Embedded insurance poised for significant growth in 2024

Embedded insurance poised for significant growth in 2024 | Insurance Business America

Technology

Embedded insurance poised for significant growth in 2024

NEXT Insurance director shares predictions for fast-growing market

Embedded insurance is on the cusp of growth in 2024 and beyond as technology providers scale up integration capabilities and partnerships with insurers.

That’s according to Nick Mabunay (pictured), director of partnership growth at NEXT Insurance, an online insurance provider for small businesses.

While embedded insurance – any insurance that can be purchased within the commercial transaction of another product or service – isn’t a new concept, technological innovations and better customer data are helping make it more attractive to non-financial companies.

NEXT Insurance believes it has the potential to transform deep-rooted distribution channels and create a more seamless customer experience.

“Technology-first insurance providers have disrupted the industry and proven that digital, efficient, and cost-effective options are what small businesses and consumers want,” said Mabunay.

“This positive customer experience is why the embedded insurance market, valued at $63.1 billion in 2022, is expected to grow to over $480 billion in 2033,” he added, citing figures from DataHorizzon Research.

What will support the growth of the embedded insurance market?

According to Mabunay, embedded insurance offerings will inevitably continue to grow in popularity. However, the integrations that are supported by partnerships that value a comprehensive, cooperative strategy are the ones that will stand the test of time.

“In addition to satisfying customers’ changing needs, the smooth incorporation of both insurance purchasing and servicing into routine business operations creates new opportunities for companies of all sizes,” he told Insurance Business.

“To unlock the full disruptive potential of embedded insurance solutions, companies must adopt a purposeful and cooperative strategy. Embracing embedded insurance will be crucial for companies to remain relevant in the evolving landscape.”

Mabunay anticipated increased adoption and deeper integration in key verticals such as restaurants, e-commerce, and business formation.

“This will continue to reshape the industry and open new opportunities for innovation and growth,” he said.

The ‘second phase’ of embedded insurance evolution?

Mabunay said he believes embedded insurance will experience a second evolution phase as the market grows and consumer behaviours change.

“The first phase was all about trying to get insurance products into partners’ ecosystems digitally and trying to do a digital quote. The second phase is doing digital binds, and many players are focused on this space,” he said.

“The second phase of embedded insurance is where we can unlock true insurance value by collaborating with our partners and utilizing data on their customers that will allow us to deliver unique value not elsewhere in the market.”

NEXT Insurance, for its part, is in “active exploration” around partners on bundling insurance on top of other products and services and making the transactions seamless and frictionless, Mabunay added.

The online insurer has secured funding to take its growth to the next level.

In November 2023, NEXT announced it inked a $265 million investment partnership with insurance giants Allstate and Allianz X. The funds will enable NEXT to continue growing its book of business.

At the same time, NEXT recently surpassed 500,000 customers.

“We have a lot of momentum in this space,” Mabunay said, referring to embedded insurance.

“I’m excited about the things we plan to deliver throughout the next 12 months. But we’re focusing on that second phase and continuing to push the envelope.”

Do you have thoughts on embedded insurance and NEXT Insurance? Please share them in the comments.