In the dynamic realm of financial services, insurance is undergoing a silent yet transformative evolution. Known as Embedded Insurance, this new avatar is increasingly becoming a seamless part of our everyday digital transactions from buying smartphones to booking flights. With India's digital economy witnessing a historic boom, Insurance 3.0 is not just reshaping how insurance is sold and serviced it’s redefining who it serves. It’s making insurance invisible, inclusive, and embedded into everyday life.

The Changing Face of Insurance

For decades, insurance in India meant elaborate paperwork, in-person meetings, and confusing jargon. Today, with a single tap on an app, a user can buy a life cover along with a credit card, add travel insurance to their flight booking, or get gadget insurance bundled with an e-commerce purchase. This is the essence of embedded insurance a product offered at the point of need, within a platform where the user is already transacting.

“Embedded finance is about meeting users where they are, For insurance, that means removing friction and offering products at relevant moments seamless, contextual, and fast”, says Nischal Shetty, Founder of WazirX.

What Is Embedded Insurance?

Embedded insurance refers to the integration of insurance products and services within non-insurance digital platforms e-commerce apps, ride-sharing services, travel booking sites, fintech apps, or healthtech platforms. The insurance product is pre-integrated and often comes as a default or optional add-on during a transaction. Whether it’s flight cancellation protection via MakeMyTrip, theft protection on Flipkart, or health top-ups via digital health platforms like Practo, these are real-world use cases of embedded insurance in India.

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Why It’s Booming in India

Several factors are fueling this trend in the Indian insurance ecosystem:

• Massive smartphone penetration (over 750 million users)
• Rise of digital commerce and UPI-based payments
• Low insurance penetration (4.2% of GDP)
• Younger, tech-savvy consumers who prefer convenience over paperwork

“Embedded insurance is a powerful tool for financial inclusion, it helps us reach first-time insurance buyers in tier 2 and tier 3 cities through platforms they already trust”, says Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance.   

According to a report by Bain & Company, embedded insurance could account for $70 billion in global gross written premiums by 2030, with India expected to be a major contributor.

APIs, Open Banking, and Smart Personalization

Technology is the biggest enabler of this quiet insurance revolution. Key innovations include:

• APIs (Application Programming Interfaces): Allow insurance products to plug into third-party platforms.
• Open banking: Enables seamless access to user financial data to personalize insurance offerings.
• AI/ML algorithms: Offer personalized underwriting, risk scoring, and premium calculations.

“We’re seeing a convergence of fintech, insurtech, and healthtech, APIs are doing what brick-and-mortar branches could never achieve distribution at scale”, says Rakesh Rewari, former Deputy MD at SIDBI and fintech policy advisor.

Startups are leading the charge:

• Zopper: Partners with retailers to offer device and health insurance.
• Toffee Insurance: Offers contextual micro-insurance for cycles, dengue, and backpacks.
• Riskcovry: Provides an API stack for insurance-as-a-service across platforms.

These insurtech startups in India are turning traditional insurance into modular, bite-sized offerings highly relevant, low-cost, and bundled in user-friendly digital interfaces.

Where Embedded Insurance Is Flourishing: Key Sectors

1. E-commerce & Electronics: Phone, appliance, and theft insurance via Flipkart, Amazon, and Croma.
2. Travel & Mobility: Flight delays, baggage loss, or cab ride coverage via Ola, Uber, and MakeMyTrip.
3. Healthcare & Wellness: Daily hospitalization cover and OPD top-ups via Practo and Tata 1mg.
4. Fintech & BNPL: Life and accident insurance bundled with EMI cards or credit offerings via Slice, LazyPay, and Paytm.

“The idea is not to make people go out of their way to buy insurance. Instead, offer it as a default value-added service”, says Yashish Dahiya, Co-founder & Chairman of Policybazaar.

Impact on the Insurance Sector

Embedded insurance is forcing traditional insurers to reimagine their distribution strategy, pricing, and customer engagement models. It's also opening doors to micro-insurance and customized coverage, particularly for gig workers, rural users, and underinsured segments.

But the change comes with challenges:

• Lack of transparency: Consumers may not fully understand what they are buying.
• Claims friction: Managing claims through third-party platforms can dilute the insurer’s brand trust.
• Overdependence on platforms: Insurance companies risk losing direct relationships with customers.

“The biggest risk is the loss of consumer understanding, We must ensure that embedded doesn’t become ‘invisible’ in the wrong sense”, notes Anand Pejawar, Deputy Managing Director at SBI General Insurance.

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Regulation and Customer Awareness

IRDAI (Insurance Regulatory and Development Authority of India) has shown support for digital insurance innovation but is also working on frameworks to protect consumer rights, especially for embedded models.

“We welcome innovation but will not compromise on transparency,Customers must know what they are paying for, how to claim, and who is responsible”, said Debasish Panda, Chairperson of IRDAI, at a 2025 digital insurance summit.

Digital platforms must be held accountable for disclosures, opt-in clarity, and claim support. As more embedded products go live, financial literacy and digital insurance education become essential.

Conclusion

Insurance 3.0 isn't about banner ads, insurance agents, or paperwork. It’s about access, timing, and relevance. Embedded finance is helping India democratize risk coverage, especially in Bharat India’s semi-urban and rural heartland where traditional insurance models often fail.

“We’re not just selling policies. We’re creating access to safety nets, Insurance is becoming ambient always there, always on, when you need it most”, says Varun Dua, Founder of Acko Insurance.