Embedded insurance: easy distribution isn't enough

For a while now the InsurTech world has been talking about a single topic: embedded insurance. Coverage placed inside the flow as you buy a product or service. The baggage insurance that appears with a plane ticket, the device-protection plan suggested when buying a phone, the shipping cover that pops up automatically at checkout. Reports describe this model as insurance’s new standard; institutions like Deloitte predict embedded finance will have its biggest impact in insurance.

It’s true this model makes distribution easier, and that has to be acknowledged. But there’s something I’ve learned in the field over years: making distribution easier doesn’t make the product genuinely matter to the customer. Putting insurance inside a flow makes it visible, not desirable. The two aren’t the same. In this piece I want to explain where embedded insurance really works, where it just stays on screen, and why the hardest part isn’t technology but operations.

Not all insurance carries the same weight

Looking closely at the market, I see three categories:

• Mandatory products (compulsory motor liability, mandatory earthquake cover): bought because we have to. The state mandates them, the bank requires them for a loan, or the vehicle inspection demands them. Competition runs on price and how fast the process is done.
• Protection products (life, critical illness, disability): they keep a life, a family or a business standing after a catastrophe. Here the customer is really buying assurance against future uncertainty.
• Micro products placed in digital flows (ticket cancellation, short-term device protection, instant travel cover): they become visible on screen, but in the customer’s mind they often stay in the not-essential, nice-to-have category.

The real problem is in this last category. The moment the customer’s priorities narrow, it’s the first line erased. When spending must be cut, or a small obstacle appears in the purchase flow, the nice-to-have drops out of the basket. Digital integration is a tool that leads the customer to the water; but you can’t make them drink. Drinking depends on feeling thirsty. Technology makes distribution easier, but can’t create the basic purchase motive on its own.

Academic work confirms this too. Research into why digital wallets and super-apps get adopted shows that what decides a new digital product’s fate is not the technology it offers, but whether it can pull the user out of their existing habit, the status quo. Embedded insurance, too, only sticks when it enters a flow the customer is already in, at a moment of real need. Otherwise it stays just a checkbox.

Where embedded insurance really works

There are places where it works, and strikingly so. In the Philippines, GCash brought micro-insurance to millions through GInsure in its mobile app. In the first quarter of 2025, 14.6 million people accessed micro-insurance via mobile, and more than 51 million policies had been issued since 2021. Insurance is offered embedded inside daily transactions like money transfer, top-ups and digital shopping. For segments that couldn’t access traditional insurance for years, this is a real financial-inclusion story.

A second example shows why embedded insurance is sometimes not a by-product but a strategy. Tesla’s insurance move is often simplified as a tech company selling policies. Yet looking at the strategic depth, the point is less about opening a profit center than about lowering the total cost of ownership of the car. Insurance here isn’t a line added to the flow; it’s a lever that increases the product’s appeal.

A third sign is the shift in behavior. In the US, young consumers now want to buy auto coverage directly from the dealer, at the moment of purchase. Super-app ecosystems in Asia make insurance a natural part of daily life. The common thread: in none of these examples is insurance a cleverly hidden add-on; it’s a solution placed at the moment the customer has already made a decision and the need is highest.

This shows embedded insurance is really not a distribution trick but an ecosystem job. The insurer brings risk expertise, the technology firm brings data and distribution power, the brand brings the customer relationship. Value emerges where these three combine correctly. None alone is enough.

The hardest part isn’t distribution, it’s claims

The most-discussed side of embedded insurance is integration and distribution. Yet the hardest part is at the heart of operations: claims. The customer judges insurance not by the buying experience but by the experience at the moment of claim. And in the embedded model, when something goes wrong the customer blames not the insurer but the brand that offered the cover. So the brand’s reputation is tied to a claims process it often never sees.

A brand entering embedded insurance roughly chooses among three paths:

• Deep integration with a single insurer: a direct relationship with the risk carrier, but the brand’s dependence on that company’s technology capacity and product appetite rises. If the company changes strategy or closes access, the brand is left exposed.
• Building its own insurance program and platform: experience and data become entirely the brand’s, but the process usually takes years, demands heavy investment and deep regulatory knowledge. The most critical point is again claims: if it falters, the bill is charged directly to the brand.
• Partnering with an embedded-insurance platform built for the job: access to multiple insurers, ready regulatory expertise and fast time to market; in return you need to find the right partner and manage the relationship.

All three have technical pros and cons. But the real distinction isn’t technical. What’s decisive is the operational maturity to carry claims, regulation and the customer relationship. Anyone can buy the technology; the hard part is building an operation that can stand beside the customer on a bad day.

What it means for Turkey

When we talk about embedded insurance in Turkey we usually start from technology. Yet the legal framework needs clarifying first. The European Union doesn’t define embedded insurance as a standalone concept; it handles it as cross-selling under the Insurance Distribution Directive (IDD). The core principle there is that the customer clearly understands the cover and the cost. Our roadmap is the same: first a value the customer genuinely understands and needs, then the legal and operational ground to carry it. Technology comes last, because it’s usually the easiest part.

The goal isn’t to make insurance invisible

In the coming period market leadership won’t be in the hands of companies that hide insurance in a cleverer corner. The real advantage will go to those who can turn optional but vital protections, like life and health, into a priority as un-postponable in the customer’s mind as compulsory motor insurance.

I see embedded insurance not as a fad but as the foundation of insurance’s evolution into the platform economy. But the value of this evolution comes not from making insurance invisible, but from tying its value to a real need in the customer’s life. Standing on the side of concrete results rather than show applies here too: what matters isn’t putting insurance everywhere, but putting it at the right moment and in a way that genuinely helps.