integrating insurance products directly into the natural flow of a buying journey, at a time that makes the most sense for the customer.

• Buying a car? Add insurance at the checkout.
• Booking a vacation? Travel insurance is just a click away.
• Purchasing concert tickets? Event insurance can be bundled seamlessly.
• Signing up for a food delivery service? Worker insurance is applied automatically.

By embedding insurance into the right place at the right time, it can become a natural part of the transaction, as opposed to a clunky and labour-intensive afterthought.

Technology: The Great Enabler

Whilst user experience design is critical, technology is the backbone of the proliferation of this new kind of insurance product. A robust system is required to support the integration of insurance into other services, ensuring seamless operation and scalability. It has made embedding insurance into other services both possible and efficient, enabling insurers to deploy the right solution for embedding insurance effectively.

APIs:

Advanced APIs enable insurers to connect with digital platforms in real time, offering instant quotes, seamless issuing of policies, and integration into checkout processes.

Cloud Computing:

Cloud infrastructure allows insurers to scale offerings globally, making it easier to collaborate with partners and deploy solutions remotely across a wide range of regions.

Cloud applications provide accessibility and scalability for insurers by enabling them to access software and services from anywhere, while supporting multitenancy and efficient management by cloud providers.

The pricing model of cloud applications, such as subscription-based or pay-per-use, impacts insurers' cost management by offering flexible options that align expenses with actual usage, unlike traditional software licensing.

Effective management and resource management are crucial in cloud computing for insurers, as they ensure that resources—including hardware, data, and computing power—are properly allocated, overseen, and optimized for operational efficiency and risk mitigation.

AI and Machine Learning:

These tools (revolutionizing underwriting, risk assessment, and claims processing), enable insurers to deliver personalized, data-driven policies at the customer’s point of need. By reorganising the burden of human oversight required to issue a policy, things can happen faster.

For instance, in the automotive sector, AI and machine learning are used to analyze telematics data, enabling embedded insurance solutions that adjust coverage and pricing in real time based on driver behavior.

Informed Decision Making and Data: The New Competitive Edge

In today's rapidly evolving market landscape, the ability to make informed decisions powered by data has become a defining factor for success in the insurance industry. As embedded insurance offerings become more prevalent, insurers are reimagining how they operate, focusing on seamless integration and delivering personalized customer experiences that set them apart from competitors. However, many traditional insurers still grapple with legacy systems that limit operational efficiency and make it challenging to respond rapidly to shifting market changes.

The adoption of machine learning and artificial intelligence is transforming risk assessment and underwriting risk, allowing insurers to analyze vast amounts of data and develop more accurate pricing models. By leveraging advanced analytics and digital platforms, insurers can streamline operations, reduce operational costs, and achieve greater cost efficiency. Cloud platforms and modern APIs further enhance these capabilities, enabling insurers to scale their solutions, collaborate with other partners, and share data securely across ecosystems.

In the context of embedded insurance, informed decision making is essential for developing compelling value propositions that address the diverse needs of customers. Insurers must design distinct layers of service tailored to different customer segments, all while maintaining regulatory compliance and upholding the principles of traditional insurance. Collaborating with e-commerce platforms and technology providers has become a key strategy for driving innovation, as it allows insurers to co-create usage-based products and deliver embedded coverage at the point of need.

This digital transformation requires a fundamental shift in business models, moving away from rigid, one-size-fits-all solutions toward more flexible offerings that give customers more control over their insurance products and services. By embracing new technologies and innovative solutions, insurers can enhance customer experiences, improve operational efficiency, and strengthen their position in an increasingly competitive market.

Ultimately, informed decision-making and data analysis are at the heart of this transformation. Insurers that harness the power of advanced analytics, machine learning, and digital platforms will be better equipped to develop accurate pricing models, streamline operations, and deliver exceptional customer experiences. As the industry continues to evolve, prioritizing innovation, regulatory compliance, and customer-centricity will be crucial for driving growth and staying ahead of the curve.

Real-world examples of informed decision making in insurance include:

• Deploying machine learning algorithms to analyze customer data and create personalized insurance products that match individual risk profiles.
• Utilizing advanced analytics to identify emerging risks and improve underwriting accuracy, resulting in more competitive pricing models.
• Implementing cloud-based platforms to streamline operations, reduce operational costs, and enhance cost efficiency across the organization.
• Partnering with e-commerce platforms and technology providers to co-develop innovative, usage-based insurance products that meet the needs of today's digital consumers.
• Leveraging artificial intelligence and deep learning to automate complex tasks, improve claims processing, and deliver faster, more efficient service to customers.

