Why adequacy, not just access, will define the future of embedded insurance

Embedded insurance is no longer a niche experiment, but a fast-growing global market. Projected to surge from around $70 billion today to more than $700 billion by 2030, it’s on track to represent nearly a quarter of the personal lines market.

The driver of this growth is simple: seamless insurance offers integrated directly at the point of sale. Customers get relevant protection in the moment, without friction. 

But scale alone isn’t enough. The next big challenge for the industry is embedded insurance adequacy: making sure products don’t just provide access, but actually give customers the protection they need.

As our Head of Partnerships Jonas von Oldenskiöld put it during our recent webinar with The Open and Embedded Insurance Observatory: ‘We’ve been so focused on access that we’ve ignored adequacy. Underinsurance is just as damaging as having no insurance at all.’

This shift raises a critical question for insurers, brokers and brands alike: how do we design embedded products that are not just available, but relevant and valuable?

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Closing the protection gap in embedded insurance

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For decades, the power of embedded insurance has been its efficiency. By piggybacking on mass distribution channels, insurers were able to offer simple products at low cost, reaching millions of people who might otherwise remain uninsured.

That efficiency is what gave embedded insurance its momentum.

But as Jonas von Oldenskiöld explained, this evolution of embedded insurance from ‘broad access’ to ‘true adequacy’ has created a paradox. 

‘This is an engine that has evolved from broad access to true adequacy. But the more we focus on adequacy, the more complicated it becomes. For half a century, embedded insurance worked because of efficiency and low-cost distribution. Now we need to balance that with designing the perfect policy.’

The protection gap – the space between the cover people have and the cover they actually need – makes this balance urgent. Accessibility has grown, but adequacy has not kept pace. Many customers still end up underinsured, leaving them exposed when it matters most.

Closing that gap means rethinking how products are designed. Adequacy isn’t simply about making insurance available at checkout – it’s about ensuring the policy truly matches customer needs, while still keeping distribution affordable.

By focusing on embedded insurance adequacy, we not only help reduce underinsurance, but we also support greater financial inclusion through insurance across markets.

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Learn more: how embedded insurance creates a global safety net of protection → 

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The hidden cost of overpersonalisation in embedded insurance

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If efficiency was the strength of embedded insurance in the past, the push for adequacy brings new complexities. Personalising products so they perfectly fit each customer makes sense on the surface, but it comes at a cost.

Customised insurance can drive distribution expenses up by 300–400% compared to standardised offerings.

This is the other side of the paradox. The more tailored the policy, the harder it becomes to maintain the low-cost distribution model that made embedded insurance successful in the first place.

This raises a difficult question for the industry: how much personalisation is enough? At what point does tailoring coverage stop adding value and start undermining the affordability and accessibility that made embedded insurance successful in the first place?

The sweet spot will be finding models that balance adequacy with efficiency, so customers get the right cover at the right price.

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How technology and data can unlock adequate embedded insurance

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If adequacy is the destination, technology and data are the vehicle. But today, the industry is still struggling with unstructured data, siloed systems and a kind of paralysis around governance.

As Jonas pointed out, data often comes into the conversation too late: ‘Too often, data only comes into the discussion at the very end. We should flip that – start from the data angle and use it as the foundation to design better products.’

This shift in mindset is crucial. Designing from the data up is how insurers and partners can create relevant, dynamic products that actually close the protection gap.

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At the same time, analytics can’t be static. Jonas emphasised the need for a more agile approach:

‘Analytics need to be dynamic and ongoing, not just a one-off setup. If we start breaking down silos and sharing data in the right way, we can use technology to enable better analysis and more innovation in our products.’

Of course, governance and regulation are part of the reality. Instead of treating compliance as a blocker, the industry needs to learn how to use rules like GDPR as an advantage, creating standards for trust and transparency while still enabling innovation.

Finally, there’s the question of legacy systems. For years, insurers have tried to retrofit old infrastructure to fit new realities. But as Jonas warned, this approach has limits: ‘We can’t keep putting life support on legacy systems. Instead, we should decide what minimal functions to keep – like accounting or booking – and build new systems that are truly fit for purpose.’

