Embedded Insurance Ecosystems and Transaction-Level Dependency

1. Introduction

Embedded insurance refers to insurance products that are integrated directly into another product, platform, service, transaction, or customer journey. Instead of approaching an insurer separately, the customer encounters insurance as part of purchasing or using another service.

Examples include:

travel insurance embedded into airline or travel-booking platforms;

insurance offered when purchasing a vehicle;

payment protection integrated into financial services;

device insurance embedded into electronics sales;

shipping insurance embedded into e-commerce;

cyber insurance incorporated into business software;

insurance offered automatically through mobility platforms;

health or accident coverage embedded into employment or gig-work platforms.

The competition-law significance becomes particularly important when insurance becomes dependent upon the transaction infrastructure controlled by another undertaking.

This produces transaction-level dependency: the customer, insurer, intermediary, or competing provider may need access to the dominant transaction platform at the precise point where the insurance product is purchased.

The resulting concern is whether a platform can use control over the underlying transaction to influence:

insurance choice;

distribution;

pricing;

customer data;

visibility;

commissions;

access to consumers;

claims information;

interoperability.

2. Meaning of Transaction-Level Dependency

Traditional market dependency usually concerns a firm's dependence upon another undertaking over a longer commercial relationship.

Transaction-level dependency is narrower.

It occurs when a business becomes dependent on another undertaking at the individual transaction stage.

For example:

A travel platform controls the consumer's booking screen and automatically offers its affiliated insurer while competing insurers receive no equivalent access.

The insurer may not depend upon the platform for all of its business. Nevertheless, it may be dependent upon the platform for access to customers at the transaction moment.

This can give the platform substantial bargaining power.

3. Structure of an Embedded Insurance Ecosystem

An embedded insurance ecosystem may contain:

Consumer → Transaction Platform → Insurance Interface → Insurer → Underwriter → Claims/Payment Infrastructure

Several other actors may participate:

banks;

payment processors;

brokers;

comparison platforms;

automobile manufacturers;

dealerships;

travel platforms;

e-commerce marketplaces;

software providers;

telecommunications companies.

The entity controlling the customer interface may therefore become a powerful distribution gatekeeper.

4. Why Transaction-Level Control Matters

Insurance is traditionally distributed through:

brokers;

agents;

banks;

direct sales;

comparison websites.

Embedded insurance changes the distribution model.

The insurance decision may be made inside another commercial transaction.

For example:

Airline

Flight booking → insurance automatically presented.

Automobile

Vehicle purchase → insurance offered through manufacturer/dealer.

E-commerce

Product purchase → shipping or product protection insurance offered.

Fintech

Loan → payment-protection insurance offered simultaneously.

Mobility

Ride → accident insurance incorporated into the transaction.

The entity controlling the transaction therefore obtains an important opportunity to influence the insurance market.

5. Types of Dependency

A. Interface dependency

The insurer depends on access to the platform's interface.

B. Data dependency

The insurer depends on transaction data controlled by the platform.

C. Customer-access dependency

The platform may be the principal gateway to consumers.

D. API dependency

The insurer may require access to APIs to provide embedded insurance.

E. Payment dependency

Insurance premiums and claims may depend upon the platform's payment infrastructure.

F. Ranking dependency

The platform may determine which insurance product is displayed first.

G. Identity dependency

The insurer may depend upon the platform for authentication and customer verification.

6. Competition-Law Concerns

Embedded insurance can generate several competition concerns.

1. Tying

The platform may make insurance available only with its preferred product.

2. Bundling

Insurance may be bundled with the underlying transaction in a way that disadvantages independent insurers.

3. Self-preferencing

A platform may favour its affiliated insurer.

4. Foreclosure

Rival insurers may be denied effective access to customers.

5. Exclusive dealing

The platform may require insurers to agree to exclusivity.

6. Data advantage

The platform may use transaction data to give its affiliated insurer an advantage.

7. Discriminatory access

Independent insurers may receive inferior API access, data, ranking, or functionality.

8. Interoperability restrictions

The platform may prevent competing insurers from integrating efficiently.

7. Case Law

1. United Brands v Commission

United Brands v Commission is a foundational Article 102 TFEU authority concerning market power and abusive conduct.

The case is relevant because it demonstrates that dominance is not merely a question of market share. The broader economic relationship between a powerful undertaking and its trading partners matters.

