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Embedded Insurance: How To Realise a New $3 Trillion Dollar Market Opportunity

Back again with another virtual “Big Round Table”, The Camelot Network welcomed a range of experts, including ex and current C-suite insurance leaders to tackle the emerging market opportunity that is embedded insurance.

The topic on the table:

“Embedded Insurance – How to realise a new $3 trillion dollar market opportunity” – specifically, what are the benefits and challenges related to embracing innovation in this area, and what are the next steps required to realise this gap in the market?

It’s a topic that needed to be carefully unpacked, with some serious potential for market growth in addition to, for example, regulatory pitfalls, all highlighted by our fantastic panel of guest speakers: Simon Torrance, Russell Corbould-Warren and Robin Merttens.

There was plenty of intriguing analysis on the subject, so we wanted to share some of the key insights raised.


  1. The customer is key: the benefits of embedded insurance?

A critical shift is occurring as financial technology evolves, highlighting the outdated nature of the traditional business model under which the insurance industry operates.

Embedded insurance, which combines such technology with financial services, can enrich customer propositions by issuing complementary or ‘invisible’ plug-ins that are, for all intents and purposes, more tailor-made to the prospective customer’s needs.

There are a number of success stories to consider in this regard, with the likes of Uber and John Lewis partnering with insurance providers to create such personalised solutions in financial services and insurance, capitalising on customer intimacy and the clear market gap.

Referencing Uber’s use-case, handing drivers a quick lump sum payout if a vehicle is damaged, Russell Corbould-Warren pointed out how effortless embedded insurance can be, with the platform taking a proportion of the driver’s fare per mile to help pay the policy.

Exploring opportunities for the customer specifically, embedded insurance has the potential to fundamentally revolutionise the customer experience by handing them access to products they couldn’t necessarily get before.

Taking that a step further, it’s all about providing bitesize chunks of products as and when they are needed, which ultimately serves to realise the goal of enhancing the customer journey.

Insurance providers likewise stand to benefit, as partnerships with a variety of players unlock new routes for distribution, not to mention new sources of data, which will more than likely lead to greater diversification of portfolios. More broadly speaking, beyond the realm of margins, there’s a societal benefit to be realised in increased accessibility, with Roger Lewis pointing to poorer, rural customers in China taking advantage of insurance for the first time courtesy of Alipay’s embedded cover.

Simon’s embedded insurance forecast

How to realise a new $3 trillion market opportunity

  1. Regulation, regulation, regulation: the challenges of embedded insurance?

A common theme that emerged from the debate over embedded insurance revolved around regulatory requirements.

The market opportunity additionally raises a number of ‘grey areas’ with regard to the multiplicity of parties involved in the value chain and clarification around what their particular roles are.

While partnerships between a number of groups from insurance providers to retailers comes with its advantages – not least of all proximity to a loyal customer base – the relationship is fundamentally reliant on the maintenance of trust.

In the interest of realising the market potential of embedded insurance, this will be one of the first major roadblocks standing in the way of innovation.

Looking further afield to the claims process, bringing in an embedded element to the insurance product offered will lead to questions over a consistent approach.

In other words, if the industry is to embrace the market opportunity in question, it’s important that the embedded aspect is also integrated into claims in order to ensure a frictionless experience for the prospective customer.

  1. One small leap for organisations, one giant leap for the industry: the next steps to take embedded insurance forward?

There is undeniably a certain hesitance – an ‘inbuilt negativity’ harking back to the time of PPI and concerns over selling unsuitable products to customers, as Robin Merttens identified – around embracing such innovation.

Nonetheless, the potential for embedded insurance to amount to a 20-25% proportion of the total market in a decade’s time should be motivation enough to adapt.

This is particularly the case given that 80% of leading insurance companies across the globe made no – or negative – economic profit, according to insights from McKinsey.

As Simon Torrance has aptly noted, however, adapting the industry’s outdated business model will require a significant cultural shift from underwriters being prepared to hand away their authority to the wider adoption of digital technology.

To enable all the working parts to fit together smoothly, an element of compartmentalisation may be advisable, starting a new book of business when entering the unfamiliar ecosystem of embedded insurance in order to prevent the hindering of any existing books of business.

Observing what seems, on the face of it, to be a near insurmountable number of hurdles, and with the increasing unprofitability of the traditional business model to contend with, standing on the precipice of industry-wide change can feel like being stuck between a rock and a hard place.

Putting a pin in the numbers for a moment, however, with the insurance industry being customer-centric to its core, a cultural shift that enables organisations to not only gather more data but also cater to customers’ specific needs is a more than worthy goal in of itself.


Want to join us for the next Big Round Table?

The Camelot Network’s next Big Round Table event is Thursday September 30th. Registration link coming soon.

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