Embedded Insurance Market Analysis, Key Trends and Strategies, Line of Business and Future Implications

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Access and explore in-depth trends and insights on Embedded Insurance Market’ and use this report to:

  • Determine the primary trends driving embedded insurance across key lines of business.
  • See how the growth of open insurance and digital ecosystems presents a major opportunity for innovative and forward-looking insurance players.
  • Assess the threat and impact of new non-insurance players in the market.
  • Identify key affinity, insurtech, API, and legacy players in the embedded insurance segment from across the industry.
  • Learn the regulatory and technological challenges facing embedded insurers.

How is the ‘Embedded Insurance Market’ report different from other reports in the market?

  • Gain access to a forward-looking view in which we determine the threat of Big Tech in the next generation of distribution; and discuss the future role of brokers and other agents in the face of an evolving distribution model in the industry.
  • Explore the key trends driving the embedded insurance model, including technology and industry trends that are shaping the future of the sector.
  • Analyze some of the leading forms of embedded insurance across different lines of business, such as motor, travel, and gadget insurance, discussing the threats and challenges facing incumbents in these spaces.
  • Ascertain what leading API providers are doing to facilitate the transition to embedded insurance.

 We recommend this valuable source of information to anyone involved in:

  • Non-Life Insurance Service providers and Startups
  • ​Insight Managers/Financial Advisors
  • Insurers, Brokers, and Underwriters
  • Strategy, Marketing, and Business Development
  • Market Intelligence and Portfolio Managers
  • Management Consultants and Consulting Firms

To get a snapshot of the embedded insurance market report, download a free report sample

Embedded Insurance Market Overview

Embedded insurance is the bundling of insurance or protection within the purchase of a third-party good or service. The growth in e-commerce and mobile commerce, along with a host of technological advances in the industry, have brought in a new age of embedded insurance. Almost all lines of business either have been disrupted to some extent or are ready for this next stage of digital distribution.

Key Trends E-commerce, Artificial Intelligence (AI) and Machine Learning, Big Data, Internet of Things (IoT), Open Insurance, Personalization, Demographics, Sharing Economy, and Strategic Partnerships

Embedded Insurance Market Dynamics

There are many trends facilitating and, in some instances, necessitating the transition to an embedded insurance model. These include technology trends such as e-commerce, machine learning, and big data. Other industry trends including personalization, demographics, open insurance, and the sharing economy are also important drivers.

E-commerce: Ecommerce is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network (typically the internet). Ecommerce has already had a tremendous impact on how people shop, forcing retailers to fundamentally alter their strategy in order to survive, and its influence will only grow over the coming years. Not only does ecommerce impact how and where we shop, it also influences what we buy and how we pay for it.

It is the prevalence of ecommerce that has generally driven the emergence of embedded insurance as a viable distribution model. As consumers increasingly look online in search of goods and services, insurers have realized that insurance for those products can be provisioned simultaneously. In most cases, the information a consumer provides when completing an online purchase suffices for insurers to offer a suitable insurance policy for that product. For consumers, this saves time, offers personalized cover, and reduces the general protection gap. For insurers, it increases new business opportunities, simplifies the purchasing journey, and improves distribution efficiency.

AI and Machine Learning: AI and machine learning are becoming increasingly important technologies for insurance companies. The ability to decode vast amounts of highly complex data, and deliver tangible and understandable results, is driving unprecedented change across all areas of the value chain. Most importantly, this change is occurring in the underwriting and risk profiling segment, in which insurers are increasingly able to price insurance in a real-time and highly personalized manner.

Big Data: The data revolution is well underway. As transactions are increasingly carried out online, businesses are using the data generated to gain a greater understanding of their customers and open new opportunities. Ecommerce giants are at the forefront of this trend, using customer data to personalize the shopping experience, tailor marketing campaigns, and offer related products. This can be seen as a key reason why embedded insurance is becoming a more frequently used distribution method.

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Embedded Insurance Market Drivers

There are many trends facilitating and, in some instances, necessitating the transition to an embedded insurance model. These include technology trends such as e-commerce, machine learning, and big data. Other industry trends including personalization, demographics, open insurance, and the sharing economy are also important drivers.

E-commerce: E-commerce is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network (typically the internet). It is the prevalence of e-commerce that has generally driven the emergence of embedded

AI and Machine Learning: AI and machine learning are becoming increasingly important technologies for insurance companies. The ability to decode vast amounts of highly complex data, and deliver tangible and understandable results, is driving unprecedented change across all areas of the value chain. Most importantly, this change is occurring in the underwriting and risk profiling segment, in which insurers are increasingly able to price insurance in a real-time and highly personalized manner.

Big Data: The data revolution is well underway. As transactions are increasingly carried out online, businesses are using the data generated to gain a greater understanding of their customers and open new opportunities. Ecommerce giants are at the forefront of this trend, using customer data to personalize the shopping experience, tailor marketing campaigns, and offer related products. This can be seen as a key reason why embedded insurance is becoming a more frequently used distribution method.

