Published by Jessica Weisman-Pitts
Posted on June 29, 2022
6 min readLast updated: February 5, 2026
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By Rory Yates, head of strategy for EMEA and APA, EIS Insurance
One of the greatest challenges insurers face is the annualised nature of their customer relationships and the ease with which people switch carriers. When the sole determinant of a relationship’s future is price, it’s easy to lure people away with a less expensive offer.
To escape the commoditization of insurance, insurers must create more positive, frequent, and valuable customer interactions. These, in turn, can lead to longer-lasting and profitable customer relationships. And that is exactly what Embedded Insurance 2.0 is helping them to do.
Anyone who has recently made an online purchase has likely been offered an embedded insurance policy. That €12 extended warranty on your new headphones or laptop? That’s an embedded insurance policy. That €7 trip insurance offered with your flight and rental car? Another embedded insurance policy.
This cross-selling model is quickly gaining traction because — at the moment of purchase — it’s contextually relevant, addresses an individual’s immediate concern, and it’s easy to buy.
These simple models and products offer insurers comparatively low-cost access to new customers and markets. Plus, through digitally streamlined pricing and purchasing processes, they increase operational efficiency. Finally, because insurers’ technology and ability are colliding with consumers’ expectations for seamless digital customer experiences, we’re approaching a proliferation of embedded insurance partnerships.
Embedded insurance 2.0 is similar but builds on that simple product and cross-sell model with something even more valuable: personalization via real-time data exchange.
For many, the most familiar example of embedded insurance 2.0 will be automakers that include auto insurance in the purchase of a new car. New cars are full of sensors that can detect, record, and transmit data around a driver’s behaviour. From kilometres driven and when, to detecting phone use, hard braking, aggressive cornering, maintenance status, and other details, those sensors can document and transmit cautious, conscientious, or risky habits.
As this technology has matured, and with the application of advanced analytics and AI, sensor data can be used for a variety of purposes beyond risk assessment and pricing. Those automakers and insurers are also adding demographic, geo, financial, and third-party data to understand individuals and to create deeply personalised and contextually-relevant products, services, and customer experiences.
Further, they’re creating digital ecosystems with a variety of partners to retain, reward, and grow those individual customer relationships. Each of those interactions and purchases within the ecosystem then contributes to an ever-more detailed portrait of the customer and opportunities to satisfy their individual needs.
From the customer’s perspective, there’s real value. Communication from the insurer through mobile apps, text, portals, and dashboards can be used to mitigate risk, reward and influence behaviour, lower insurance, maintenance, and operating costs, and reduce marketing noise. Performance metrics, comparisons, rewards, and other gamification techniques create even more customer engagement.
If all that sounds fanciful, I can assure you that it’s already here and spreading across insurance segments.
IoT devices are everywhere: in phones, watches, heart and activity monitors, beds, thermostats, drones, moisture detectors, “tiles,” and thousands of other consumer devices.
With just a bit of creativity, one can reimagine health and wellness coverage sold with smart watches, and health-food stores, gyms, spas, and meditation or exercise apps participating in the ecosystem. Similarly, home and commercial real estate policies could be sold through security systems, smart thermostats, and water-detecting sensors. Contractors, staffing firms, and hardware stores would clamour to join that ecosystem.
In more sophisticated models, insurers are even partnering across insurance segments – a phenomenon we’re calling “the Great Crossover” – and sharing data to increase customer knowledge, market share, and offer discounted premiums.
Insurers that take the initiative and are willing to work with regulators can make the most of their early adopter status and are more likely to benefit from customer and transaction data and secure a competitive advantage. This is the precedent we’ve seen with open finance. Bankers that demonstrated their openness to working with regulators are benefiting from a wave of creative and connected financial solutions and distancing themselves from laggards.
While the embedded insurance model is largely automated and data driven, the result ideally is a return to knowing customers and acting like it. The appropriate customer data can be shared with agents, brokers, CSRs, and partners to advise and service customers’ changing insurance needs as their incomes grow, they get married, have children, buy homes and cars, fund college educations, start businesses, switch jobs, or retire.
The challenge for many insurers will be the limitations of their backend insurance core systems. Historically, these legacy systems have been purpose built to support only P&C policies, or only life insurance policies, for example, creating data and functional silos that impede innovation.
With their closed architectures, legacy systems impose severe and obvious limitations on insurers that are looking to create or join insurance ecosystems. Those legacy, and even “modern legacy” systems also are unlikely to support the volume and variety of customer data generated or to deliver it in real time to support such a model.
However, contemporary cloud-native systems, aka coretech, are built around customer data – not policy data – and designed specifically to join or support ecosystems and integration. This new architecture and data model liberates insurers in a number of important ways. For example, microservices and APIs facilitate quick-change and in-flight integrations, cloud-native architectures radically improve scalability, and analytics capabilities and subscription pricing increases palatability to the C-suite.
It is possible for ambitious insurers to break free from the commoditization of insurance, and offering excellent customer experiences through embedded insurance, and embedded insurance 2.0, is a viable way to embed insurance into people’s lives and create more positive, frequent, and valuable customer interactions.
About Author:
Rory Yates has more than 24 years of business leadership experience spanning client, agency, consultancy, start-up, and private equity roles. As EIS’ head of strategy for EMEA and APA, Rory helps insurers achieve their transformation goals and evolve toward ecosystem-based futures via insurance core systems transformation, including truly personalised engagement, taking innovation from concept to market quickly, and growing efficiently.
Embedded insurance refers to insurance policies that are integrated into the purchase of products or services, offering coverage at the point of sale, making it convenient for consumers.
Customer personalization involves tailoring products, services, and communications to meet the specific needs and preferences of individual customers, enhancing their overall experience.
Operational efficiency is the ability of an organization to deliver products or services in the most cost-effective manner while maintaining high quality, often achieved through streamlined processes.
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