Viewpoint: Insurers Risk Losing Out if They Ignore Embedded Insurance Opportunities

Embedded insurance is no longer just an emerging trend; it’s becoming a central strategy for retailers and non-insurance brands looking to enhance customer experience, drive loyalty, and generate new revenue streams.

With global gross written premiums in embedded insurance projected to hit $700 billion by 2030, the opportunity for retailers to diversify into insurance is undeniable. For 2025, the focus will be on achieving seamless integration, building consumer trust, and navigating regulatory compliance.

This journey is not without challenges, but the rewards are significant, not just for retailers but for insurers too, who risk losing market share if they fail to embrace partnerships with non-insurance brands.

Integration Complexities Can Be Daunting

Retailers are known for their focus on the customer experience, and the success of embedded insurance hinges on maintaining that. The ability to integrate insurance into existing retail systems – whether e-commerce platforms, in-store checkout processes, or apps – is also critical. However, the complexities can be daunting.

Retailers must invest in technology that enables real-time data exchange and seamless APIs; enabling insurance products to appear as natural extensions of the purchase process. For instance, when a customer buys a high-end bicycle, they should be offered coverage in a single click during checkout. This requires insurers to adopt flexible, scalable solutions that can integrate into third-party platforms without friction.

The shift from “Embedded Insurance 1.0 to 2.0,” which focuses on personalization and advanced technology, is already addressing these challenges. Embedded insurance platforms are making headway by offering pre-packaged solutions for specific verticals, such as high-end tech and luxury items. These solutions enable retailers to provide immediate, tailored coverage while preserving their brand’s reputation for excellence.

Avoiding the Pitfalls

Customer trust is paramount. Retailers entering the insurance market must ensure customers understand what they are purchasing, what is covered, and what is excluded. Poorly communicated policies or perceived “hidden” terms can lead to complaints, reputational damage, and regulatory scrutiny.

Transparency begins with clarity at the point of sale. This includes simplified language, visible policy terms, and instant access to policy documentation. Retailers can also leverage their trusted brand status to reassure customers. For instance, embedding insurance into the purchasing journey aligns the product with the brand’s established values and commitment to quality.

Education also plays a role. By offering clear examples of scenarios where coverage applies – like theft of a luxury watch or accidental damage to a smartphone – retailers can build confidence in the product. Technology can assist here too, with interactive tools to help customers explore coverage options without overwhelming them with jargon.

Navigating Regulatory Landscape

The regulatory environment for insurance is tightening, especially with consumer-focused mandates such as the UK’s Consumer Duty regulation, and retailers entering this space must ensure compliance, while delivering tailored offerings.

Partnerships with specialized platforms or insurtech providers can ease this burden. These partners often have a deep understanding of compliance requirements and can help streamline the process. Best practice among embedded insurance platform solutions demands that they are built with regulatory alignment in mind, allowing retailers to focus on customer experience while ensuring all necessary legal and compliance measures are in place.

Retailers must also monitor and adapt to evolving regulations. This requires close collaboration with insurers and regulatory experts to maintain a balance between innovation and compliance.

Tapping Into Growing Customer Base

Perhaps the most compelling trend for 2025 is the growing market share of retailers and non-insurance brands in the insurance sector. These brands have a unique advantage: proximity to the customer. They know their customers’ behaviors, preferences, and needs, which makes their platforms ideal for embedding relevant insurance products.

Insurers who fail to partner with retailers and provide capacity for embedded insurance offerings risk being left behind. Non-insurance brands are not just offering insurance as an add-on; they are creating ecosystems where insurance is seamlessly woven into the customer journey. This approach resonates with today’s consumer who values convenience and relevance.

We’re already seeing significant shifts in market dynamics. Retailers are gaining traction in high-growth verticals like luxury goods, high-end tech, and bicycles – areas traditionally underserved by traditional insurers. The implication is clear: insurers would be mad not to collaborate with these forward-thinking brands. By providing underwriting expertise and a regulatory compliance framework, insurers can tap into a vast, ready-made customer base and secure their relevance in an increasingly crowded market.

Outlook: A Collaborative Future

As embedded insurance evolves, the most successful retailers will be those who prioritize seamless integration, build transparency and trust, and maintain compliance. The winners in this space will not only generate new revenue streams but also deepen customer loyalty by offering solutions that genuinely add value.

For insurers, the path forward is clear: embrace partnerships with non-insurance brands or risk losing out. Retailers’ growing market share in insurance is not a threat – it’s an opportunity – to redefine how insurance is delivered. 2025 promises to be a pivotal year, where innovation and collaboration will separate leaders from laggards.

Topics Carriers