Earnix Blog > Pricing

Embedded Insurance: A Proven Concept, but with New Requirements

Earnix Team

March 1, 2023

  • Pricing
  • Customer Centricity
  • Personalization

The concept of embedded insurance is not new - insurers have been offering embedded insurance products for nearly a century.  

Insurance executives and marketers reading this blog are likely already offering embedded products, everything from extended warranties on vehicles and new electronics to hole-in-one insurance for golf tournament organizers and sponsors (yes, that’s a thing). 

What has changed is that today’s market requires a new way of executing and delivering on embedded insurance. In today’s environment, and especially when attracting younger consumers, “one size fits all” (or even “one size fits most”) products will not cut it. 

Economic Imperatives for Modern Embedded Insurance 

Insurers today face a “perfect storm” of macroeconomic forces, with climate change, once-in-a-generation inflation, global supply chain issues, skyrocketing consumer expectations, increasing regulatory pressures, new workforce dynamics, and hungry competitors all driving unprecedented change in the industry. Embedded insurance provides a compelling way for insurers to overcome some of these market pressures and insurance trends.  

One of the attractions to embedded insurance is its rapid growth. InsTech London, for example, projects that the embedded insurance market has the potential to reach US$722 Billion in gross written premiums (GWP) by 2030, making the market opportunity more than six times its current size. Other estimates put the market potential in the trillions of dollars, when all insurance types (P&C, healthcare, etc.) and all distribution channels are taken into account. 

In its report “Insurance 2025 and beyond, Insurance reimagined”, PwC lists the drivers of embedded insurance as three C’s: Convergence, collaboration, and competition. These forces are driven by advances in technology, economic imperatives, and changing market dynamics.  

As PwC puts it, “A digital, data-rich economy is allowing organizations to share and collaborate within and across industry boundaries in new ways and create new value propositions for customers.” 

The Problem with Today’s Embedded Insurance Offerings 

Today’s “traditional” embedded insurance products all suffer one overriding weakness – they are seldom personalized to the individual consumer; they are marketed as a “one size fits all” proposition, with premiums based on statistical analysis of a broad swath of “typical” customers over time. 

To succeed in today’s market, insurers instead need to craft offers to meet the demands of today’s consumers.  

Driven by their personalized digital experiences in other industries such as retail, insurance customers now expect nothing less in insurance. This is especially true of customers and prospects in the prized younger demographics, many of whom are entering the prime years for home ownership, more expensive cars, and starting families, all key decision points for insurance coverage, and ripe for embedded insurance products.  

The Winning Formula for Embedded Insurance Today 

With a market this big, and undergoing rapid evolution, insurers need to seize on the embedded insurance opportunity now. A key component is technology, technology that far surpasses what has been used with embedded insurance in the past. 

The components of the winning technology strategy involve both IT infrastructure and upgraded insurance software functionality: 


The architectural lynchpin of embedded insurance is the application programming interface, or API. APIs allow software components from multiple, independent suppliers to interact and exchange information.   

These components may be an assemblage of new, off-the-shelf technologies, or APIs can provide connections between new technologies and existing insurer systems which are still viable (e.g., billing, accounting, policy management). 

APIs allow solutions to be assembled that are agile, composable, and intelligent, so that specialized functionality can be brought to bear, regardless of the provider.   

As just one example, Earnix and JD Power are collaborating to allow insurance carriers (and auto lenders) to utilize granular and precise information for dynamic pricing. This not only brings unique capabilities together from two industry-leading vendors, it also speeds time to market and avoids unnecessary expense. 

Precise Personalization 

In today’s world, “personalization” that merely addresses a customer by name or aligns to a broad demographic is no longer competitive. Today, offers must be generated in real time for each individual customer, presenting them with a personalized insurance offer that fits them best, while simultaneously meeting insurers’ KPI goals.  

Done well, these individualized offers make every interaction between a carrier and customer feel like a one-to-one connection. This improves embedded insurance success by increasing digital sales and conversion rates, increasing customer loyalty, and adapting to dynamic market trends much more quickly. 

AI-Driven Pricing and Rating 

Informed decision-making requires powerful analytics and the integration of new and existing data sets in real time. Artificial intelligence (AI) and machine learning (ML) capabilities with predictive modeling and world-class data science make smarter pricing and rating decisions automatically. 

AI and ML make real-time pricing and product personalization possible. An AI-driven enterprise rating engine can deploy rates to market in milliseconds, capturing customers in real time at their point of decision-making, while enhancing governance and control across the organization. 

Let’s Not Forget Underwriting 

While rating and pricing have received significant attention in the insurance value chain, underwriting is also due for modernization. The ideal underwriting software solution is tightly integrated with pricing and rating, drawing all three key functions together in a coordinated, intelligent layer of insurance solutions. 

This allows insurers to easily add powerful advanced analytics to underwriting decision-making, blending algorithms, geospatial, and complex machine learning to make decisions timelier and more accurate.  

Existing underwriting rules that are still considered valuable can be retained, with those rules-based approaches augmented with advanced machine learning to deliver better business results. 

Upgrading Embedded Insurance 

As a leader in financial services technology, Earnix can help insurers and their partners seize the full potential for embedded insurance. 

To start modernizing and upgrading your embedded insurance strategy and offerings, contact Earnix today. 

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Earnix Team