In recent years, the insurance industry has witnessed a significant transformation, with embedded insurance emerging as a game-changer. This innovative approach integrates insurance products directly into the purchase process of other goods and services, making them more accessible and relevant to consumers. In Canada, embedded insurance is poised to revolutionize the market, offering numerous benefits to consumers and insurers.
What is Embedded Insurance?
Embedded insurance refers to seamlessly integrating insurance coverage into non-insurance products, platforms, and services. This means that consumers can purchase insurance at the point of sale, whether they are buying a car, booking a flight, or even purchasing electronics. For example- When booking a flight online, the traveler is offered an option to add travel insurance as part of the booking process. The insurance, such as trip cancellation, lost baggage, or medical coverage, is seamlessly integrated into the booking experience. The customer can choose to opt in or out while paying for the flight, making the process effortless and convenient without needing to visit a separate insurance website.
Unlike extended warranties, which cover repairs and replacements for product defects or accidental damage, embedded insurance is designed to offer broader protection related to specific risks. For example, a ride-hailing app might include automatic passenger accident coverage within the ride fare, ensuring customers are covered without needing to buy separate policies.
The Growth of Embedded Insurance in Canada
The Canadian market is ripe for embedded insurance growth and the global embedded insurance market is experiencing exponential growth. According to a report by Mordor Intelligence, the market size is expected to expand from USD 210.90 billion in 2025 to USD 950.59 billion by 2030, reflecting a compound annual growth rate (CAGR) of 35.14% during this period.
In Canada, this upward trend is mirrored by increasing collaborations between insurers and non-insurance brands. A notable example is the launch of the Embedded Insurance Report 2025 by Duuo, a subsidiary of Co-operators. This study delves into Canadian consumer preferences and highlights opportunities for non-insurance brands to integrate insurance offerings into their products and services.
Bridging the Protection Gap
One of the most compelling advantages of embedded insurance is its potential to close the “protection gap”—the disparity between insured losses and total economic losses. Currently, approximately 50% of all economic losses are not covered by insurance. By embedding insurance into everyday transactions, consumers are more likely to obtain necessary coverage, thereby reducing their financial vulnerability.
A great example of this in the Canadian market is Air Canada’s partnership with Manulife. When customers book flights through Air Canada’s website or app, they are seamlessly offered trip protection, medical coverage, and cancellation insurance as part of the booking process. This ensures travelers don’t overlook important coverage, helping to reduce financial vulnerability.
The Role of Technology and Innovation
The role of technology in embedded insurance has dramatically expanded, as digital platforms and Insurtech innovations have made it easier for insurers to integrate their offerings directly into various consumer touchpoints. This shift has removed the friction of traditional insurance buying processes, allowing consumers to purchase coverage effortlessly as they engage with other products or services. For example, purchasing life insurance at the airport before a flight was an early form of embedded insurance. Today, with the evolution of technology and online commerce, customers can purchase insurance alongside digital products like concert or plane tickets or even get car insurance through sites like Credit Karma.
Conclusion
For Canadian consumers, embedded insurance offers a more intuitive and accessible way to obtain coverage. It reduces friction in the purchasing process and ensures that insurance becomes a natural extension of everyday transactions. For insurers and businesses, it presents an opportunity to reach a broader audience, foster innovation, and develop products that align more closely with consumer needs.