By adopting these data-driven strategies, insurers can drive innovation, improve customer experiences, and respond rapidly to market changes. Informed decision making and advanced analytics will continue to play a key role in shaping the future of the insurance industry, enabling companies to capitalize on new opportunities and deliver greater value to their customers.

Platform Power: Success Stories

In the past 12 months, we’ve seen a range of announcements related to insurers and brokers expanding through partnerships with, and investments into, alternative platforms and ecosystems. Hunting for new customers in ancillary but related places. Platforms and ecosystems offer insurers opportunities to grow by introducing insurance to new customers. Insurers are increasingly shifting their focus to new customer segments and growth opportunities through these partnerships and ecosystems. These add to a range of historic success stories when it comes to leveraging ecosystems and platforms for growth.

For example: 

In health and wellness:

MetLife stepped into the health and wellness ecosystem by partnering with Vitality, a platform that gamifies healthy living. Vitality encourages users to stay active, eat healthily, and get regular check-ups, rewarding them with perks like discounts and gift cards. MetLife integrated Vitality’s program into its insurance offerings, giving policyholders an incentive to live healthier lives. This partnership not only improved customer engagement but also reduced MetLife’s long-term claims costs by promoting preventive care. It’s a win-win: happier, healthier customers and lower risks for the insurer.

In super apps:

Grab, Southeast Asia’s leading super app, connects millions of users to ride-hailing, food delivery, and digital payments. Tokio Marine partnered with Grab to offer microinsurance products directly through the app, including accident, health, and travel insurance. This partnership allowed Tokio Marine to reach underinsured populations in emerging markets, offering affordable coverage that could be purchased in seconds. For Grab, the partnership boosted user trust and loyalty by offering value-added services. Together, they expanded access to insurance in a region that needed it most.

In ancillary but relevant areas:

Swiss Re partnered with Ikea to offer affordable, easy-to-understand home insurance directly to Ikea customers. By embedding insurance products into Ikea’s ecosystem, Swiss Re tapped into a massive customer base—people furnishing and protecting their homes. Dubbed "Hemsäker," the insurance was simple, digital, and designed to align with Ikea’s brand values of affordability and convenience. This partnership helped Swiss Re redefine how home insurance is sold, making it accessible to an entirely new demographic.

A tool for growth

• By 2033, embedded insurance is expected to account for 15% of global gross written premiums, up from just 3-5% today.
• In certain sectors (like property and casualty insurance), embedded solutions could capture as much as 30% market share.
• The tech-savvy Asia-Pacific region is leading the charge, driven by rapid digital adoption, while North America is experiencing the fastest growth rates.

Challenges in the Path to Success

While the opportunities that platformification provides are immense, actually implementing embedded insurance is not without hurdles.

First and foremost, insurance is regulated, and these regulations can be complex. It’s all very well making things as simple as possible for customers, but companies still have to follow the rules. Embedded insurance still has to be properly licensed, effectively regulated from an advertising perspective, and appropriately managed when it comes to customer data

Secondly, even with advanced tools, embedding insurance into non-traditional platforms requires careful planning and effective execution. APIs must function seamlessly to connect insurers and platforms, data security must be watertight and compliant, and interactive elements like real-time pricing and instant policy issuance need to work properly. This requires technical know-how and proper testing. 

Conclusion

Whilst embedded insurance might seem revolutionary, it’s really just an evolution of how (some) insurance products are distributed. In business school, we’re taught about the ‘4 p’s’—product, price, place, and promotion. If an increasingly large portion of our lives is now digital and spent in digital ecosystems, it therefore makes sense for products and services to adapt and be optimised for new contexts. While the fundamental value offering is the same, the look and feel of insurance is evolving. 

As customers increasingly ‘hang-out’ in different digital places, insurance has to remain both customer-centric and relevant by working with these changes. 

The platformification of insurance and the rise of embedded solutions represent a significant shift in how we access and understand protection in our daily lives. As these models gain traction, they offer not only greater convenience for consumers but also present new opportunities for insurers to both innovate and engage with their customers. By focusing on integration and customer experience, the industry can create a more relevant and accessible insurance landscape. Moving forward, the challenge will be to balance this evolution with the necessary safeguards to ensure trust and reliability in these emerging solutions.

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