Embedded Insurance in Italy: Why the Intermediary Can Become the Technology Partner of Local Businesses (and Not the Victim of Disintermediation)

When insurance stops being a separate purchase

You buy a plane ticket and, within the same checkout flow, you are offered a policy for delays and cancellations. You buy a smartphone online and you are offered a warranty extension with a click. You rent a car for the weekend and comprehensive cover is already in the quote. You book a holiday home and cancellation insurance is a box to tick before paying.

This is embedded insurance: the integration of insurance cover directly into the purchasing process of another product or service, without the customer having to search separately for a dedicated policy. It is not a new idea — anyone who has bought a smartphone or a bicycle in a physical shop over the last fifteen years has already seen this model in action. But the coming together of specific regulation, open APIs, artificial intelligence and cloud is transforming a marginal phenomenon into one of the main growth drivers of the insurance sector over the next five years.

And here comes the uncomfortable question for Italian agents and brokers: is this model, which by definition originates outside the traditional distribution channels, an existential threat or an opportunity that most intermediaries are missing because they keep reading it only as a threat?

The numbers that explain why ignoring the phenomenon is a strategic mistake

The data on the Italian embedded-insurance market are by now well established and come from converging sources. According to the Open & Embedded Insurance research carried out in collaboration with the Italian Insurtech Association, the value of embedded insurance services in Italy will reach 60 billion euros by 2030, contributing to overall growth of the global insurance market to as much as 10 trillion euros.

Globally, EY research cited in Fabrick's white paper From Connection to Orchestration estimates that by 2028 more than 30% of insurance transactions could take place through embedded channels, with a global market of between 70 and 950 billion dollars by 2030 and annual growth rates above 35%.

But the most relevant figure for anyone thinking as an intermediary is not the absolute value of the market. It is another one: according to estimates by the Italian Insurtech Association, 70% of the premiums generated by embedded insurance come from customers who were not insured for those same risks. Translated: embedded insurance is not cannibalising the portfolio of traditional intermediaries, it is intercepting a latent demand that the traditional channel was unable to reach. Considering that today only 8% of the Italian population has taken out a policy other than compulsory motor third-party liability, the available market pool is enormous.

The number of non-insurance players active in the Italian market rose from 60 in 2018 to more than 168 in 2022, with estimates of exceeding 350 by 2025. The Italian banks distributing digital insurance products rose from 15 in 2023 to a projected 40 in 2025. Amazon, as far back as 2020, had sold more than 100 million policies in Europe, against the roughly 3 million policies sold online in Italy over the same period.

The direction is clear. So is the speed.

The regulatory blind spot many intermediaries fail to see

Here a technical aspect comes into play that deserves attention, because it is precisely the point where an intermediary can position itself strategically: the Italian regulatory framework on insurance distribution as applied to embedded insurance.

The Private Insurance Code (Legislative Decree 209/2005) and IVASS Regulation 40/2018, implementing EU Directive 2016/97 (IDD), define very broadly what constitutes "insurance distribution": any activity of advising on, proposing or preparing for the conclusion of insurance contracts, assisting with their management, or providing support in the event of claims. All these activities may be carried out only by parties registered with the RUI or duly authorised.

There is, however, the so-called Connected Contracts Exemption, which allows certain parties to distribute insurance products without RUI registration, provided that stringent conditions are met: the insurance must be complementary to the main good or service, the premium must not exceed 600 euros per year or 200 euros for policies lasting up to three months, and the distribution activity must be ancillary to the party's main activity.

This means that many Italian companies — car dealerships, travel agencies, niche e-commerce businesses, estate agencies, gyms and sports centres, driving schools, workshops, independent electronics shops, local service platforms — can potentially integrate insurance products into their own sales flows. But to do so in a compliant way, they must either register as ancillary intermediaries or operate in partnership with a duly registered intermediary who handles the distribution and compliance aspects.

And here lies the real strategic point: all this infrastructure — from the onboarding flow to the collection of risk data, from quote generation to document management, right through to the tracking of interactions required by the transparency rules — needs technology. Technology that most of these local companies do not have. And which the large insurtech platforms offer in a standardised, generic form, designed to scale across millions of users.

The thesis: the intermediary as the technology enabler of the local economy

This is where the strategic space opens up. The big global insurtechs target big clients: Amazon, Booking, Klarna, Ryanair. The hundreds of thousands of Italian SMEs that could integrate embedded insurance — the car dealership, the independent travel agency, the sports shop, the beauty centre, the language school, the small vertical marketplace — are not attractive clients for a global player. Their volumes are too low, their needs too specific, their integrations with their existing management systems too heterogeneous.

They are, however, perfect clients for a local intermediary who positions itself as a technology partner as well as an insurance one. The agent or broker who today serves that SME for its own business policies can become the party that enables it to integrate cover into its sales flow to end customers. Not losing the relationship, but strengthening it: moving from being the provider of an annual service (the company's policy) to being a continuous operational partner (the infrastructure that makes embedded insurance work day after day).

This positioning requires three components working together.

