Embedded insurance in Australia is poised for strong growth due to a variety of factors including customer preferences, technological advancements and industry collaboration.
Embedded insurance refers to the integration of insurance products into non-insurance platforms and experiences, such as e-commerce, travel, and healthcare. This integration allows customers to conveniently and efficiently access insurance coverage during their daily interactions without having to visit a traditional insurance company separately.
This growth is expected to be significant, with PwC estimate Gross written premiums (GWP) generated by embedded insurance are projected to grow by 34% annually between 2024 and 2033. This rate is higher than the estimated annual growth rate of 4% for traditional insurance channels over the same period.
These figures suggest that embedded finance is expected to account for A$35.3 billion, or 18% of the total Australian insurance market, worth A$210 billion in GWP terms, by 2033, and by 2024. This is a staggering 1,370% increase from the market’s estimated GWP equivalent of A$2.4 billion. .
The consultancy expects redistribution to stand out as a key revenue driver in this sector, accounting for 12% of Australia’s insurance market (A$24.1 billion) by 2033. The contribution of new customer segments and new products to additional revenue is expected to be small. 5% (A$10.1 billion) and 1% (A$2 billion) respectively.
Australian insurance market size by growth drivers, AUD, 2024-2033, Source: Embedded Insurance: a multibillion$ of Australian insurers, PwC, April 2024
Among the major types of insurance, the general insurance sector is expected to see the highest adoption of embedded finance. Between 2024 and 2033, the share of non-life insurance sold through embedded channels is expected to rise from 1% to 12%. This category is followed by health insurance and life insurance, which are expected to grow by 0% to 3% and 0% to 2%, respectively.
Australian insurance market size, by segment, AUD, 2024-2033, Source: Embedded Insurance: a multibillion$ of Australian insurers, PwC, April 2024
Australian built-in insurance
PwC says that for insurers, embedded insurance has significant market growth potential due to several key factors. First, it provides additional distribution channels and facilitates access to new and broader customer segments. Second, the concept also fosters collaboration with partners for the development of innovative new products. Finally, it allows for redirection of distribution revenue from existing channels.
For consumers, built-in insurance offers convenience and a simplified process. Customers can access their coverage without the hassle of individual transactions and benefit from reduced paperwork. Embedded insurance also enables personalization, providing customers with insurance products tailored to their specific needs, preferences, and behaviors within these platforms. Finally, built-in insurance increases choice and provides customers with a wide range of insurance options.
Embedded insurance is growing in popularity in Australia due to the demand for seamless solutions. 2021 Bank Customer Survey Commissioned by Cover Genius found There is strong interest among Australian banking customers, with 70% of digital banking customers and 54% of traditional banking customers keen to receive embedded insurance offers based on their transaction data. Convenience was cited as the main factor of interest, with 55% responding.
Embedded insurance in Asia
Across Asia Pacific, more and more companies are leveraging embedded insurance to develop their own ecosystems along the insurance value chain.AXA in Singapore launched In 2017, we launched an Insurance-as-a-Service (IaaS) API platform that connects insurance companies and non-insurance retailers and enables embedded insurance propositions. The following customers are registered on the AXA Affiliates platform: scoota low-cost subsidiary of Singapore Airlines Group, and PropertyGuru Groupan online real estate company in Singapore.
Meanwhile, new insurtech companies such as Cover Genius are emerging and quickly establishing themselves. Cover Genius is his 2014 startup in Sydney, Australia that partners with digital companies in built-in protection.that customer include Booking Holdings, Uber, Hopper, Ryanair, Turkish Airlines, Descartes ShipRush, Zip, SeatGeek.
Additionally, non-insurance companies such as Tesla are entering the industry, further increasing pressure on incumbents.tesla launched The company’s auto insurance product will be launched in late 2019 and will provide comprehensive coverage and claims management services to Tesla owners in select U.S. states.
Global consulting firm McKinsey & Company Estimate Embedded insurance in Asia has the potential to grow into a USD 270 billion market in GWP terms. 66% of this growth is expected to be attributable to GWP’s shift from traditional channels such as agents and over-the-counter sales to embedded channels.
Embedded insurance is part of a broader embedded finance phenomenon in which financial products and services are distributed through other activities and industries. PwC I’m looking forward to it The global market for embedded financial applications is expected to grow five times over the next decade, jumping from USD 54.3 billion in 2022 to USD 248.4 billion by 2032.
Featured image credit: Edited from freepic
