The data tells a compelling story about the massive potential residing within the embedded insurance distribution model in Australia.
This channel is forecast to reach a staggering valuation of approximately $35 billion by 2033, claiming around 18% of the total Australian insurance market. This growth rate, which PwC projects will vastly exceed the 4% rate for traditional insurance channels over the same period, signals embedded distribution as the inevitable strategic priority for carriers looking to secure significant scale.
When we talk about the opportunity, discussion often centres around personal lines, and rightly so. We all immediately recall the personal experience: being offered travel insurance while booking a flight, or seeing a warranty option for a new gadget.
However, the B2B market, particularly through vertical SaaS (Software as a Service) platforms, represents arguably the most significant growth opportunity for insurers and underwriters today. Businesses are increasingly relying on specialised, industry-focused SaaS platforms for core operations. Embedded insurance offerings within these platforms can offer businesses, and at times their clients, a truly simplified and friction-free process to obtain essential or tailored protection.
While regulatory compliance is non-negotiable, the exemption from the deferred sales model for wholesale business insurance products provides a strategic advantage. This allows for the high-velocity, friction-free distribution that defines modern embedded insurance.
Navigating Challenges: Partnership and Brand
But harnessing this opportunity isn’t without its challenges. Simply identifying a potential partner isn’t enough to sell insurance.
Bringing an embedded proposition to life requires genuine engagement and collaboration between your team and the external partner(s). If all parties share the vision and have clear incentives for success, the likelihood for buy-in and a robust outcome increases significantly.
It’s crucial that all sides work together to deliver the best experience possible for the customer. Embedding the option to purchase your insurance product within the registration or sign-up process of a complementary service inevitably links the experiences of both products and brands in the eyes of the customer. While many see this brand linkage as a risk, it’s one that can be mitigated by ensuring a strong foundational partnership, aligning brands and products closely, and maintaining an unwavering commitment to quality service delivery.
Brand dilution is another critical factor. How do you successfully present your product within the partner’s ecosystem? This needs careful consideration, extending from the initial customer touchpoint through the full lifecycle of the policy. Ron Arnold, in his article for Insurancenews.com.au, rightly highlights that the winners will be those who “surprise and delight” when it comes to the service provided throughout the policy lifecycle.
Embracing the “seamless” nature of the embedded opportunity is key. Simplifying the purchasing journey by reducing data duplication, saving the repeat entry of information, or simply offering the convenience of not having to quit one process to start another, is a massive win for the customer. Presenting the right product to the right customer at the right time feels like magic to the customer, and you want your brand associated with that positive experience.
The Technology Backbone
For the magic of embedded insurance to happen, having the right technology to power the service is vitally important.
At the heart of a truly seamless embedded experience is the need for real-time interaction. This raises a key question: how can essential functionality, including real-time quote calculation, instant risk assessment for underwriting criteria, policy binding, and automatic document issuance, be achieved when the customer is on your partner’s site and going through their checkout process? This interaction can be delivered in a few ways. Two common approaches – partners can leverage a robust API for direct data exchange, or a capable technology partner can provide an embedded, tailor-made form component (like an iframe) that integrates directly into the partner’s site. This immediate, data-driven interaction is what makes the experience “embedded,” eliminating friction for the customer.
Underpinning all of this is data security. With sensitive data flowing back and forth between partner brands and the carrier, robust security and privacy protocols need to be continuously managed and monitored.
As more insurers seek out opportunities within specific markets, the ability to get to market quickly and reduce integration complexity for partners becomes paramount. Historically, having the time, money, and resources to develop and maintain this complex technology internally has been a barrier to entry for all but the largest insurers.
This is where sophisticated platforms come into play. Leveraging technology developed with embedded insurance opportunities in mind that still provide the robust customisation and ability to integrate with pre-existing systems and processes, is the competitive advantage.
One of the rewarding aspects of working on a platform like uBind is precisely that: opening up these opportunities to those in the market that may not have the in-house capabilities to capitalise immediately. By broadening the field of potential partnerships and reducing the technical lift, platforms like uBind assist in ensuring a wider uptake in embedded insurance across a more diverse selection of products and insurers, ultimately improving the experience for the end customer.