Embedded Insurance Gains Ground as a Key Growth Driver

Embedded insurance—insurance purchased within another product transaction—promises to reshape how coverage is distributed, expanding accessibility while closing the ‘protection gap.’ Embedded models are not entirely new; for decades, options like life insurance at airports and auto insurance at dealerships have shown the approach’s potential. Yet, recent market projections suggest massive growth, with global gross written premiums expected to rise from $156 billion in 2024 to over $700 billion by 2029, driven by rising demand in diverse sectors such as electronics warranties and auto insurance.

In the mobility sector, embedded insurance innovations are particularly notable. Original equipment manufacturers (OEMs) such as Tesla, Toyota, and Carvana now integrate insurance options directly into the vehicle sales process. This provides customers with convenience and coverage, while benefiting service providers with increased loyalty and additional revenue streams. A study by Polly indicates that most Millennials and Gen Z consumers are inclined toward embedded auto insurance options, showing strong interest in obtaining coverage during vehicle purchases.

The widespread adoption of embedded insurance may pose challenges for traditional agents, who remain essential for customers needing guidance on complex insurance options. Although digital channels are convenient, studies show that most consumers prefer consulting with a human when making insurance decisions, especially for intricate needs. Insurers must carefully manage potential distribution conflicts with agents while harnessing embedded insurance’s advantages. As the insurance market continues to evolve, embedded models offer a promising avenue for industry growth and greater consumer accessibility.