Embedded insurance: the future of distribution

Summary

I moderated the closing panel of the 4th International Insurance Summit on behalf of the Insurance and Reinsurance Brokers Association; the subject was embedded insurance. Around the table sat the CEO of Sigortam.net, Ersin Al from the insurance arm of Colendi, one of Turkey's four digital banks, FIBA Sigorta's Deputy General Manager Buket Erşan, and Mehmet Akif Özdemir, founder of EasyCep, the pioneer of the refurbished-device market. I opened with the plainest definition: embedded insurance is insurance ceasing to be a separate transaction and becoming part of a product or a service. The customer doesn't go looking for cover; it reaches them at the moment of highest need, at the point of purchase. That turns insurance from a chore into a natural step in the experience.

I told the history in four stops: travel cover sold with plane tickets and motor cover at the dealership since the 1950s, bancassurance in the 1980s, add-ons like phone and screen-breakage cover in the 2000s, and the web-enabled era that came with the platform economy after 2015. The real break came in 2021-2022, when the top management of Allianz, AXA, Munich Re, Swiss Re, Liberty and Travelers ran a peer study with Google, and Swiss Re's June 2022 report gave us the term Embedded Insurance 2.0. In this model, services like insurance, payment, credit and loyalty are offered as API components to an operating system; brands snap those pieces into their own customer journey like Lego. The report's key warning: whoever holds that operating system will shape the market.

I put the numbers on the table too. In 2020 Alipay and Ant Group had connected more than ninety insurers to their platform, offered close to two thousand products, and won 100 million of their 500 million policyholders from rural customers who had never bought insurance before. By Swiss Re's projection, the embedded channel's share of global premium was under one per cent in 2022 and will reach five per cent in 2027 and fifteen per cent in 2032, a market close to 2.5 trillion dollars. Sixty per cent of non-life and thirty per cent of life business could theoretically move through the embedded channel. The strategic warning is clear: early movers take the larger slice, latecomers struggle to grow.

The most concrete part of the panel came from Turkey. FIBA Sigorta had sold roughly 400,000 policies through the embedded model in two years; via FIBA Bank's Taksitliyo platform it offers device cover inside the credit flow in 12,000 stores, adds screen-breakage cover to mobile consumer loans, and sells credit-embedded motor cover through QR codes. In EasyCep's stores, 25 to 30 per cent of refurbished phones leave with insurance; what convinces the customer is that there is no separate transaction, the policy is created automatically in the same payment as the phone. Colendi has embedded micro life insurance into buy-now-pay-later: a thousand-lira purchase at Migros on a ready limit is protected by a life policy in the background. I closed with my own point: as embedded insurance grows with technology, the need for professional intermediaries, banks, agents, e-commerce platforms and mobile ecosystems does not disappear; getting through a door is not enough, you have to carry value through it.

In this talk

• The definition of embedded insurance: insurance as part of a product or service, offered at the moment of need and purchase
• History: travel and motor cover in the 1950s, bancassurance in the 1980s, device add-ons in the 2000s, the platform economy after 2015
• Embedded Insurance 2.0: the term born from Swiss Re's June 2022 report and a peer study by major insurers and Google
• The operating-system logic: insurance, payment, credit and loyalty as API components; brands build the journey like Lego
• Alipay/Ant in 2020: 90+ insurers, close to 2,000 products, 100 million of 500 million policyholders first-time rural buyers
• Market projection: the embedded channel's share at 5 per cent in 2027 and 15 per cent in 2032, close to 2.5 trillion dollars
• Digital MGAs: fully digital, new-generation intermediaries building products for new risk gaps, one opening its own syndicate at Lloyd's
• Point of sale versus point of design: insurance as an add-on versus insurance written into the product's DNA
• The field in Turkey: FIBA's 400,000 policies and 12,000-store credit integration, 25-30 per cent attach rate at EasyCep, Colendi's micro life cover inside BNPL
• Regulation needs: a legal frame for API integrations, defined roles and liabilities in embedded models, micro products and e-contracts
• The role of intermediaries: as technology grows, banks, agents and platforms remain necessary; the point is passing value through the door, not just getting in

Embedded insurance takes insurance out of being a chore and makes it a natural part of the customer experience.