Insurance industry insiders believe the most susceptible product line to embedded insurance disruption is motor insurance, according to GlobalData polling.

Over a quarter of respondents to a poll by GlobalData, a business intelligence provider, said that motor insurance is likely to be the most disrupted segment, followed by life insurance and then home and health insurance equally.

Embedded insurance, when a non-insurance company provides cover for a product or service at the point-of-sale (or as part of a subscription or membership package), is a rapidly evolving trend that has benefited from the growth in mobile and e-commerce technology. 

Embedded insurance presents new opportunities for insurers to expose customers to their products via partnerships with B2C intermediaries.

Alongside tech trends (such as big data, artificial intelligence and the proliferation of third-party APIs) many players, both inside and outside the industry, see embedded insurance as a major disruptor to product distribution channels.

GlobalData polling found that motor insurance is the most ripe for disruption (with 28.4% of votes), followed by life insurance (22.6%) and then household and health insurance jointly in third place (14.8%). 

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Insurers should be prepared for the changing face of distribution across these product lines as consumers increasingly seek simple avenues to purchase cover for the services or products they buy.

Tesla is arguably the leader in embedded motor solutions. Its own insurance product is cheaper than legacy players’ offering for Teslas while incorporating many of the in-built telematics systems in the vehicle to create feedback loops for both driver and manufacturer, and these can potentially improve driving and inform of design changes if needed. 

Tesla’s loyal followers also help the business sell its product – if a consumer is keen to buy a Tesla, they are likely to buy its insurance product too. 

During Tesla’s Q4 2022 earnings call, in January 2023, CEO Elon Musk said that an average of 17% of its customers had purchased the Tesla Insurance product.

Source: GlobalData, findings based on a poll of industry insiders run on Verdict Media websites in Q3 2023. There were 155 respondents.

Life insurance

Embedded life insurance slightly lags the trend seen in general insurance lines, although evidence from our poll suggests insiders nevertheless see this as an area ripe for innovation and disruption. 

These policies tend to be embedded into products related to life events, with the emergence of partnerships between life insurers and real estate and banking players. 

Examples include a collaboration between Allianz Life in Ghana and Pay Angel Remittance to embed life solutions into digital remittance services, as well as US InsurTech Bubble’s ‘Insurance-in-a-Box’ offering, which allows partners to embed home and life products into real estate transactions for customers. 

The embedded insurance trend is set to proliferate over the coming decade: InsTech London estimates that the market size of embedded insurance in the property and casualty segment alone will grow six-fold from 2022 to reach $700 billion in GWP by 2030. 

Key benefits to the industry will be delivered by reducing friction in the purchasing process, minimising distribution costs, and generally cutting the global protection gap. 

Market players should have some form of embedded distribution strategy to stay competitive in the next generation of insurance.

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