Distribution model aligns with shifting consumer habits
Insurance News
By Roxanne Libatique
Insurers are shifting their focus toward embedded distribution channels and artificial intelligence (AI) integration as they respond to evolving consumer behaviours and digital purchasing patterns, according to new insights from GlobalData.
A recent industry poll conducted by the data and analytics firm gathered more than 170 responses during the first quarter of 2025 (Q1 2025) via Verdict Media platforms.
Embedded insurance preferred distribution model
The survey identified embedded insurance as the most likely channel to drive future growth in personal lines, with 31.6% of respondents indicating it as the top distribution model.
This placed it ahead of direct-to-consumer approaches (18.4%) and traditional intermediated sales through brokers (17.2%).
Embedded insurance refers to coverage options that are bundled with other products or services at the point of purchase. Examples include offering travel insurance during flight bookings, auto coverage when purchasing a vehicle, or device protection alongside consumer electronics.
Benefits of embedded insurance
Beatriz Benito, lead insurance analyst at GlobalData, said embedding policies into digital retail environments allows insurers to align with consumers’ buying habits and reach individuals who might not otherwise engage with traditional insurance channels.
“A key competitive advantage of embedded insurance is that policies are offered precisely when and where they are most relevant to customers, increasing the likelihood of a purchase,” she said.
She added that the model also opens the door for non-insurance entities to play a role in distribution, increasing scale and customer access.
“For instance, travel insurance can be offered during a flight booking, motor insurance when selling a car, or gadget insurance with electronic goods. In fact, this model allows insurers to reach customers who were otherwise not seeking to take out a policy,” Benito said.
Although embedded insurance is not a new concept, its resurgence has been supported by growing e-commerce activity and consumer demand for seamless, digital-first experiences.
“Digital platforms are gaining more and more importance in the embedded insurance model as consumers continue to shift away from brick-and-mortar stores towards online purchases, increasingly expecting frictionless experiences across industries,” Benito said.
Customer perception on insurance innovations
At the same time, insurers are navigating consumer sentiment around the use of AI in their operations.
According to GlobalData’s 2024 Emerging Trends Insurance Consumer Survey – spanning 5,500 respondents across 11 countries – many policyholders recognise benefits from AI, but adoption challenges persist.
The survey found that 73.8% of respondents believe AI can improve access to customer service, while 71.5% anticipate it will support operational efficiency. Another 71.2% saw AI as superior to humans in detecting patterns. Among those who had interacted with AI-based tools such as chatbots, 74.5% reported a favourable experience.
Despite those figures, many consumers remain hesitant about insurers’ broader use of AI. Concerns around how decisions are made – particularly in claims processing – and the handling of personal data were frequently cited as barriers to adoption.
“Despite the positive perceptions, insurers face challenges in ensuring consumers adopt AI tools. Many consumers find that the technology is not yet sufficiently developed to be adopted at scale, eroding their trust,” Benito said.
Benito emphasised that improving transparency around how AI is used, particularly when it affects claims or pricing decisions, will be key to building trust.
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