Embedded Insurance 2.0 (‘EI 2.0’) describes a new approach to collaborating and innovating with third party brands, of all types and sizes, to help them grow their businesses, create compelling new protection solutions for end customers and, ultimately, close protection gaps. 

EI 2.0 is complementary to, but different from, current affinity and partnership programs in a number of ways: 

1. PURPOSE: it’s focus is on enabling brands and their customers to access a broader set of diverse and customised solutions to problems, rather than on distributing existing risk transfer products from a single supplier. 
2. TECHNOLOGY: it exploits a new type of infrastructure – ‘Operating Systems’ that can aggregate demand and orchestrate supply from multiple parties. 
3. SKILLS: to be successful, it requires new capabilities in digital sales and marketing, data science, open platform development, as well as digital underwriting. 
4. MONETISATION: it combines Software-as-a-Service fees with recurring GWP and AuM revenue share. 

Due to fast evolving commercial and technological trends a new ‘value stack’ is emerging in the insurance industry. The ‘Operating System’ layer will become the key control point, orchestrating the supply of modularised products and components from multiple insurance and adjacent providers to brands and digital platforms, and through them to more end customers.

Embedded Insurance 2.0 is still an early stage market, with most of the innovation coming from a growing number of start-ups deploying a range of different business models. 

Within the next five years this new ‘value stack’ will be mature. The biggest winners then will be those running the Operating Systems, which are much less capital-intensive businesses than risk carriers. 

The skills to develop, manage and grow Operating Systems do not (yet) reside within incumbent insurers, and should be learnt fast.

Size of the Prize 

Our analysis suggests that about 60% of Non-Life (P&C3, business, commercial) and 30% of Life markets (life, pensions, annuities) is addressable by EI 2.0.

We estimate that, by 2032, EI 2.0 could account for around 16% of total global insurance distribution, or $1.5 trillion of GWP. 

In addition, we believe that EI 2.0 has the potential to increase the size of the overall insurance market (as a percentage of global GDP), potentially adding an extra $1 trillion of net new GWP to the industry by the end of the decade, mostly by leveraging the reach of digital platforms in emerging markets.

The report covers:

• A clear definition of Embedded Insurance 2.0 (EI 2.0) 
• Why and how EI 2.0 solves high value problems for multiple stakeholders
• Market sizing: why EI 2.0 can drive net new growth for the insurance industry 
• How the new insurance ‘Value Stack’ is developing in practice
• Lessons from pioneers and innovators in the market
• How to create an effective EI 2.0 strategy
• How to execute: key issues to address related to organisational structure, skills, legacy technology/processes and metrics.
• FAQs: all the objections we hear everyday from executives around the world, and how to answer them.

Full Report: Here