Embedded insurance will be a game-changer for the distribution of insurance over the next few years as a broader range of platforms emerge as distribution partners, and more insurance products become embedded. While historically embedded insurance heavily focused on personal lines, the next wave will gravitate toward commercial lines as providers realise further potential despite the greater complexity of commercial products.
According to GlobalData’s 2025 SME Survey, 39.1% of global SMEs claim to have been offered business insurance when purchasing another product or service through a marketplace platform. A key competitive advantage of embedded insurance is that policies are integrated at the point of sale with a core product or service offered by a non-insurance business, meaning that the model allows insurers to reach customers who may not have actively sought to take out an insurance policy. Given its convenience, embedded insurance is also characterised by high conversion rates. In fact, almost half (48.8%) of all SMEs that offered embedded insurance through a marketplace bought it, signalling there is an appetite and strong potential among small business owners.
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Digital insurtech company ERGO NEXT Insurance’s partnership with TikTok Shop reflects a massive industry push toward embedded commercial lines. In this example, TikTok Shop’s e-commerce businesses can purchase general liability, professional liability, workers’ compensation, and cyber insurance entirely online when buying digital tools for their business through TikTok’s merchant onboarding and business management infrastructure. This creates a more streamlined experience for digital-first businesses as it removes the need to fill out long questionnaires, as this information can be leveraged from the merchant’s profile data that is already on the TikTok Shop platform.
Besides time savings and frictionless processes, the embedded insurance concept offers further advantages. It can also lead to cost savings as policies may be priced more favourably given that embedding eliminates marketing and brokerage costs. Furthermore, it will likely reduce underinsurance among SMEs, as many may not have realised the relevance of such policies to their business.
There will be hurdles to overcome for insurers to maximise the potential of embedded insurance in commercial lines. For instance, some businesses may hold off on purchasing insurance through a marketplace when buying another product or service because they anticipate difficulties with the claims process, while others may just want to receive advice. The next generation of embedded insurance innovation will likely be limited to smaller businesses with less complex needs, while outreach to larger businesses will likely take longer.
