Airlines Offer Traveler Insurance... Embedded Insurance Market Expands

[Asia Economy Reporter Changhwan Lee] It is forecasted that the embedded insurance market will grow domestically as well.

On the 21st, the Korea Insurance Research Institute published a report titled 'Understanding Embedded Insurance Business Models,' stating that although embedded insurance is still in its early stages in the domestic insurance market, its growth potential is high due to changes in the digital environment.

Embedded insurance refers to insurance products or services embedded within non-insurance products or services provided by non-insurance (financial) companies.

In Korea, embedded insurance is sold in forms such as extended automobile quality insurance, extended warranty insurance for electronic products, return shipping insurance, and driver insurance, but the market size remains minimal.

Typical examples include travel insurance offered by airlines when booking plane tickets or product warranty insurance included in the purchase price when buying electronic products.

Although the domestic market size is not large, the global embedded insurance market value is expected to exceed approximately $700 billion (928 trillion KRW) by 2030.

The report forecasts that applying insurtech technology to life and health sectors will create a value of over $3 trillion for embedded insurance.

Business models surrounding the provision of embedded insurance can be broadly divided from the perspective of product and service providers into platform or data-based operators, insurtech-centered, and digital insurance company-centered models.

The report emphasized that after examining various overseas embedded insurance business models, the core competencies are partnerships with diverse sales channels, securing technology, and discovering insurance products not previously offered by utilizing data.

In particular, it added that for partnerships with platforms to play a key role in providing embedded insurance?not merely securing new channels?it is essential to analyze and utilize the data obtained through these partnerships to develop insurance products that offer new value.

In the domestic insurance market, embedded insurance and its market are still in the early stages. Currently, embedded insurance is provided mainly through e-commerce platforms that have consumer touchpoints. However, considering the speed of changes in the digital environment, the potential for embedded insurance could be significant, so it is necessary to review various ways to participate in the embedded insurance market.

Researcher Jaehee Son of the Korea Insurance Research Institute stated, "It is necessary to pay attention to and respond to the possibility of embedded insurance expanding to healthcare, manufacturers, and general offline companies in the future."

This content was produced with the assistance of AI translation services.