Is the Embedded Insurance Model Rewriting the Rules? A Closer Look at Adacta's State of Embedded Insurance 2024 Market Survey

Is the Embedded Insurance Model Rewriting the Rules? A Closer Look at Adacta's State of Embedded Insurance 2024 Market Survey

Embedded insurance has become increasingly popular as it seamlessly integrates insurance coverage with non-insurance organizations' products or services. As the business model gains momentum within the industry, we conducted a survey to determine whether insurers consider it a fad or a critical element of their long-term strategic planning.

As a  provider of innovative technologies for insurance companies actively involved in various digital transformation initiatives in the insurance industry, we have a keen interest in comprehending the industry's dynamics to better cater to its evolving needs. Our research aimed to understand insurers' goals, challenges, partnerships, and embedded product development strategies.

The 'State of Embedded Insurance 2024 ' survey, a comprehensive analysis of European insurers' current trends and future expectations of embedded insurance serves as a valuable resource for understanding the industry's dynamics.

This blog points out some of the most interesting areas; for details, you are welcome to take a look at the Survey.

Embedded Insurance survey

Table of Contents:

A staggering 94% of survey respondents view embedded insurance as a critical part of their future strategy

One of the crucial questions was about the participants' perception of the significance of embedded insurance in their company's future strategy. The response showed that the majority of the survey respondents, 94% to be precise, recognized embedded insurance as a vital component of their future planning.

                 embedded insurance as a critical part

As a DACH survey respondent succinctly stated, "Providing tailor-made insurance products and services that cater to individual needs and behaviors will become paramount." This comparison highlights the industry's shift from being reactive to proactive, with a focus on precisely meeting the varied needs of today's consumers. It reflects an industry that is ready to provide more dynamic and fluid insurance solutions than ever before, going beyond mere financial safety nets.

Insurers’ key objective with embedded insurance is to improve customer experience

According to the survey, when asked about the main goals in implementing embedded insurance, most insurers stated that improving the customer experience was their top priority. This suggests that insurers are focused on streamlining the user journey and making it as seamless as possible by incorporating insurance into other products and services.

Such integration is expected to please customers and differentiate insurers in a competitive market where personalized and convenient experiences are increasingly valued.

This was well summarized by a Benelux respondent stating that: ‘’Integration with Ecosystems enhances the convenience for consumers, making insurance a natural part of their everyday interactions and is thus no longer just an option but a necessity.’’

With embedded insurance, insurers focus on customer experience and aim to grow their revenue and broaden their market reach by accessing untapped segments.

Financial institutions, e-commerce, health and automotive lead as top embedded insurance partners

Which types of non-insurance brands the survey participants are collaborating with or planning to collaborate with for embedded insurance offerings?

With 63% of survey respondents partnering with financial institutions and significant collaborations in the health, automotive, and e-commerce domains, the breadth of these partnerships signifies a collective move towards offering more holistic and integrated customer solutions.

The partnership with financial institutions is mutually beneficial; it capitalizes on the established trust and customer base of financial institutions while providing insurers with a vast platform to distribute their products. Similarly, regarding e-commerce and retailers, we are all familiar with add-on products such as extended warranties. 

Health and wellness platforms are closely followed, demonstrating the insurance industry's recognition of the increasing consumer investment in health and preventive care.

Collaboration with automobile manufacturers is a good example of how insurance becomes a feature of mobility rather than an afterthought. As cars become data-driven, these partnerships pave the way for usage-based insurance premiums that reflect driving habits and actual vehicle usage.

As a UK survey respondent stated: ‘’Embedded insurance holds great promise for a win-win situation for both insurers and drivers by incentivizing safer driving behaviors that can be captured at lower premiums.’’embedded insurance report on top partners

Insurers are primarily interested in adopting usage-based and insurance embedded in financial products

We were also interested in which approaches for embedded insurance products survey respondents' companies are most interested in or planning to adopt.

As indicated by the survey, insurers' growing interest in usage-based insurance suggests a keen focus on aligning premiums with actual risk and usage. This model, which accounts for 44% of insurers' interest, reflects a shift toward greater personalization and fairness in pricing.

Similarly, embedding insurance in financial products, capturing 43% of interest, underscores the effort to integrate insurance into the consumer's financial ecosystem, enhancing the appeal of financial products by adding a layer of protection that is contextually relevant, such as travel insurance with credit cards.

Furthermore, the concept of bundling with products and services, showing a 38% interest level, illustrates insurers' desire to create a more comprehensive consumer experience. This approach, where insurance is presented as an intrinsic part of a product or service package, can streamline the purchase process and ensure that customers are protected when engaging in high-value purchases.

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Data privacy and regulatory compliance are The top anticipated challenges in adopting and promoting embedded insurance

The survey findings revealed multifaceted challenges in adopting and promoting embedded insurance in the European region, particularly in addressing data privacy and maintaining regulatory compliance.

The primary concern expressed succinctly by one of the survey respondents is:

‘’Managing legal complexities when offering insurance products that span multiple European jurisdictions.’’

The complexity of harmonizing technical standards and fostering strategic partnerships and collaboration forms represent the next tier of challenges. Insurers are struggling to ensure interoperability among different systems and technologies.

Furthermore, insurers must contend with the cultural nuances across different regions. Tailoring embedded insurance solutions to align with national cultures, laws, and consumer behaviors adds another layer of complexity, emphasizing the need for localized strategies and customer education. A Benelux survey participant well stated the objective:

‘’We need to deliver embedded insurance offerings that not only comply with regulations but also resonate with customers' diverse needs, promoting awareness and understanding of this novel concept.’’

In Conclusion

As the  "State of Embedded Insurance 2024" survey reveals, industry professionals see a future where insurance seamlessly integrates into broader ecosystems, offering more personalized, intuitive, and accessible coverage. 

This new business and operational model presents opportunities for traditional insurers across all lines of business, including retail and commercial insurance. It also presents new opportunities for conventional distribution partners such as insurance brokers and MGAs. It also presents huge opportunities for Insurtech and non-insurance brands from various industries.

This future envisions an industry that not only responds to but anticipates its customers' needs and preferences, leveraging technology, strategic partnerships, and innovation to deliver risk coverage that truly fits into the fabric of modern life.

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