The embedded insurance industry is expected to grow steadily over the forecast period, recording a CAGR of 20.7% during 2022-2029. The embedded insurance revenues in the region will increase from US$56,979.8 million in 2022 to reach US$161,598.3 million by 2029.
The Asia Pacific is the largest embedded insurance market. The region is home to one-third of the world’s population and one of the world’s fastest-growing economies. The most significant number of insurtech firms are emerging in China and India. This is primarily due to a large uninsured population and the strong growth of the fintech industry.
Insurers and insurtech firms are widely experimenting with new insurance offerings, distribution models, and technological advancements resulting in innovations. In the recent four to eight quarters, there has been a significant increase in the number of funds raised by market players in the embedded insurance ecosystem.
Additionally, substantial growth in digitization in emerging countries such as Indonesia, Malaysia, Thailand, India is attracting the attention of market players. However, the number of technology companies trying to underwrite and sell policies will be limited in the region due to regulatory restrictions on issuing carrier licenses.
Insurers are making strategic investments in insurtech firms to expand their digital distribution channels
Leading insurance companies are planning to expand their operations across the globe, taking advantage of the tremendous growth opportunity that exists in the global embedded insurance industry. For instance,
- In September 2021, Singapore-based insurance provider Sompo Holdings (Asia) Pte. Ltd. (Sompo Asia) made an investment in Cover Genius, a United States-based insurtech firm and embedded insurance company.
- This is a strategic move by Sompo Holdings to expand its distribution channels in the embedded insurance market by leveraging Cover Genius’ global network.
- Cover Genius has many e-commerce platforms as partners in multiple industries, including Booking Holdings, Skyscanner, Ola, Intuit, Shopee, and other well-known leading brands, across the globe.
- According to Sompo Holdings, the company is planning to utilize Cover Genius’s client network to embed its insurance products and enhance distribution channels.
- Conversely, Cover Genius will utilize the support from Sompo Holdings to expand its global insurance distribution platform.
The embedded insurance landscape is booming in Europe, and countries like the United Kingdom, Germany, and France have made significant contributions to the region’s embedded insurance business growth.
To remain competitive in the market and to keep pace with the ever-changing customer requirements, insurers in Europe are modifying their business models and working to improve their distribution channels. Furthermore, with the rising number of new entrants in the region, the European embedded insurance market is soaring. Considerable increases in fresh fundraising rounds are propelling the market to new heights.
According to the publisher analysis, European insurtech start-ups have surpassed the total capital investment of 2020 by more than US$ 1 billion in the first quarter of the year 2021, with a total of nearly US$ 2 billion invested across more than 50 transactions. Over the next four to eight quarters, rising finance activities are likely to raise embedded insurance demand. For instance,
- In June 2021, German digital insurance start-up Wefox has raised a $650 million Series C funding round led by Target Global. Wefox is a digital insurer that specializes in personal insurance products such as home insurance, auto insurance, and personal liability insurance. With the latest fundraising round, the company has reached a total worth of US$ 3 billion.
- In June 2021, Bought By Many, a pet insurance provider based in London, United Kingdom, raised US$ 350 million in Series D funding, totaling the company’s value to over US$ 2 billion.
- Both the companies are planning to utilize these funds to expand their operation across European countries.
- The publisher anticipates continued investment rounds in the embedded insurance industry in Europe over the next four to eight quarters.
The Africa & Middle East Embedded insurance market gained a huge traction in mobility sector
The Africa & Middle East region witnessed significant growth in the embedded insurance demand by the mobility sector. Moreover, the embedded insurance market has already crossed the growth stage in the mobility embedded insurance product life cycle and now are moving towards the maturity stage at a considerable pace. The market witnessed numerous collaborations among ride-hailing, driver-sharing, and embedded insurers. For instance,
- Uber (India) launched in-ride embedded insurance for its drivers and delivery partners across Saudi Arabia in 2018.
- Additionally, in In December 2019, UAE based ride-hailing app Careem (Uber’s subsidiary) launched in-ride insurance for passengers and drivers across 15 cities. The insurance policy will cover up to $20,000 in expenses incurred due to death or major injury sustained during a Careem ride.
The developments mentioned above show that the mobility sector has provided embedded insurance to its clients and drivers for years. Additionally, the market for mopeds and e-bikes is expanding rapidly due to the surge in food and grocery delivery requirements due to the Covid-19 pandemic. As a result, insurtech firms have been drawn to capitalize on the expanding market for usage-based insurance for e-bike and moped fleets.
Market participants are introducing new products through newly obtained funds. The launch of new products will assist fleet businesses by providing flexible and seamless embedded insurance options. For instance,
- In August 2020, Israel-based mobility insurtech firm Bambi Dynamic raised US$ 6 million led by MS&AD Ventures and backed by existing investor The Phoenix Insurance Company. The newly raised funds were utilized to enhance its offerings across the mobility sector.
Latin America is witnessing evolution in embedded health & life insurance technology by insurtech firms
The global coronavirus pandemic has propelled the demand for health insurance products in the Latin American region. Looking at this growing demand for health insurance in the region, insurtech firms are improving their offerings to serve the health insurance segment in a better way.
Furthermore, amid the insurtech boom in the region, firms are aggressively raising funds to scale their platforms and expand their list of partners in the healthcare industry. The firms are upgrading their offerings by adding new product features and technologies. For instance,
- In July 2021, Mexico-based insurtech Guros raised US$5.8 million in the new funding round, totaling the company’s valuation to US$30 million. Guros’s funding round was led by F-Prime Capital, while Cometa with Clocktower and Insurify participated as contributors. The company aims to utilize the funds to improve its platform’s capabilities, customize APIs for commercial partners across various sectors, enter the health insurance market, and expand internally across technology, product, and operations.
- In September 2021, Brazilian insurtech firm Pier raised US$20 million in its Series B funding round. Currently, Pier is distributing insurance products by allowing consumers to access auto insurance cover using a smartphone. With the newly raised funds, the company is expanding its foothold into newer segments, including life insurance.
Source: Yahoo Finance