In short, technology is not just an enabler; it’s the foundation. Breaking away from legacy anchors, embracing dynamic analytics and starting from the data are what will allow embedded insurance to evolve from efficiency-driven access to true adequacy.

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Building customer trust through clear communication in embedded insurance

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Adequacy isn’t only a design problem – it’s also a perception problem.

Even the best-designed product falls flat if customers don’t understand it. That’s why clear communication is essential.

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As Alok Kalra, Product Lead - Strategy & Distribution of ING noted: ‘Customers don’t always know they’re insured – and if they don’t know, they don’t value it. Some even feel tricked because the insurance just comes along with the main product.’

This paradox cuts to the heart of embedded insurance: the easier and more seamless it becomes, the greater the risk that customers won’t fully understand what they’re buying. And when a product isn’t understood, it isn’t used – which makes it less valued.

Alok pointed out that this undervaluation also creates a commercial problem:

‘Today embedded insurance is often cheap because it’s not used as much – and if it’s not used, it’s not valued. We may be leaving money on the table, because customers would pay a bit more for a product that’s truly usable.’

Transparency, clarity and usability are therefore not only about building trust – they’re also essential for creating products that are both sustainable and valued.

Alok suggested that the answer, particularly for banks, could be by making both standalone and embedded products better connected. That type of flexibility could allow customers to choose the coverage they need.

To close the protection gap, insurers and distributors need to think about the customer’s entire portfolio of protection, not just a single product.

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Why insurers, brokers and brands must collaborate for embedded insurance success

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Brokers, brands and insurers each have a role to play. But in the embedded space, brokers face new pressures: access to customer data is often limited, margins are squeezed by commission structures and distribution power is shifting to commercial partners who own the customer relationship.

That doesn’t mean brokers are out of the picture – far from it. The opportunity lies in redefining their role.

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As Andre Santos, Business Development Director at WTW, argued:

‘The commercial partner controls the customer relationship and the data, so brokers need to work hand in hand with them – aligning on values, creating propositions that resonate, and building commercial models that balance affordability with profitability.’

The more digital consumers become, and the more willing they are to buy insurance from brands they trust, the more insurers and brokers need to work hand-in-hand with commercial partners to deliver embedded programs that are compelling, relevant and truly valued.

At the same time, building a program doesn’t end at launch. He stressed the importance of continuous optimisation by monitoring performance, refining coverage, and keeping costs efficient through strong technology partnerships.

In embedded insurance, collaboration isn’t a one-off event but an ongoing discipline.

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The future of embedded insurance: adequacy, AI and customer experience

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Digitalisation is already accelerating embedded insurance adequacy. Over the next two to three years, adoption will only grow as integrations become easier and platforms more seamless. 

As Alok noted, the challenge will be finding the right mix of products and making the customer experience exceptional: ‘If you could have an AI agent tell you exactly which cover is really relevant for you, that could be a game changer.’

Andre was equally optimistic, pointing to clear signals from younger generations: ‘Fifty percent of millennials and younger customers say they want to buy insurance digitally, and 67% would rather buy from brands they trust than from traditional players.’

That trust in brands, combined with frictionless digital journeys, underlines why embedded insurance is on track for massive growth.

Looking further ahead, Jonas believes AI will reshape the landscape entirely: ‘There will be more personalisation, more instant and autonomous systems – and even new ecosystems and channels created because of AI. It’s not just a co-pilot, it’s a new market in some ways.’

The message is clear: the future of embedded insurance isn’t just bigger; it’s smarter, faster and more deeply integrated into the way people engage with services.

At Qover, we believe the next chapter of embedded insurance is about closing the adequacy gap by delivering products that are transparent, trusted and truly valuable – creating a true global safety net for consumers. That means leveraging technology, using data intelligently and collaborating with the right partners.

The industry has already proven it can make insurance accessible. Now it’s time to make it meaningful.

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Want to join the cause? Get in touch with our team.

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