Embedded insurance: why Turkey should look at Germany

Embedded insurance already exists in practice in Turkey; we see the model often on e-commerce platforms and digital channels. But the truly critical question isn’t technical, it’s legal: where does this model sit in law? Because the obstacle to scaling is often not technology, but regulation.

The EU perspective: IDD

The European Union doesn’t define embedded insurance as a standalone concept; it handles it as a cross-selling approach under the Insurance Distribution Directive (IDD). The core principle is clear: insurance may be offered together with a main product, but from the consumer’s side it must always be separately purchasable. Mandatory bundles create a tying risk; and that creates serious problems for both consumer law and competition law.

The German model: a licensing exemption

Germany has adopted a much more pragmatic, market-friendly model. The system developed under its trade-regulation rules grants, under certain conditions, a licensing exemption to platforms and sellers whose main business isn’t insurance. For low-premium, simple and complementary insurance, these players become able to act as intermediaries. So embedded insurance gains a structure that is both legally defined and compatible with the dynamics of the platform economy. The regulatory model enables it in a controlled way, instead of restricting it.

Turkey: present in practice, limited in law

In Turkey the picture is different. Current legislation limits platforms to the role of presenting an invitation to offer and acting as a hosting or technical-infrastructure provider. Platforms can’t sell insurance, can’t act as insurance intermediaries, and don’t have a licensing exemption like Germany’s. This stands out as the main factor limiting embedded insurance from scaling and deepening with new business models. So the potential is there, but the legal ground doesn’t release it.

The cost of this legal gap isn’t abstract. A device-protection plan on an e-commerce site, a cancellation cover in a travel flow, instant accident insurance in a mobility app; all are technically possible today, but because the legal ground isn’t clear enough, they’re either half-built or stay in a gray area. A clear framework gives the investor confidence and protects the consumer.

Consumer rights and data protection: the red lines

In the middle of all this is a red line: consumer rights and the protection of personal data. In embedded-insurance applications the insurance must always be optional; the main product must be purchasable without the insurance. No model built without protecting this principle can produce trust in the long run. A design that corners the consumer in the name of convenience may bring short-term sales but harms the brand.

From the brokerage and industry perspective the picture reaches the same conclusion. A proper licensing-exemption regime turns platforms from the insurer’s competitor into a distribution partner. The insurer carries the risk and the product, the platform provides reach and context. The only real obstacle to this cooperation isn’t technology, it’s the rules that define it.

The numbers tell us why this matters. Insurance penetration in Turkey has long been low; broad segments lack even basic protection. Embedded insurance is the most practical way to reach exactly this segment: instead of trying to persuade people to buy insurance, place insurance, in small, understandable pieces, inside the e-commerce, mobility and finance flows they already use. Set up right, this becomes both a commercial-growth and a financial-inclusion story.

The areas with near-term promise are clear: device and electronics protection, travel and cancellation cover, micro health and accident products. All of them are low-premium, simple and complementary; that is, a perfect fit for the exemption logic of the German model. The only thing missing is a clear legal framework that opens controlled room for these players. When the framework arrives, the ecosystem with the technology already in hand is waiting.

Conclusion: a strategic opportunity for Turkey

The picture points to a clear conclusion: Turkey needs a clear, modern regulation at the level of law for embedded insurance. Similar to the German model, setting up a controlled licensing-exemption regime for low-risk, complementary insurance could both raise insurance penetration and open the way to a new distribution architecture compatible with the platform economy. With the right regulation, embedded insurance means growth for the industry, value for platforms, and accessible protection for the consumer. There’s no losing side here; as long as the framework is set up right.