Embedded Insurance Blurring Industry Lines: Views on Opportunities and Challenges

This IDC Perspective is meant to instill interest as well as to provide some precautionary warnings to the insurance tech buyers audience towards the emerging opportunity of embedded insurance. Getting insurance coverage is, in many ways, an inherently contextual experience. Plans to obtain insurance can easily slip from consumers' minds if offers are not present in the purchasing experience. In addition, distribution partnerships are a cost-effective way of increasing sales and revenue on both sides of the table. Despite the clear benefits, partnerships are on the rise but are far from ubiquitous as partners face difficult obstacles to overcome, almost all of them are centered around the insurer's difficulty to swiftly integrate its digital channels seamlessly. On the other side, insurers should embrace the opportunity whilst still acknowledging its underlying threats and, hence, by developing their unique, product or partnership specific, embedded strategy, with the purpose of mitigating, where possible, the risk of their insurance offerings being commoditized. "Embedded insurance is the biggest growth opportunity for insurance in the next decade, and it will have a bigger impact on distribution than aggregators in terms of market share. Embedded insurance considers all the existing use cases of non-traditional insurance distribution on top of new digitally enabled models. Embedded insurance has opened access to new addressable market segments, and the size of this opportunity means embedded insurance is giving birth to a new, vibrant ecosystem of insurance providers, embedded insurance enablers, and distribution partners. Embedded insurance is the opportunity for the industry to reframe its digital purpose individually and collectively, bringing benefits not only to insurers, but also other organizations and customers with more relevant and affordable insurance," said Davide Palanza, research manager, IDC Financial Insights.