Application to embedded insurance

If a transaction platform becomes indispensable for reaching customers, its control over the transaction interface may create substantial bargaining power.

The analysis should therefore consider:

alternatives available to insurers;

switching possibilities;

access to customers;

network effects;

contractual constraints.

Principle

A firm's market power must be assessed in its actual economic and commercial context.

2. Commercial Solvents v Commission

In Commercial Solvents, the Court recognised that a dominant undertaking controlling an important input could not simply use that position to exclude downstream competitors.

Application

A transaction platform can sometimes function as an essential input into insurance distribution.

Relevant inputs may include:

customer access;

transaction data;

APIs;

payment infrastructure;

authentication;

booking interfaces.

If a dominant undertaking controls such an input and restricts downstream insurers, the conduct may raise refusal-to-supply or foreclosure concerns.

Principle

Control over an indispensable input can become an important source of exclusionary power.

3. Bronner v Mediaprint

Bronner is particularly relevant to platform-dependent insurance ecosystems.

The Court established a demanding test for compelling a dominant undertaking to provide access to an infrastructure under the essential-facilities doctrine.

The case concerned access to a newspaper-delivery system.

Application

An insurer might argue that access to a platform's transaction interface is indispensable.

However, Bronner indicates that mere commercial desirability is insufficient.

The claimant generally must demonstrate circumstances such as:

indispensability;

absence of realistic alternatives;

inability to reproduce the facility;

potential elimination of effective competition.

Principle

Competition law does not automatically require dominant companies to share every commercially valuable infrastructure.

4. IMS Health v Commission

IMS Health developed the essential-facilities analysis further in the context of intellectual property and access to market infrastructure.

Application to embedded insurance

Suppose an insurance platform controls a proprietary transaction architecture that insurers need to reach customers.

Questions may include:

Is the infrastructure genuinely indispensable?

Are alternative distribution channels available?

Does denial eliminate effective competition?

Is there an objective justification?

Would access promote innovation rather than undermine it?

Principle

Access obligations require careful balancing between competition and legitimate property/business interests.

5. Microsoft v Commission

The Microsoft cases are highly relevant to digital ecosystems.

Microsoft's control over software interoperability and related interfaces produced competition concerns because rivals depended upon compatibility with Microsoft's dominant ecosystem.

Application

Embedded insurance platforms can create similar dependencies.

For example, an insurer may require:

API access;

technical documentation;

authentication;

transaction data;

interoperability.

If the platform deliberately degrades these mechanisms for rival insurers while favouring its own insurance product, the conduct may resemble broader interoperability-based foreclosure concerns.

Principle

Control over technological interoperability can become a source of market power.

6. Google Shopping

The Google Shopping litigation demonstrates how a dominant digital platform can influence competition through the organisation of its interface.

Google's search-results architecture affected the visibility of competing comparison services.

Application to insurance

An embedded-insurance platform may determine:

which insurer appears first;

whether rival offers are visible;

whether consumers must click through multiple screens;

whether the platform's insurer is pre-selected;

whether competing insurers are hidden behind additional steps.

Thus, interface design itself can become competition-relevant.

Principle

A dominant platform's control over visibility and user access can produce exclusionary effects.

7. Slovak Telekom v Commission

Slovak Telekom concerned access to telecommunications infrastructure and exclusionary conduct.

The case is relevant to embedded insurance because it illustrates how a vertically integrated undertaking can use control over infrastructure to disadvantage downstream competitors.

Application

Consider:

Transaction platform → insurance distribution → affiliated insurer

If the platform simultaneously controls the distribution infrastructure and competes in insurance, it has an incentive to:

degrade rivals' access;

increase rival costs;

restrict data;

impose discriminatory technical conditions.

Principle

Vertical integration combined with infrastructure control can create foreclosure risks.

8. MEO v Autoridade da Concorrência

MEO is important for discriminatory treatment under Article 102 TFEU.

The case emphasised the need to examine whether differences in treatment actually place trading partners at a competitive disadvantage.

Application

An embedded insurance platform might provide:

better API functionality to its affiliated insurer;

faster transaction processing;

superior data access;

preferential ranking;

lower commissions.

The legal analysis should examine whether these differences distort competitive conditions.

Principle

Differential treatment becomes particularly significant when it produces competitive disadvantage.

