Why expanding embedded insurance is Asian telcos’ next differentiator

The ability to integrate protection into everyday services will enable telcos to stand out.

For many years, telcos across Asia have competed on the same battleground of network quality, price, data allowances, and customer perks such as entertainment bundles. However, as coverage and prices become largely aligned, telcos need to get more creative in how they stand out from competitors.  

According to GlobalData, Asia-Pacific mobile service revenues are forecast to grow at just 2.3% annually between 2025 and 2030, despite continued investment in next-generation networks. At the same time, network traffic is growing faster than revenues, putting increasing pressure on margins.

To remain on top, retain customers, and attract new ones, Asian telcos need additional value-add services that sit on top of or within price plans and enhance the customer experience. 

Embedding insurance offerings beyond classic device insurance is emerging as a creative ‘value add’ that enables telcos to leverage their access to customer data to provide tailored solutions.

The rise of embedded insurance
If you remember a time when mobile phones were nowhere near as expensive, that’s because they were subsidised by telcos and customers were able to access attractive upgrade options year-on-year.

However, this ended when costs became too high for telcos to subsidise and their customers and regulators demanded greater transparency around how monthly payments were split between device costs and airtime costs. As a result, many customers decided to stick with their phones for longer, creating a greater demand for device insurance.

Many telcos swiftly turned to embedding insurance within the device purchase journey. These bundled-up models addressed the need to protect expensive mobile devices and shielded customers from unexpected costs should something happen to their device, all within a complete and reliable solution.

By offering a complete solution to customers, telcos were able to diversify their revenue streams and foster customer loyalty by reducing the need to ‘shop around’.

Today Asia is a world leader in embedded insurance, with the gadget insurance market set to grow at a 13.7% compound annual growth rate (CAGR) through 2030. With this established, the question is how can telcos extend these models to their benefit?

Expanding the offerings
Telcos are looking at expansion to embed a broader range of insurance products that sit naturally in their ecosystems. What makes them almost uniquely positioned to do so is that, unlike most industries, telcos don’t rely on static snapshots of customer information but instead see behaviour as it happens. They can detect when a customer travels abroad, when a device experiences impact, or when network activity signals emerging cyber threats.

Operating at this intersection of distribution, data and customer engagement opens up many avenues for firms to roll out additional embedded insurance and competitively differentiate themselves.

Telco’s have a unique opportunity to expand their travel insurance offerings, using opt-in models. Leveraging the network “knowledge” that a customer has arrived or returned from abroad, telcos can switch coverage on and off accordingly once customers have opted in.

For customers, these opt-in models remove the admin associated with arranging cover for each individual trip and ensure they only pay for cover when they are actually travelling. For telcos, they provide valuable recurring revenue.

From there, this model can be scaled quickly. Internet of Things (IoT) connections are projected to reach 1.3 billion by 2030 in Asia, with growth led by the likes of China, Japan, Singapore and South Korea. This opens up a significant opportunity for telcos to expand their offerings.  

For example, Telcos can leverage network data from IoT devices to integrate parametric models that protect customers against service interruptions to deliver fast and automatic compensation for connectivity outages, without the need for lengthy traditional claims processes.

For gig economy workers, such as those working for ride-hailing services like Grab or delivery drivers, this sort of network-triggered business interruption cover could provide support against sudden loss of income when outages happen, and workers lose the connectivity needed to do their jobs.

And, as more telcos harness location data from IoT devices for weather monitoring, they are well placed to sell protection against weather-related disruption, such as flood or high wind speeds. Combined with the reach and data capabilities of telcos, this opens up new opportunities to provide timely protection against disruption caused by extreme weather.

Turning a flashy feature into financial impact
By creating new revenue streams and supporting customer loyalty, embedded insurance is a valuable tool for the telco industry, which has been slower to innovate than the wider tech ecosystem.

At a time when demand for connectivity is rising but monetisation remains constrained, the ability to layer relevant, high-value services onto core offerings is becoming a defining competitive lever for telcos operating in Asia.

However, success depends on execution. Insurance cannot be treated as a bolt-on revenue line. It must fit seamlessly into the customer journey from the outset, with a clear and tangible benefit to the end user.

In a crowded market, the ability to integrate protection seamlessly into everyday services will be critical in enabling telcos to stand out.