Buy the Report to Get More Insights on the Key Drivers Impacting the Embedded Insurance Industry, Download a Free Report Sample

Embedded Insurance Market - Next Stages

API providers are driving the embedded insurance trend: While digital challengers have been able to target this form of distribution very effectively, many incumbent providers find themselves constrained by dated legacy systems that are incompatible with modern third-party platforms. Insurtechs created with a purpose-built digital architecture are therefore at an advantage when it comes to meeting the digital demands of younger consumers.

Future brokers can embrace and use embedded insurance: While the embedded insurance trend is a change to the distribution model in the industry, this does not necessarily spell the end of brokers and agents. Instead, the role of brokers will evolve alongside the embedded transformation, bringing greater agent productivity, more cross-selling opportunities, and improved customer relations. Embedded insurance will reduce the need for brokers and agents to spend time engaging in lead generation and prospecting. Indeed, the very focus of embedded insurance is to offer the service when the customer most needs it.

Tech players will drive both challenges and opportunities: Embedded insurance represents a significant opportunity to insurers in terms of new business opportunities. However, it will also bring the threat of new competition. Retailers, car manufacturers, and Big Tech companies are increasingly open to introducing financial services propositions to customers. The emergence of super-apps is creating ecosystems in which companies such as Twitter could look to integrate offerings into their platforms. Digital banking providers such as Revolut, empowered by the rise of open banking, have been able to integrate a series of insurance propositions into their apps. Some of these are automatically integrated into the subscription of premium services, while others are offered to customers through partnerships and affiliations. If embedded insurance is to be powered by customer data, the companies that hold such an asset are likely to pose some form of threat to the industry as the trend evolves.

Regulatory challenges: The first issue pertaining to retailers selling insurance, either as a self-insured, full-stack carrier, or an intermediary, is to obtain a license. While this is not a particularly challenging endeavor, the specific model of embedded insurance chosen by the retailer (i.e., as a partner for an insurer or as a full-stack carrier) feeds into the way in which it can advertise the product and earn compensation. Furthermore, those that choose the lesser-trodden path of becoming a full-stack carrier (à la Tesla) have to overcome more stringent conditions related to other regulatory and capital requirements.

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Key Highlights

Key Players

Google
Amazon
Samsung
Apple
Swiss Re
Tesla
Zurich
Ping An
Discovery
LV=
Allianz
Admiral
Nationwide
American Family
AXA
First Underwriting
Liberty Mutual
MS&AD
Inshur
Zego
flock
Uber
Cover Genius
Battleface
Aribnb
Vrbo
Onefinestay
Expedia
Booking.com
Sky
ADT
Ikea
EE
Neos
Wakam
Cover Genius
Wrisk
Penni.io
Ancileo
MIC Global
Redkik
Lloyd’s
Lemonade
Twitter
WeChat
Alipay
Paytm
Alan
Oscar
YuLife
Garmin
Virgin Active
Beazley
Assureful
Chwey
Trupanion
Barkibu

Table of Contents

  • 1. Executive Summary
  • 1.1 Market overview
  • 1.2 Key findings
  • 1.3 Critical success factors
  • 2. Key Factors Affecting Embedded Insurance
  • 2.1 Embedded insurance
  • 2.2 Technological evolution is driving embedded insurance
  • 3. Industry Use Cases and Line of Business Analysis
  • 3.1 Motor insurance could be set for significant disruption
  • 3.2 Travel is most associated with embedded insurance
  • 3.3 Property insurance will be affected by smart home policies
  • 3.4 Affinity providers are entering gadget insurance markets
  • 4. The Next Stages of Embedded Insurance
  • 4.1 API providers are driving the embedded insurance trend
  • 4.2 Regulatory challenges are an important hurdle to overcome
  • 4.3 Tech players will drive both challenges and opportunities
  • 4.4 Embedded insurance can still pervade new lines
  • 4.5 Future brokers can embrace and use embedded insurance
  • 5. Appendix
  • 5.1 Abbreviations, initialisms, and acronyms
  • 5.2 Methodology
  • 5.3 Secondary sources
  • 5.4 Further reading
  • 6. About GlobalData
  • 7. Contact Us

Table

Table 1: There is a wide range of factors driving and affecting embedded insurance

Table 2: Auto manufacturers are partnered with a range of motor insurers

Table 3: How and why digital players are leading the way in embedded insurance

Figures

Figure 1: Less than 3% of UK motor insurance customers bought their policy from an OEM in 2022

Figure 2: Nearly one third of SMEs have UBI motor insurance, with many more interested in the savings

Figure 3: Over a third of global travel insurance customers bought their policy from a travel agent in 2021

Figure 4: Over a third of consumers do not know about COVID-19-related exclusions in their travel policy

Figure 5: Expedia and Booking.com are the most popular travel sites for buying travel insurance

Figure 6: Younger consumers are more open to purchasing home insurance from technology providers

Figure 7: Embedded extended warranties are frequently purchased by UK consumers

Figure 8: Consumers have an interest in buying gadget insurance from tech providers and manufacturers

Figure 9: Lemonade’s API or widget can be easily integrated into retailers’ sites

Figure 10: Health insurers must overcome data privacy barriers to grow the uptake of smart health policies

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