This article has been published in The European Financial Review and is being promoted here with permission from the publication.

The remarkable surge in embedded insurance is taking centre stage for 2024, with major retailers and supermarkets leading the charge to offer more relevant products to their customers and diversify their own revenue streams. But there are challenges and pitfalls along the way – so what are the tech architecture advancements driving this transformative shift, and how can non-insurance brands ensure they are best positioned to optimise innovative new digital distribution channels?

The attraction of embedded insurance lies in its ability to cater to evolving consumer preferences. Speed, simplicity, product transparency and the association with trusted brands are key drivers for its adoption. This digital bundling approach allows partners across diverse industries to seamlessly integrate insurance policies into their offerings. Whether it’s travel and entertainment or retail, healthcare, and property, the integration is facilitated by APIs, providing smooth communication between software applications.

Research underscores the growing acceptance of embedded insurance, with 45% of UK consumers comfortable with purchasing insurance policies from non-insurance companies during significant transactions. Similarly, 71% of digital bank customers have expressed interest in embedded insurance offers, with more than three-fifths of traditional bank customers also open to such purchases, driven primarily by convenience.

Supermarket giants have embraced the insurance trend in areas such as life and pet insurance, consistently reporting growth in their insurance channels over the past year, and we are seeing demand and interest from these large retailers to explore further embedded channels to deepen their insurance value proposition.

Architectural Advancements Propelling Embedded Insurance

The upshot of this growth is that non-insurance brands are on the lookout for the easiest, fastest and most reliable ways to launch digital insurance solutions. Root’s approach, characterised by a proven API-first insurance infrastructure, supports retailers in bringing new insurance products to market rapidly. The emphasis is on simplifying compliance, enabling retailers to focus on growth, and facilitating the digital transformation of their businesses.

As non-insurance brands look to embed insurance experiences with a few lines of code, the need for a reliable partner becomes paramount. For insurtech innovators like us, embedded insurance signifies a paradigm shift in distribution. In our function as a low-code and API-first, end-to-end insurance platform, we are witnessing strong demand from retailers seeking flexible architecture for omni-channel distribution as we head into 2024.

Such advancements in technology also enable insurtechs to collaborate with third party platform developers to provide comprehensive solutions for non-insurance brands, while still offering a single point of contact.

This demand is fuelled by the need for modern, relevant products that can be easily launched and managed across all customer touchpoints. It is critical though that architecture partners are able to streamline insurance administration, compliance, and reporting, enabling insurers and retailers to unlock the power of their insurance data seamlessly.

Unlocking the Power of Embedded Insurance

Insurers connecting with retailers on digital offerings like embedded insurance are also aiming to modernise selected parts of the insurance value chain. This involves integrating a modular platform with existing legacy systems, unlocking the potential of insurance data, and securing flexible access for data-driven products, operations, and strategy.

The emphasis is on making it easier for other builders and innovators to contribute to the evolution of insurance. The strategic use of APIs provides a turn-key service to customers, offering them the convenience of securing insurance at the point of purchase without having to be phoned back by a salesperson. This streamlined approach ensures that customers can protect the things they love, enhancing the overall customer experience.

We advocate for deep collaboration, leveraging an innovative platform, a team of experts, and years of experience to navigate the complexities and unlock partner distribution at scale. The power of APIs plays a pivotal role in enabling innovative partner distribution, allowing companies to not only offer products and services but also insurance cover seamlessly at the point of sale.

Seize the Future: A Stronger Call to Action

In the race to embrace embedded insurance, retailers and supermarkets cannot afford to lag behind. The insurtech landscape is evolving rapidly, and making the right technological choice is paramount. It is important not to make a costly misstep – brands looking to launch digital insurance distribution channels must not waste time and money on solutions that aren’t scalable, reliable, transparent or flexible enough.