Embedded insurance has become a buzzword across the insurance sector, but the real impact isn’t where most might expect. While it's often promoted as a digital distribution play, its most compelling commercial cases have little to do with efficiency, and everything to do with reaching customers that traditional channels routinely miss.
“Embedded insurance at its best is market-making,” said Yuri Poletto (pictured), founder of the Open and Embedded Insurance Observatory. “It’s not just a new way to sell – it’s a way to create entirely new insurance customers.”
For UK brokers navigating Consumer Duty, digital disruption, and tight margins, this matters. Embedded insurance isn’t a threat to the value chain, it’s an opportunity to expand it.
Examples from both consumer and commercial markets show that embedded insurance can penetrate segments that have long remained outside the traditional system.
One of the most cited is Nubank, a digital bank in Brazil with 92 million customers and over 2 million active life insurance policies. Crucially, half of those policies were bought by customers purchasing life insurance for the first time, not switching providers.
“These aren’t price-sensitive churners,” said Poletto. “They’re people who never saw themselves as insurance buyers until the offer was embedded into a platform they already trusted.”
A similar story is unfolding in the SME space. Next Insurance, recently acquired by Munich Re’s Ergo, has scaled through partnerships with business software platforms like Gusto and ADP. Nearly 40% of its customers are first-time commercial insurance buyers – business owners who weren’t previously covered.
Traditional routes didn’t reach them. Embedded delivery did.
Poletto pointed to the gig economy as one of the most underserved and underinsured segments today. “In the US alone, nearly 40% of the workforce are freelancers,” he said. While UK figures are lower, the underlying issue is similar: millions of workers, often classified as independent contractors, have little or no access to core protections like income support or disability cover.
Companies like Wolt, part of the DoorDash group, are embedding protection directly into the platforms workers already use. In Wolt’s case, that includes assault and accident coverage for couriers, with claims processed in days rather than weeks.
“These aren’t luxury benefits,” said Poletto. “They’re essential protections for workers whose risks are real and rising, and who’ve been left out of traditional models.”
In Europe, telcos have begun offering home and cyber insurance at the point of broadband installation, a move that taps into moments of high sensitivity to risk. One central European telco has reached 90% penetration in Slovenia simply by embedding cover into onboarding for new home internet.
The automotive sector is another growth area. Car manufacturers are bundling extended warranties and after-sales cover to maintain customer relationships while closing a protection gap for EV owners facing steep repair costs and battery replacements.
Under the FCA’s Consumer Duty, insurers and distributors must ensure that products meet real needs and offer fair value. For embedded insurance, this is not just a hurdle – it’s a framework to demonstrate impact.
“Consumer Duty forces a rethink,” said Poletto. “It pushes insurers to prove they’re reaching the right people, at the right time, with products that are understood and actually useful.”
Some insurers are introducing guardrails: loss ratio corridors that automatically trigger pricing adjustments or coverage improvements when claims fall below a set threshold. Meanwhile, AI is simplifying terms and conditions and reducing reliance on legacy compliance frameworks.
“The embedded model fits well with this direction,” said Poletto. “It’s transparent, digital, and – when done well – targeted to real risk.”
For brokers, this environment presents a strategic opportunity. Those who can advise on regulatory alignment, help build embedded journeys with real consumer value, and connect capacity to trusted distribution partners will be increasingly in demand.
For all the technology and data involved, embedded insurance has deep roots in a model brokers know well: affinity.
“Embedded is really Affinity 2.0,” said Poletto. “The same principles apply – you’re offering insurance through a trusted, relevant partner – but now it’s digital, automated, and powered by data.”
Brokers remain critical to making it work. Their role in designing structured programmes, ensuring compliance, managing underwriting relationships, and interpreting customer risk remains essential, especially for emerging needs and unconventional exposures.
And as embedded models aim to solve protection gaps, not just make sales more seamless, brokers can be central to shaping solutions that work at scale, across real-world needs.
“The winners,” said Poletto, “will be those who can bridge the gap between the old model and the new opportunity - and bring protection to the people who’ve been missing it all along.”
