Sigorta Lab: embedded insurance, trend or revolution?

Summary

For the past year, wherever you look you see embedded insurance: in company reports, conference programmes, panel titles. We lived through the same excitement for digital insurance and for insurtech, and both lost their air over time. So the question is fair: is embedded insurance another passing fashion, or is something really changing?

The term needs putting in its place first. Embedded insurance is insurance appearing on the same screen while you buy something that is not insurance: screen-breakage cover as you put a phone in the basket, travel cover as you book a flight. The idea is not new; banks have sold life cover with loans for years. What is new is technology making it instant and limitless. One API carries dozens of insurers' products to millions of people at once; in China, 600 million return-shipping policies can be issued on a single shopping day. The real revolution, to my mind, is not in insurance but in the digitalisation of the economy. Embedded insurance is how insurance keeps pace with that wave: an evolution, not a revolution. By Swiss Re's projection, that evolution will take the embedded share of non-life premium from one per cent to sixteen within a decade.

This ease has a price. When insurance is bought that fast it also becomes invisible; people can end up insured without knowing what they bought. The decision takes seconds; a second policy can be bought for a device already covered, a thin cover can pass for real protection. The worry is fair but the diagnosis is incomplete. Insurance awareness forms not when the policy is bought but when the claim happens. A well-designed embedded product can be the first positive insurance experience in someone's life; a badly designed one breaks that person's trust in insurance altogether. Invisibility is not the flaw. Leaving the cover invisible is. What it covers, what it doesn't, when it starts, when it ends: these belong on that decision screen, in plain words. Nobody reads the information form while buying a plane ticket; ticking a box may satisfy the law, it does not build awareness.

So what is left for the insurer? On the day of a claim the customer calls the brand they bought the phone from, not the insurer. That does not erase the insurer; it means price stops being the only conversation. An insurer that only supplies capacity is easily swapped out in the background. An insurer that designs the product jointly, draws insight from the data and pays claims fast and correctly stays indispensable even when unseen. The measure is simple: a product sold in four minutes cannot have its claim paid in four weeks. For agents the picture is similar. Competing on price with a data-crunching platform is like facing a nuclear bomb with a slingshot. There are three paths instead: become a supplier to these systems, go deep in advice-heavy lines like health and life, or be the one standing next to the customer on the bad day. AI compares prices; it holds nobody's hand when things go wrong.

In a market like Turkey, embedded insurance today comes down to two products: device cover sold by retailers and travel cover sold by airlines. But a dedicated regulation is on the way under the name 'integrated insurance', and giving something a name and a measure is a big step. Looking back, bancassurance was already the first form of embedded insurance: the bank embedded the policy into the credit process, first on paper and then on screen. Embedded insurance will not replace bancassurance; it will sit beside it. The word may fade with time; the model will not.

In this talk

• Definition: the insurance extension of embedded finance; insurance offered along the sales path of a non-insurance good or service
• Two academic definitions: a company insuring its own product's risk (Tesla) and insurance offered at the point of sale; a comparison platform is not embedded
• The real revolution is the economy's digital transformation; embedded insurance is the evolution that keeps up
• Swiss Re: 78 billion dollars in 2022, 1.5 to 2.5 trillion by 2032; from one to sixteen per cent of non-life premium
• Turkey 2025: 6.25 million policies and close to 18 billion lira in the device channel alone; no official data yet
• Three differences: depth of integration and reach, context and data, the insurer's shifting place in the value chain
• ZhongAn at 54,000 policies a second; 600 million return policies on Singles' Day; 200 million Chinese insured through embedded
• UK courier cover: starts on shift, ends ten minutes after the last delivery; insurance matched to the customer's unit of time
• The risks of invisibility: hasty decisions, duplicate cover, underinsurance; awareness forms at the claim, not the purchase
• Invisibility is not a flaw; make the cover visible on the decision screen: what it covers, what it doesn't, when it starts, when it ends
• At the claim the customer calls the brand; price stops being the only conversation, good news for insurers
• Invisibility is a choice: capacity alone makes a replaceable supplier; value in product, data, claims and integration makes you indispensable
• Readiness: going live in a week rather than three months; why big insurers partner with or buy insurtechs
• The four claim questions: who takes the notification, who manages, who pays, who does the customer call; four minutes to sell, not four weeks to pay
• Three paths for intermediaries: become an embedded supplier, focus on advice-heavy products, bad-day representation
• Regulation in Turkey: electronic devices and airline travel cover today; a dedicated 'integrated insurance' regulation on the way
• Bancassurance is embedded insurance's first form; an indispensable channel needs a clear definition, economics for all and customer trust; the word may fade, the model won't

A product that takes four minutes to sell cannot take four weeks to pay a claim. Systems that don't leave the customer alone produce awareness; the others produce policies.