In the traditional landscape of financial services, insurance has long been categorized as a “grudge purchase,” a complex, often opaque product that consumers know they need but rarely enjoy acquiring. For decades, the process was reactive: a customer identified a risk, sought out a provider, navigated a labyrinth of forms, and eventually secured a policy.
But we are witnessing a seismic shift, which is accelerating digital transformation in insurance, giving rise to digital embedded insurance models powered by modern insurance software platforms and insurance platform solutions that seamlessly connect insurance and tech ecosystems.
At Globant, we believe we are moving toward a world where insurance is no longer a standalone destination. Instead, it is becoming a persistent infrastructure. This is the era of Embedded Insurance. It is the strategic integration of insurance products into non-insurance platforms that provides continuously adaptive protection. It is not just a new distribution channel; it is a fundamental reinvention of how risk is managed, how value is delivered, and how brands build lifelong loyalty.
1. The End of the “Point of Sale”: Why Embedded, Why Now?
The rise of embedded insurance is the result of a “perfect storm” of three converging forces: technological maturity, the API economy, and a radical shift in consumer expectations.
The Connectivity Catalyst
We have moved past the era of digital silos. Today, the connected experience is the standard. Through robust API ecosystems and cloud-native architectures, insurance carriers can now “plug in” to retail platforms, travel apps, and mobility ecosystems with zero friction. The technology has matured to a point where data can flow securely and instantaneously between a car, a smartphone, and an underwriter’s engine.
The Consumer Mandate
Modern consumers do not want to buy insurance. They want to be protected. They value convenience over complexity. If they are booking a high-value trip, they expect the protection for that trip to be a natural extension of the booking process, not a separate homework assignment. Embedded insurance solves the “friction problem” by meeting the customer where they already are.
Globally, there is a massive “protection gap,” which is the difference between the amount of insurance that is economically beneficial and the amount actually purchased. Embedded insurance is the most effective tool to close this gap. By simplifying the offering and placing it in context, we make protection accessible to segments of the population that traditional models have historically overlooked.
2. Industry Deep-Dives: Where the Invisible Layer Lives
Embedded insurance is not a one-size-fits-all solution. Its true power lies in its ability to adapt to the specific nuances of different industries.
The automotive industry is perhaps the most advanced laboratory for embedded insurance. As we move toward Software-Defined Vehicles (SDVs), the car itself becomes the broker. Insurance is no longer tied to a person or a static 12-month cycle; it is tied to the drive. Embedded systems can offer “pay-how-you-drive” or “pay-as-you-go” models, where the premium is calculated millisecond by millisecond based on speed, braking patterns, and road conditions.
In e-commerce, embedded insurance is evolving from simple extended warranties into “life-event protection.” If a consumer buys a high-end camera, insurance isn’t just a checkbox at checkout; it is a service that includes theft protection, accidental damage, and even “resale value protection,” all managed through the retailer’s app. This builds a deeper, multi-year relationship between the brand and the consumer.
3. The Technical Blueprint: Building the Architecture of Autonomy
To succeed in embedded insurance, organizations must move away from legacy, monolithic systems. You cannot embed a 40-year-old mainframe into a modern mobile app. The “Blueprint for Reinvention” requires four foundational pillars:
- Microservices and APIs: The ability to “atomize” insurance functions (quoting, underwriting, claims) into small, reusable digital components that can be easily consumed by third-party platforms.
- Data Orchestration Layers: A sophisticated way to ingest data from IoT devices, wearables, and smartphones, and translate that data into real-time underwriting decisions.
- Real-Time Underwriting Engines: Moving away from static actuarial tables to dynamic models that use machine learning to price risk in the moment.
- The “Human-in-the-Loop” Governance: As we automate the “invisible layer,” we must maintain a robust ethical framework. AI must be transparent, and human experts must oversee the edge cases to ensure fairness and empathy in the claims process.
4. Navigating the Friction
While the opportunity is vast, the journey to “fully embedded” is not without its hurdles. CSOs and CTOs must address several critical points of friction, including:
Regulatory Complexity
Insurance is one of the most heavily regulated industries in the world. Embedding insurance into a non-insurance platform raises questions of licensing, transparency, and consumer protection. Strategically, the “platform” (the retailer or the car manufacturer) must work closely with the “carrier” to ensure that the user experience remains compliant without becoming clunky.
Data Privacy and Trust
Embedded insurance relies heavily on data sharing. Consumers will only allow an app to monitor their driving or health if it has a high “trust quotient.” Brands must be radical in their transparency, explaining exactly what data is being used, why it’s being used, and how it directly benefits the customer through lower costs or better protection.
For traditional insurance companies, “embedding” means their brand might fade into the background. They risk becoming a “utility” while the customer-facing platform (like Amazon or Tesla) owns the relationship. Strategic leaders must decide: do we want to be the “invisible engine,” or do we want to create a “co-branded” experience that maintains our brand equity?
Food for thought
Embedded insurance is the ultimate expression of digital transformation. It is the point where technology, data, and human needs converge to create something truly frictionless. The future of insurance is invisible. It is intelligent. And it is already here.
