Insurance Moves Into Platforms... "Embedded Insurance" on the Rise

Insurance Integrates with Travel, Commerce, and Mobility

Evolving Beyond Compensation Toward "Preventive Insurance"

Concerns Over Personal Data and Incomplete Sales Remain

Insurance is increasingly being integrated into everyday consumer activities such as automobiles, e-commerce, travel, and delivery platforms. There is growing analysis that the insurance industry's distribution structure is changing, as "embedded insurance"—where insurance is automatically provided during the purchase of products or services without consumers having to seek out insurance products separately—is becoming more widespread. The industry anticipates that artificial intelligence (AI) and data-driven platforms could emerge as key channels for insurance sales. There is also attention on the potential evolution of embedded insurance beyond simple compensation, toward forms that also incorporate risk prevention functions in the future.

According to the financial sector on May 29, global insurtech company bolttech has recently begun collaborating with Chinese electric vehicle manufacturer BYD to provide embedded insurance in major European markets. bolttech plans to utilize its AI-based embedded insurance platform to offer electric vehicle-specific auto insurance during the process of purchasing BYD vehicles. Customers can sign up for insurance both online and at offline dealerships, with customized premiums calculated based on vehicle data and driving risk analysis.

Previously, bolttech also partnered with the Korean digital insurance company Kyobo Lifeplanet Life Insurance to advance their digital insurance distribution platform. Kyobo Lifeplanet has been strengthening its digital transformation with a focus on non-face-to-face insurance sales, mini-insurance, and lifestyle-focused insurance products.

As insurtech companies accelerate the expansion of embedded insurance and digital partnership channels, the industry observes that insurance is becoming an integral part of daily financial life at an increasingly rapid pace. Representative examples include consumers automatically enrolling in travel insurance when purchasing airline tickets or adding accidental damage coverage when buying expensive electronics on e-commerce platforms. The application of real-time short-term insurance based on usage duration is also expanding in ride-sharing and delivery platforms.

Some interpret this phenomenon as "the platformization of insurance distribution." Whereas insurance companies previously controlled everything from product development to sales and customer contact, in the future, platform companies may expand customer interfaces while insurance companies focus on risk management and insurance manufacturing functions. Jin Bongjae, Partner at Samil PwC, commented, "The spread of digital channels and the growth of embedded insurance are weakening the dominance of traditional sales channels in the insurance industry."

Attention is also being paid to the potential expansion of embedded insurance into "preventive insurance" in the future. The analysis is that insurance could evolve, using data connected to platforms not just to provide compensation after an incident, but to actively reduce risks themselves. For example, customers who sign up for embedded insurance during a vehicle purchase may receive real-time notifications about vehicle abnormalities or battery status, or be provided with safe driving guides based on their driving habits. In the healthcare sector, there are cases where wearable devices and apps are used to provide early alerts for health issues and connect users with services to improve their lifestyle habits.

However, there are also numerous challenges to address as embedded insurance becomes more widespread. Issues such as the obligation to explain insurance products, concerns over incomplete sales, the use of personal information, and controversies over the fairness of algorithm-based premium calculations are representative. In particular, there are concerns that if the process of enrolling in insurance within platforms becomes overly simplified, consumers may sign up without fully understanding the coverage details. Ryeonghwa Lee, Senior Research Fellow at Hana Institute of Finance, stated, "The embedded insurance market will continue to grow, driven by advances in AI technology and improvements in customer experience offered by big tech platforms. However, it is important to be cautious of potential violations of the duty to explain or infringements on personal information as convenience for customers is increased."

This content was produced with the assistance of AI translation services.