Embedded Finance Trends 2025: Insurance is Next
Embedded finance has transformed how consumers interact with financial services. After payments (Stripe) and lending (Affirm), insurance is emerging as the next major embedded finance category. Here is what the data tells us.
The Embedded Finance Revolution
The past decade saw a fundamental shift in financial services distribution. Rather than going to a bank or financial institution, consumers now access financial products where they already are: on digital platforms.
This shift created some of the most valuable fintech companies:
- Stripe: $65B valuation, embedded payments
- Affirm: $10B market cap, embedded lending
- Plaid: $13B valuation, embedded banking
The pattern is clear: when you meet customers where they are with seamless experiences, you create massive value.
Why Insurance is Next
Insurance is a $6 trillion global market, but the customer experience has barely evolved in decades. Most people still buy insurance through agents, brokers, or clunky carrier websites.
Several trends are converging to change this:
1. Point-of-Sale Relevance
Insurance is most relevant at the moment of transaction. When you buy a laptop, that is when you care about protection. When you book a vacation rental, that is when you think about liability.
Platforms that own these moments can embed insurance naturally.
2. Data Advantage
Digital platforms have rich data about their users and transactions. This enables:
- Better risk assessment (reduced fraud, accurate pricing)
- Personalized recommendations
- Streamlined underwriting
- Faster claims processing
3. API-First Infrastructure
Modern insurance infrastructure (like CoverKit) makes embedding insurance as easy as embedding payments. What used to take 12-18 months can now be done in weeks.
Market Projections
Key Embedded Insurance Categories
E-Commerce & Shipping
Shipping protection at checkout. Platforms like Amazon, Shopify merchants, and DTC brands are embedding protection to reduce customer anxiety and support costs.
Gig & Sharing Economy
Rental protection, liability coverage for hosts and guests. Airbnb, VRBO, and equipment rental platforms are leading adoption.
B2B SaaS
Cyber insurance and E&O coverage as platform benefits. Helping customers meet enterprise security requirements.
Travel & Mobility
Trip protection, vehicle insurance, and rideshare coverage embedded in booking flows.
What This Means for Platforms
For digital platforms, embedded insurance represents both a revenue opportunity and a competitive advantage:
- New Revenue Stream: 20-35% margins on insurance premiums
- Higher Conversion: Customers convert more when protected
- Customer Trust: Protection builds platform loyalty
- Reduced Support Costs: Insurance handles disputes
The Path Forward
We believe 2025 will be the year embedded insurance goes mainstream. The infrastructure is ready, customer expectations have shifted, and the economics make sense for platforms of all sizes.
At CoverKit, we are building the infrastructure to power this transformation. If you are interested in embedding insurance into your platform, get started with a free account or talk to our team.