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A Bite-size Summary of InsTech London’s Embedded Insurance Report

Embedded Insurance is trending and is all the buzz in the insurtech and innovation communities, which is why InsTech London recently interviewed over 200 insurance companies and innovators on the subject. “Embedded Insurance is one of the big themes we believe will be driving change in insurance in the next decade,”  as noted in the report. The report looks at the history of insurance, what embedded insurance is and the problem it solves, why it’s trending, what the necessary elements are, and how insurers can make the most of the Embedded Insurance opportunity. Here, we provide a bite-size summary of the report - Insurance: to Embed, or not to Embed.


The History of Insurance

The traditional insurance model has been to sell through agents and brokers, either face-to-face or over the phone. As technology developed and consumers were online, some insurance retailers developed websites to sell directly to the customer. Recently, the focus has been on using technology to cut costs and improve operational efficiency. However, the tendency has been to focus on costs over customer experience. Of course, some insurance providers have been developing improvements with the overall customer experience through a streamlined claims process and user-friendly online tools. Overall, the industry as a whole is far behind the financial services industry.


What is Embedded Insurance?

Embedded insurance is simply “embedding” or integrating insurance products into companies’ value chains and distribution capabilities.  It is technology-enabled insurance products offered in the context of non-insurance applications. In most cases, it is an add-on to a transaction in which insurance is highly relevant and provides added value to the customer.


What Does Embedded Insurance Solve?

Why embedded insurance, and what does it solve? First of all, “embedded insurance benefits the entire value chain – customers, distributors, and insurers,” as stated in the report. Not to mention, embedding insurance provides a relevant and personalized experience or product to be delivered right where the consumer is. The modern consumer expects a convenient and seamless experience. Furthermore, providing embedded insurance is a perfect opportunity for distributors, insurers, and non-traditional insurance providers alike to offer insurance while generating new revenue streams and keeping customers within their existing ecosystems. In fact, Simon Torrence, an expert on business model transformation and a contributor to the report, estimates $722 billion in Gross Written Premium by 2030.

Embedded Insurance Forecast, W’wide P&C, GWP $USD bn

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(Copyright Simon Torrence, Nov 2021)


Why it’s Trending?

With Embedded Finance leading the way, embedded insurance is the next natural industry to follow. “As a business model, embedded financial services are becoming increasingly mainstream. Embedded insurance is next. With this model, companies can benefit from an improved revenue stream and customer retention.” - according to Andreessen Horowitz as quoted in the report. As you can see below, media mentions of embedded lending and embedded finance have increased with a dramatic rise beginning in mid-2020 and staying steady into 2021.

Media mentions of ‘embedded lending’ & ‘embedded finance” skyrocket

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The Magic Ingredients

Embedded insurance represents a massive opportunity, but only with the correct combination of necessary elements: the right technology platform, a good source of distribution, and the right products to sell. First, to provide embedded insurance, there needs to be the technology available to either custom build, license a platform, or partner with an existing embedded insurance provider. Second, distribution partners are crucial and must have customers, a trusted brand, be willing to partner and share data, and will not compete in the future. The most advantageous partner categories are big tech, e-commerce, retailers, mobility, banks, and financial services. Lastly, the right kind of product needs to be provided where and when it makes the most sense. 

Examples of Embedded products

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Source: InsTech London


How Insurers/MGA’s Can Benefit

Embedded Insurance opens up the opportunity to provide insurance to segments with high margins that may have been too risky or not commercially viable in the past. However, to take advantage of this opportunity, there are two options to get to market; build it yourself or partner with platforms or technology-enabled MGA’s. If building it, companies must have the right technology, provide an easy onboarding process, and have an experimental mindset + agile company culture. If deciding to partner, the options mentioned above include partnering with a Platform as a Service provider or a technology-enabled MGA. Both will provide the digital-first business that most insurers do not possess.


To Embed or Not to Embed

Embedded insurance offers a massive opportunity for all players in the industry, particularly those that are consumer-facing. It is believed that “the type of insurance products that can be embedded (simple, transparent, easy to understand and a simple claims process) will increasingly be sold this way.” The Embedded Insurance opportunity is perfectly aligned with what consumers want and frankly expect in this digital world. 

If you are interested in learning more about our embedded insurance capabilities here at Trov, drop us a line

Want to read the full report, Insurance: Embed, or not to Embed,  conducted by InsTech London?  Download it here. - And make sure to see pages 12, 13, and 41, where Trov is featured.