As more consumers are comfortable buying motor insurance directly from manufacturers and embedded insurance continues to grow, KwikFit emerges as the latest player entering the market. It announced its own motor insurance policy in July 2024 as another example of the embedded insurance trend.
GlobalData’s 2023 UK Insurance Consumer Survey found that nearly a third (30.4%) of UK consumers would be happy to purchase motor insurance from a car manufacturer. This shows that embedded insurance is already established in the motor insurance market. KwikFit is essentially aiming to join this trend and target this third of consumers. GlobalData believes that embedded insurance will grow across a range of product lines and consumers will become more comfortable with purchasing insurance through non-traditional insurers.
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While KwikFit is a service provider and not a manufacturer, it still poses a similar threat to insurers. It has the ability to offer motor insurance policies at the point that customers are having issues with their car, which makes it incredibly timely. It also has access to customers who clearly already trust it as they are using its services already.
Motor insurers will have to be aware of the risks that embedded insurance poses. While most policies—including this one from KwikFit—have an insurance underwriting partner, the more comfortable consumers get with buying insurance from manufacturers or service providers, the more likely they are to move away from traditional insurers. We have already seen Tesla launch its own insurance policy and essentially cut out insurers entirely.
Motor insurers may be best placed to embrace embedded insurance and partner with manufacturers and service providers to gain that access to customers at the point of sale. However, there are only so many leading manufacturers and servicers, so insurers slow to adapt may risk being left behind. Many consumers will remain resistant to it as they will feel they can get better value on comparison sites, but as offering competitive pricing is getting harder and harder for insurers, the convenience of embedded insurance could become more popular.
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By GlobalData
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