Why embedded is the future of auto insurance

There's a lot of buzz around embedded insurance. As someone who has been in this industry a long time, I have to state the obvious: Embedded insurance isn't new. We've just been doing it wrong in the digital age.

Remember buying travel insurance with your plane ticket? Or that warranty protection for your new washing machine? That's embedded insurance in its most basic form. But today's digital landscape demands something more sophisticated.

Taking a step back, embedded insurance means leveraging data and technology to offer insurance seamlessly online. We're not just talking about basic coverage anymore – we're talking about complex insurance products available through a completely digital buying process. Such as purchasing homeowners insurance while finalizing a mortgage online or adding auto insurance while closing on a new car. That's the future we're building. Insurance that meets customers exactly when they need it, without the hassle.

Deloitte forecasts that by 2030, embedded sales of property and casualty insurance alone will reach $700 billion globally. Skeptics might dismiss this as just another overhyped trend, but the evidence suggests otherwise.

The fact is, consumers don't just want it, they are demanding it. Our Consumer Sentiment Report reveals a striking generational shift: 64% of digital natives – those born in 1975 or later – believe insurance should be primarily purchased and managed online. What's more, half of all consumers across all age demographics have already engaged in digital insurance transactions, with digital natives leading the way at 70%.

The shift is happening. And nowhere is it more evident – or more promising – than in auto insurance.

The $250 billion opportunity

The auto insurance market presents a particularly compelling opportunity. While embedded auto insurance at the point of sale is commonplace globally, the U.S. has lagged behind. This represents an enormous untapped market. In 2022, U.S. personal auto insurers wrote $267 billion in premiums, according to Deloitte, which is nearly two-thirds of the personal lines segment. 

The consumer appetite is there. Sure research shows that 76% of those who purchased insurance online bought auto insurance – making it the most popular type of digital insurance purchase. And they're not just willing to buy online; they're enthusiastic about it. An overwhelming 86% reported satisfaction with their digital insurance purchases.

Your customers are waiting

Our research is a real wake-up call for the industry to embrace digital, and consumers are looking to brands to lead this transformation. Of those who bought auto insurance digitally, 81% did so through their automobile manufacturer. We also found that 63% of consumers across all age groups want even more options to purchase insurance online directly from brands beyond just auto.

We also found that if they aren't offered more options for digital insurance experiences, they'll take their money and run. More than half of consumers are considering switching insurance providers if they don't offer digital experiences, with digital natives leading this charge. 

Move fast or be left behind

This all matters, because within a decade, this group will dominate insurance transactions through this new and challenging to navigate distribution channel, and if the industry doesn't get ahead of consumer preferences it will be left behind.

Implementing embedded insurance at the point of sale creates powerful partnerships with brands that own their ecosystems. The first-mover advantage is real, and early adopters within the insurance industry will capture billions in premiums and shape the future of distribution.

Some might say I'm overstating the case, but the numbers speak for themselves. The embedded insurance market has already grown from $82 billion in 2023 to $97.57 billion in 2024, with a compound annual growth rate of 19%. 

The future of digital insurance is here, and embedded auto insurance is leading the charge. When brands, carriers, and insurtech infrastructure companies align, we can deliver what consumers really want.