Embedded insurance: towards a more personalised insurance system

The digital transformation of the insurance industry is inevitably moving towards embedded insurance, a new way of marketing policies efficiently that can also reduce the cost of distribution for insurance companies, provide a new source of revenue and allow them to differentiate, attract or retain customers. Embedded insurance is going to be a game changer, and if you have any doubts, just look at this fact: it could generate more than 2.55 trillion euros in market value.

Embedded insurance: meaning

In recent years, there has been a shift in the consumer model. Customers are increasingly opting to make their transactions and purchases online, a trend accelerated by the coronavirus pandemic. The insurance industry has also been immersed in the process of digital transformation of the industry and has developed embedded insurance, which basically consists of incorporating insurance into any customer purchasing process.

A very simple example of embedded insurance can be found in travel insurance. Imagine you have just booked the adventure of a lifetime in an exotic country where you also plan to go scuba diving, kayaking and motorcycling. If you had to call several insurers to get all the policies you need, you would probably go crazy and the trip would be much more expensive. In this case, the travel company itself is usually responsible for offering you the most appropriate insurance to cover your specific needs during the trip. This is known as the ‘as a service’ model, which is flexible and personalised for each client.

Embedded insurance could generate more than 2.55 trillion euros in market value.

So what does embedded insurance mean? When we talk about embedded insurance, we mean making insurance more affordable, relevant and personalised for users, exactly when and where they need it most. And this efficiency is possible thanks to new technologies such as Artificial Intelligence, the Internet of Things, Machine Learning and Big Data.

Another trend brought about by embedded insurance is the progressive unification of the life, health and wealth insurance industries. According to a report by Accenture, this combination will generate almost 1.1 billion euros in additional revenue. This includes more than €530 million in smart health products, more than €350 million in products and services for the elderly and more than €260 million in life and wealth management.

Why will embedded insurance be a game changer?

Traditional insurers are at a turning point. Over the next five years, the global insurance industry is expected to grow by 250 billion euros. However, according to McKinsey, 80% of insurers made negligible or negative profits in the years leading up to the crisis and, looking forward, the situation is likely to get worse. Just in Spain, the entry of new players could mean a leakage of 4 billion in revenues towards digital insurance, according to calculations by the consultancy firm Accenture.

Inability to match supply and demand

One of the fundamental reasons for this weakness in the insurance industry is the inability to match supply and demand effectively. Traditional insurance is complicated, inflexible, expensive, poorly sold, and the benefits to customers are uncertain and distant. Moreover, insurance companies are experts in risk management, but most lack the time and expertise to develop products that keep pace with new market demands and trends. In addition, in many cases, legislation restricts the emergence of new initiatives and, despite regulatory sandboxes, supply is unable to keep pace with demand.

It is in this context that embedded insurance emerges, a new way of distributing insurance services efficiently that can reduce the cost of distribution for insurers, provide a new source of revenue, and differentiate, attract or retain users. Additionally, consumers get personalised products in which coverages are more economical and meet their real needs.

According to a Finnovista report, in property and casualty alone, embedded insurance could represent more than 600 billion euros in gross written premiums by 2030, or 25% of the total market worldwide. And if we include life and health coverages from insurtechs, this embedded insurance could generate more than €2.55 trillion in market value.

Key players in the embedded insurance model

Ant Group

It operates a digital financial services platform in China. In terms of insurance, they spotted a large underserved market in low-income rural areas that traditional insurance companies were ignoring. They decided to create their own insurtech platform to design, together with their providers, compelling embedded insurance solutions for them.


With 3 million drivers worldwide, Uber requires flexible insurance with benefits and incentives for workers. Some of its policies are free, some include optional add-ons, and some are only activated when the driver is “on duty”. Given the size of its driver base, it has the potential to offer more complex products such as pensions, life and health insurance in the future, in addition to other financial services such as the bank accounts and loans it already offers.

Square, Intuit, Gusto, Xero, Toast

Along with other B2B SaaS companies, they provide operational management systems to small businesses. Given their real-time knowledge of their customers’ financial status, they are in a perfect position to add customised insurance solutions to the range of other financial services they already provide. This adds significant additional revenue with virtually no customer acquisition costs.

World Funeral Net

WFN, the world’s first digital bidding platform for funeral services, has real-time information on funeral transfers, funeral services and other purchases of goods or services demanded and offered by hundreds of customers in the funeral industry. This is a perfect business option for insurers who have embedded insurance for this type of service, while reducing their distribution and customer acquisition costs.


BIMA is a great example of embedded insurance, being able to integrate affordable health insurance into the mobile ecosystem. It currently offers protection to 35 million Africans. Of these customers, 75% are accessing insurance for the first time.

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