Embedded insurance is the topic du jour in insurance. It’s all the rage. Except that many are getting the modern definition of embedded insurance wrong. Embedded insurance has been around for a long time – just without the benefit of data and technology and improved customer experiences. For decades, consumers have added coverage like travel insurance when purchasing airfare or warranty protection when purchasing appliances. These are tried and true examples of embedded insurance – in an analog world.
In our digital world, embedded insurance uses data and technology to seamlessly transact insurance online – far beyond the simple insurance products like travel insurance and product warranty. It provides consumers with the ability to purchase complex insurance products, like auto insurance with your new car purchase or homeowners insurance during the mortgage process, through a completely digital buying process.Embedded insurance is all about meeting the customer with the right product at the exact moment of need, through a frictionless digital experience not offered by insurance carrier websites.
While it’s not a new phenomenon, the hype around embedded insurance is exploding. In fact, according to a forecast from Deloitte, the embedded sales of property and casualty (P&C) insurance alone by 2030 will reach $700 billion globally. Many are right to ask: Is the hype real, or just another example of overstated trends?
Made for this moment
What is new about this moment is the market shift in consumer appetites for insurance purchasing experiences. According to our new 2025 Consumer Sentiment Report: Preferences for Insurance in a Digital World, 64% of Digital Natives (those born in 1975 or later) believe insurance should be primarily purchased and managed online in today’s digital world. Not only are consumers hungry for insurance to modernize, they’re already partaking in digital transactions. At least half of all respondents in our survey indicated that they had already engaged in a digital insurance transaction, with 70% of Digital Natives leading the way.
This is especially true in auto insurance. While offering auto insurance at the point of sale is already standard practice in many parts of the world, the U.S. has been slow to adopt. This means that the market opportunity is enormous. The same Deloitte report found that U.S. personal auto insurers wrote $267 billion in premiums in 2022, accounting for nearly two-thirds of the personal lines segment and one-third of all P&C direct premiums written. Deloitte predicts that if as much as 20% of the U.S. personal auto market shifts to embedded by 2030, at least $50 billion in premiums could be diverted away from the industry’s traditional distribution channels. If automakers have the foresight to partner with insurtech infrastructure companies, they could shift billions of these dollars and maintain control of the customer experience.
Importantly, American consumers are ready for this shift. 76% of respondents in our new report who had previously purchased insurance online said that they had purchased auto insurance – and it was, by far, the most common type of coverage purchased digitally. Not only are consumers willing to purchase insurance online, they’re overwhelmingly satisfied when they do. Across all age groups, 86% of our respondents reported feeling satisfied when they purchased insurance online on their own.
From the mouths of brands
One thing is clear from our data: Consumers are ready for the insurance industry to shift, and they’re looking to brands to lead the way. Of those who had purchased auto insurance digitally, 81% did so via the automobile manufacturer that they purchased the car from. Across all age groups, 63% of respondents believe there should be more options to purchase insurance online directly from a brand.
Even if they haven’t already made the switch to digital, more than half of respondents said they would consider doing so in the future. Almost two-thirds of Digital Natives said they were open to it, and 58% of them said they would consider switching insurance providers if their current one didn’t offer digital insurance experiences. Within the next decade, this group will dominate the future of insurance transactions – and those who can’t adapt will be left behind.
All of this is to say that implementing embedded insurance products at the point of sale not only has the potential to disrupt legacy distribution channels, it also creates a huge opportunity for insurance carriers to forge partnerships with insurtech providers and brands that own their ecosystems. The first mover advantage is real, and it gives those prescient enough to pursue it the mind share, resources, and learnings first. As more and more consumers expect embedded insurance experiences, those carriers who refuse to adapt are going to lose out on the billions of premium in play – this is a true disruption moment in time.
