Root Blog | Why embedded insurance should still be part of your growth strategy

Embedded insurance is the high-margin, high-value gift many insurers, retailers and affinity brands will leave unopened this year.

In 2025, the words “AI”, “MCP” and “agentic” have all but dominated the insurance technology conversation while established strategic models like embedded insurance have been pushed into the background.

The embedded insurance opportunity

As the world ramps up to Black Friday and the holiday season, the traditional retail busy season also represents a sizable embedded insurance opportunity.

However, this opportunity isn’t merely a seasonal one. Embedded insurance is estimated to grow to $1.5 trillion in GWP by 2032.

By seamlessly integrating protection at the point of sale, coverage becomes a natural part of a customer’s buying journey, not a separate sale.

This integration delivers immense to insurers, distributors and customers:

Superior conversion, by eliminating friction in the insurance buying process for customers and distributors
Increased market penetration, particularly in the mature markets where non-insurance brands like retailers, banks and affinity brands hold hard-won customer trust. Carriers can leverage that existing trust to close protection gaps.
Strategic growth, as around 60% of non-life and 30% of life business is addressable by embedded insurance.

The orchestration problem in embedded insurance

However, the major problem we see insurers and intermediaries grapple with when launching embedded insurance solutions is orchestrating multiple moving parts and role-players across the value chain.

Capacity providers, reinsurers and service providers need to be able to seamlessly work together within the partner's digital environment. Yet, all of the roleplayers in that value chain will have different systems and data structures.

This is what makes APIs so powerful.

APIs provide the stitching that binds these various functions and role-players across the value chain together. They are the essential architectural layer that enables real-time data exchange, directly destroying the data siloes that slow down underwriting, complicate claims, and prevent that necessary, personalised view of the customer.

By having sight of the entire customer journey, including behavioural data insights into customers, capacity providers and distributors will be empowered to offer customers a more streamlined, personalised experience.

Embedded insurance 2.0: The new way

Embedded Insurance 2.0 - the new way of leveraging third-party brands for distribution whilst creating new, tailored protection for customers - can only succeed with the underlying infrastructure in place to enable it.

EI2.0 is not merely about increasing distribution channels; it is about fundamentally reinventing the insurance product itself. This demands cloud-native, API-first core insurance systems.

Legacy systems are incapable of delivering the necessary real-time data exchange, customisation, and scalability needed for modern embedded models. They define the old way of implementing embedded insurance: slow, rigid, and siloed.

They are the anchor dragging down a trillion-dollar opportunity.

API-first insurance platforms, by contrast, unlock composability. They allow insurers to weave together cover types, limits, pricing logic, documents, workflows, into a single product journey.

Without APIs and modern insurance systems, rapidly experimenting with flexible product design is not possible. And without that, delivering personalised, tailored customer products and experiences will remain a pipedream.

Unwrapping embedded insurance

While competitors chase trends, the $1.5 trillion embedded insurance opportunity still awaits those with the core technology to claim it.

The year-end rush will expose the operational flows of the old way in real time, but more importantly, it will remind the industry just how big the growth opportunity truly is.

Can your insurance business afford to wait another year to start building?

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