Embedded insurance in the UK: Trends and regulatory challenges
In recent years in the UK we have seen a growing trend of distribution involving embedded insurance across a range of consumer sectors from, for example, banking and payment service providers, to car leases, to mobile phone and computer manufacturers. Embedded insurance is by no means new but the way it is distributed brings some unique regulatory challenges. In the article below, we explore two of those regulatory challenges: the need to verify the regulatory status of the distributor and the approach to fair value assessment.
Embedded insurance doesn’t have a single meaning but broadly refers to the integration of insurance products directly into the sale of the distributor’s ‘core’ non-insurance goods and services. This can be achieved through a separate and distinct “add-on” insurance sales process by the distributor of the core good or service (i.e., sold separately but at the same time as the core good or service) or by way of fuller integration of the insurance into the core good and service itself. The article below focuses on the latter and not “add-on” sales of insurance products (nor are we looking at product or service warranties) but we do consider the integration of insurance into the purchase price (and sometimes the contract) of the core non-insurance good or service; for example the lease of a car with comprehensive road insurance included in the monthly rental.
Read the full article here.