Embedded insurance will grow to $35 billion or 18% of gross written premium (GWP) in Australia in 2033, analysts at PwC forecast.

The segment is expected to post compound annual growth of 34% over the period, while traditional insurance channels are expected to grow 4% a year.

PwC says embedded insurance offers insurers a “step-change” chance to serve new and existing customers, and getting on board is “imperative”. 

“It offers a major distributional advantage, lowering the cost to serve by reducing onboarding and customer acquisition costs and increasing the addressable market using channel partners’ access to different customer segments.”

Data-sharing arrangements under embedded insurance partnerships enable insurers to deliver personalised products and easier claims processing, and companies can also reap value from “affinity with non-insurance brands”, PwC says in a report in the segment.

Insurer offers can be embedded in loyalty or membership programs if they deploy subscription payment models.

Insurers should consider establishing business units that operate at arm’s length from the core business, as IAG did with Rollin’, PwC says. 

 See the report here.