Embedded Insurance and Digital Platforms in Australia 2026: ASIC Regulation and How an Insurance Broker Can Help

Embedded insurance — cover bundled into the purchase of a product or service, from travel booked online to a new car or smartphone — has become one of the fastest-growing segments of the Australian insurance market. Yet as digital platforms proliferate and insurance is increasingly sold at the point of sale by non-insurance businesses, the Australian Securities and Investments Commission (ASIC) has identified this space as a significant regulatory priority for 2026 and beyond. For Australian consumers and businesses, understanding how embedded insurance works — and where an experienced insurance broker adds value — has never been more important.

What Is Embedded Insurance?

Embedded insurance refers to insurance products that are integrated directly into the purchase of another product or service, rather than being sold as a standalone policy. Common examples include travel insurance offered at checkout when booking flights, device protection bundled with a new phone plan, or warranty extensions sold alongside white goods.

The appeal for consumers is convenience — cover is available at the moment of need, often with a single click. However, this convenience can come at a cost. Embedded insurance products are frequently designed to suit the distribution channel rather than the consumer's actual needs, and the terms, exclusions, and pricing may not be transparent or competitive.

How Digital Platforms Are Changing Insurance Distribution

The rise of digital platforms — including e-commerce marketplaces, ride-sharing apps, fintech platforms, and comparison websites — has fundamentally changed how insurance reaches consumers. Many of these platforms operate at the "edge" of the financial system, offering insurance-like products or facilitating insurance sales without holding an Australian Financial Services Licence (AFSL) themselves.

ASIC has described this as a "regulatory perimeter" challenge: businesses that operate with models less familiar to traditional financial regulation may expose consumers to risks of misleading conduct, inadequate disclosure, and products that do not meet their needs.

ASIC's 2026 Regulatory Priorities for Embedded Insurance

In its 2026-27 supervisory priorities, ASIC has explicitly identified the supervision of digital platforms and embedded insurance as a key focus area. The regulator is taking a multi-pronged approach to managing the risks in this space.

Active Perimeter Oversight

ASIC is conducting "active perimeter oversight" of businesses that distribute insurance through digital channels without holding an AFSL. This includes monitoring for unlicensed advice, misleading product descriptions, and inadequate disclosure of terms and exclusions.

Businesses that facilitate insurance sales — even incidentally — may be required to hold an AFSL or operate as an authorised representative of a licensed insurer or broker. ASIC has signalled it will take enforcement action against businesses that breach the regulatory perimeter.

AI Governance in Insurance Distribution

ASIC has also flagged concerns about the use of artificial intelligence in customer-facing insurance activities. AI-powered recommendation engines on digital platforms can exploit behavioural biases, potentially steering consumers toward products that are profitable for the platform rather than suitable for the consumer.

The regulator has noted that many firms currently lack sufficient maturity in AI governance and risk controls, and has indicated it will scrutinise AI-driven insurance distribution as part of its 2026-27 supervisory program.

Informed Consent for Commission Payments

Effective 10 July 2025, ASIC introduced updated regulations requiring insurance brokers and financial advisers to obtain and record "informed consent" from retail clients before receiving commission payments for insurance product recommendations. This mandate applies to most retail interactions involving general, life, and consumer credit insurance.

Firms must maintain secure, retrievable records of all disclosures and consents for at least five years. This requirement is designed to ensure consumers understand how their broker or adviser is remunerated and can make informed decisions about the advice they receive.

Key Risks for Consumers Using Embedded Insurance

While embedded insurance offers convenience, consumers should be aware of several significant risks before relying on bundled cover.

• Inadequate coverage: Embedded products are often designed for the average customer of the distribution channel, not for your specific circumstances. Exclusions may be extensive and not clearly disclosed at the point of sale.
• Duplicate coverage: You may already have equivalent cover through an existing policy — for example, travel insurance through your credit card or income protection through your superannuation fund. Paying for embedded cover you already have is a common and costly mistake.
• Claims difficulties: When a claim arises, embedded insurance products may be administered by the platform rather than a licensed insurer, creating confusion about who to contact and how to lodge a claim.
• Lack of ongoing advice: Embedded insurance is sold at a point in time, without ongoing review. Your circumstances may change — a new business, a growing family, a change in income — and your embedded cover will not automatically adapt.
• Price competitiveness: Embedded insurance is rarely the most competitively priced option. A broker with access to the broader market can typically source equivalent or superior cover at a lower premium.

Common Mistakes When Relying on Embedded Insurance

Many Australians accept embedded insurance without fully understanding what they are buying. The following mistakes are particularly common and can have serious financial consequences.

• Not reading the Product Disclosure Statement (PDS): Every insurance product must have a PDS, but consumers frequently accept embedded cover without reading it. Key exclusions — such as pre-existing medical conditions in travel insurance, or business use exclusions in device protection — are often buried in the fine print.
• Assuming embedded cover is comprehensive: Embedded products are typically designed to cover the most common, low-cost claims. Major losses — a serious illness, a significant business interruption — may not be covered at all.
• Failing to compare alternatives: Accepting the first insurance option presented at checkout, without comparing it to standalone policies available through a broker, often results in paying more for less cover.
• Not disclosing material facts: Insurance contracts require you to disclose all material facts at the time of purchase. Consumers who accept embedded cover quickly, without considering their full circumstances, may inadvertently fail to make required disclosures, which can void a claim.

Australian Regulatory Context

Insurance in Australia is regulated under the Corporations Act 2001 and the Insurance Contracts Act 1984. ASIC is the primary conduct regulator for insurance distribution, while the Australian Prudential Regulation Authority (APRA) oversees the financial soundness of insurers.

Insurance brokers must hold an AFSL and are subject to the Insurance Brokers Code of Practice, administered by the National Insurance Brokers Association (NIBA). The 2025 review of the Code introduced enhanced remuneration disclosure requirements and strengthened obligations around contingent commissions.

Consumers who have a dispute with an insurer or broker can lodge a complaint with the Australian Financial Complaints Authority (AFCA), which provides free, independent dispute resolution. AFCA's jurisdiction covers most retail insurance products, including those distributed through digital platforms.

Questions to Ask Before Accepting Embedded Insurance

Before accepting embedded insurance at the point of sale, consider asking the following questions — or engaging an insurance broker to review your options:

1. Do I already have equivalent cover through an existing policy, credit card, or superannuation fund?
2. What are the key exclusions in this policy, and do they apply to my circumstances?
3. Who is the underlying insurer, and are they regulated by APRA?
4. How do I lodge a claim, and who administers the claims process?
5. Is this the most competitively priced option for the cover I need, or can a broker source better value?
6. Does this cover meet my specific needs, or is it a generic product designed for the average customer?

How MyMoney® Can Help

An experienced insurance broker can review your existing cover — including any embedded insurance you may have accepted — identify gaps and duplications, and source competitive, suitable policies from the broader market. Brokers are licensed professionals with a legal obligation to act in your best interests, providing a level of protection that embedded insurance distribution cannot match.

MyMoney® connects Australian consumers and businesses with licensed insurance brokers who specialise in personal and commercial insurance. You can post a brief describing your insurance needs and receive proposals from qualified brokers, or browse insurance brokers on the MyMoney® marketplace to find a professional who can help you navigate the increasingly complex world of digital insurance distribution.

In a market where insurance is increasingly sold by algorithms and embedded in digital checkouts, the independent expertise of a licensed insurance broker remains one of the most valuable protections available to Australian consumers.