A duly authorised and compliant distribution capability

The intermediary brings its RUI registration, its professional liability, its knowledge of the products and the insurers. It is the regulatory guarantor of the operation, the interface with IVASS, the party responsible for correct pre-contractual disclosure and for handling complaints in accordance with ISVAP Regulation 24/2008.

A technology infrastructure that adapts to the individual client

Not a standardised product that forces the partner company to change its own processes, but a tool that integrates with the existing management system, the existing e-commerce platform, the existing CRM. The critical issue flagged by the IIA too is precisely the inadequacy of IT infrastructure as the main obstacle to the adoption of embedded insurance: companies are not ready to develop integrated solutions on their own.

An operating model that manages the invisible complexity

The embedded flow looks simple to the end user (one click at checkout), but behind it lies an orchestration of API calls to different insurers for different products, real-time premium calculation, automatic generation of pre-contractual documentation compliant with IDD, consent tracking, ten-year archiving of documents, claims handling, accounting reconciliation and IVASS reporting. All of this has to work without daily manual intervention.

What it concretely takes to enable embedded insurance for a client

When working with an intermediary who wants to position itself as the technology enabler for its corporate clients, the analysis always starts from the same point: mapping the partner company's real flow. What are the touchpoints with the end customer? Where is data collected that is needed for insurance pricing (personal details, transaction amount, characteristics of the good, duration of the service)? What is the optimal moment to propose the cover? How does it appear visually within the existing checkout?

From here the vertical micro-application is born: a tool designed for that precise flow, integrated with the client's existing management system or e-commerce platform, which handles the entire embedded mechanics without requiring the partner company to overhaul its own procedures.

The technical components typically required include a quotation engine that communicates via API with the systems of the intermediary's partner insurers; a presentation layer that integrates graphically with the client's website or software without being a recognisably external component; a document management system that automatically generates the pre-contractual information set, the IPID, the policy terms and compliant receipts; a consent and tracking module compliant with the GDPR and with the IDD transparency rules; a separate administration area for the intermediary that retains regulatory control over the operation; and a reporting system that automatically generates the data needed for the annual filings.

All of this must be built on the systems the intermediary's client already has, not in their place. Because a car dealership will not change its management system to integrate embedded insurance, nor will a travel agency or a sports goods shop. But it will gladly use a tool that plugs into their existing flow and enriches it.

This is why the generalist platforms designed for the global market struggle to penetrate the fabric of Italian SMEs: they assume a level of technological standardisation that simply is not there. An application built to measure for a single intermediary and for the typical flows of its clients solves the problem at its root.

The flip side: what happens to those who do not move

It is worth being explicit about an alternative scenario, because in many conversations with Italian intermediaries this is still the dominant thought: "Embedded insurance doesn't concern me, my clients will keep calling me as they always have."

The data tell a different story. 77% of Italians, according to IIA estimates, would like to take out a policy digitally. Between 50% and 70% of the new customers entering the insurance market in the coming years will arrive precisely through embedded channels. Banks, e-commerce, mobility platforms and the big insurtechs are building an infrastructure that will intercept these people before they have any reason to turn to a traditional intermediary.

The effect will not be a sudden collapse of the traditional intermediaries' portfolios. It will be a progressive erosion of the pool of new customers, while the historical portfolio continues to age. The same phenomenon the travel sector saw with Booking, or the music industry with Spotify, according to the analogy often cited by Simone Ranucci Brandimarte, president of the IIA: the traditional players did not disappear overnight, they simply lost over the years the ability to attract new customers.

The alternative for the intermediary is not to protect itself from embedded insurance, but to become one of its enablers in its own territory. To turn its RUI registration, its partnerships with insurers and its knowledge of the local economic fabric into a technological asset that local SMEs can use to integrate cover into their own flows.

From intermediary to infrastructure

The picture is this: a market growing at double-digit rates, a latent demand for cover that traditional channels cannot intercept, an Italian regulatory framework that in any case requires a duly registered party as the one responsible for distribution, and a fabric of Italian SMEs that lack the resources to build the necessary technology infrastructure themselves.

Within this picture there is a precise space for the intermediary who decides to evolve. Not as a more digitalised policy seller, but as a provider of a distribution infrastructure that companies in its own territory can use to integrate cover into their products and services. A defensible position, because it combines the regulatory expertise the big tech players do not have with the local roots that global platforms cannot replicate.

A126 Corporate Advisors designs and builds vertical micro-applications for insurance intermediaries who want to create this infrastructure: bespoke applications, integrated with the management systems and e-commerce platforms of the end clients, compliant with IDD regulation and with IVASS Regulation 40/2018, sized for the intermediary's real volume of operations. Not standardised platforms to be adopted, but tools designed around the specific operational flow of each project.

If you are assessing how to position your business in relation to the embedded-insurance phenomenon, or you have a concrete integration opportunity with a corporate client and want to understand how to make it operational, get in touch for a free consultation. Together we will analyse the case, map the flow, assess the technical and regulatory feasibility, and define the scope of a possible project.

A126 Corporate Advisors — Bespoke software for insurance intermediaries who want to lead change, not endure it.