LONDON — A new survey from GlobalData has highlighted that insurers are increasingly shifting their focus towards embedded distribution channels and artificial intelligence (AI) integration as they adapt to changing consumer behaviors and the growing trend of digital purchasing.
The survey, conducted in the first quarter of 2025 (Q1 2025), gathered over 170 responses through Verdict Media platforms, offering valuable insights into the future of personal lines insurance.
Embedded Insurance Leads as Preferred Distribution Model
According to the survey, embedded insurance is poised to be the leading distribution model for future growth in personal lines, with 31.6% of respondents selecting it as their top choice. This outpaced direct-to-consumer models (18.4%) and traditional broker-mediated sales (17.2%).
Embedded insurance refers to policies that are bundled with other products or services during the point of purchase. Common examples include travel insurance offered during flight bookings, auto insurance when purchasing a vehicle, or device protection alongside consumer electronics.
The Advantages of Embedded Insurance
Beatriz Benito, lead insurance analyst at GlobalData, noted that embedded insurance allows insurers to align their offerings with consumers’ buying habits, reaching individuals who might not engage with traditional insurance channels.
“A key advantage of embedded insurance is that policies are presented precisely when they are most relevant to customers, increasing the likelihood of a purchase,” Benito explained.
This distribution model also creates opportunities for non-insurance companies to participate, expanding access to insurance for a broader customer base. For instance, travel insurance can be offered when booking a flight, or motor insurance when selling a car, allowing insurers to connect with customers who were not actively seeking insurance.
Although embedded insurance is not a new concept, its resurgence has been driven by the rise of e-commerce and consumer demand for seamless, digital-first experiences.
“As consumers increasingly shift from brick-and-mortar stores to online shopping, digital platforms have become critical to the embedded insurance model. Consumers now expect frictionless experiences across industries,” Benito added.
Consumer Perception of AI in Insurance
In addition to embedded insurance, insurers are also embracing artificial intelligence (AI) to improve their operations. According to GlobalData’s 2024 Emerging Trends Insurance Consumer Survey, which surveyed 5,500 respondents across 11 countries, many policyholders see the potential benefits of AI in the insurance sector, but challenges remain regarding adoption.
The survey found that 73.8% of respondents believe AI can enhance customer service access, while 71.5% feel it will improve operational efficiency. Another 71.2% consider AI superior to humans in detecting patterns. Furthermore, 74.5% of those who had interacted with AI tools such as chatbots reported a positive experience.
However, despite these favorable views, many consumers remain wary about insurers’ use of AI. Concerns around decision-making transparency, particularly in claims processing, as well as the handling of personal data, are key barriers to broader adoption.
“Despite the positive perceptions, insurers face challenges in ensuring that consumers fully embrace AI. Many find the technology not yet sufficiently developed for widespread use, which undermines trust,” Benito said.
She emphasized the importance of improving transparency around how AI is used, especially in areas like claims processing and pricing, to build greater consumer trust.
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