8. The Data Dimension

Embedded insurance generates valuable transaction data.

A platform may know:

what product the customer purchased;

purchase price;

location;

customer behaviour;

frequency of transactions;

payment method;

previous claims;

vehicle usage;

travel patterns.

An affiliated insurer may therefore possess information that independent insurers cannot obtain.

This creates a potential data asymmetry.

The competitive concern becomes greater when:

Platform data → superior underwriting → better pricing → more customers → more data → stronger platform position.

This produces a data-network feedback loop.

9. Self-Preferencing in Embedded Insurance

Suppose a marketplace owns an insurance company.

At checkout, it displays:

Platform Insurance — ₹800

while competing insurers appear only after several additional clicks.

Even if competitors technically remain available, the architecture may materially reduce their ability to compete.

The relevant issue is therefore not merely:

“Are competitors allowed onto the platform?”

but:

“Are competitors given an effective opportunity to compete?”

This is the difference between formal access and effective access.

10. Dark Patterns and Insurance Choice

Embedded insurance also creates consumer-choice concerns.

A platform may use:

pre-ticked insurance boxes;

default coverage;

countdown messages;

confusing cancellation mechanisms;

bundled pricing;

visually dominant affiliated products.

These practices can simultaneously create:

consumer-protection concerns;

competition concerns;

information asymmetry.

A consumer who does not actively reject the insurance may automatically purchase the platform's product.

11. Tying and Bundling

Suppose a platform requires:

“To use our transaction service, customers must purchase our insurance.”

This could create a tying issue where the platform possesses market power in the tying product.

The competition analysis may consider:

two separate products;

market power in the tying product;

coercion;

foreclosure;

objective justification;

competitive effects.

The existence of an integrated customer journey does not automatically establish unlawful tying, but the architecture deserves careful examination.

12. Exclusive Embedded Insurance

An especially significant model is:

Platform + exclusive insurer.

The platform may prohibit competing insurance providers from appearing within its transaction environment.

This may raise concerns where:

the platform is unavoidable or highly important;

the insurance market is concentrated;

rivals cannot reach equivalent customers elsewhere;

exclusivity lasts for long periods;

network effects reinforce the arrangement.

The effect can be:

platform dominance → exclusive distribution → rival foreclosure → insurance concentration.

13. Interoperability as a Competition Remedy

Where platform control creates dependency, interoperability can become an important remedy.

Possible measures include:

API access

Independent insurers receive standardised technical access.

Data portability

Customers can authorise transfer of relevant insurance information.

Non-discriminatory access

The platform must apply equivalent technical conditions.

Ranking transparency

Platforms may be required to explain ranking criteria.

Functional separation

In particularly serious cases, platform and insurance operations may require stronger organisational separation.

14. Transaction-Level Dependency and Switching Costs

Customers may become locked into the platform's insurance ecosystem because their insurance history is integrated with:

transaction records;

payment systems;

identity accounts;

claims databases;

loyalty programmes.

Leaving the ecosystem may therefore impose costs.

For example:

Platform A → insurance history → rewards → claims information → customer account

Switching to another platform may require rebuilding this ecosystem.

This can create ecosystem-level switching costs.

15. Network Effects

Embedded insurance can generate powerful network effects.

More transactions produce:

more data → better underwriting → better pricing → more customers → more transactions.

This can produce a reinforcing cycle.

If the platform's insurance product benefits from transaction data unavailable to rivals, the cycle may become difficult for competitors to replicate.

16. The “Gatekeeper” Problem

The central structural problem can be illustrated as:

Consumer transaction

↓

Platform controls interface

↓

Platform controls data

↓

Platform controls insurance presentation

↓

Platform owns/partners with insurer

↓

Rival insurers become dependent

This makes the platform simultaneously:

transaction intermediary;

data controller;

insurance distributor;

potential insurance competitor.

The combination creates an inherent conflict of interest.

17. Regulatory and Competition-Law Questions

Authorities should ask:

Market definition

What is the relevant market?

Platform power

How important is the underlying transaction platform?

Alternatives

Can insurers realistically reach customers elsewhere?

Data

Does the platform possess competitively significant information?

Ranking

Does the platform favour its own insurance product?

Interoperability

Can competitors technically integrate?

Exclusivity

Are rival insurers contractually excluded?

Switching

Can customers easily change insurers?

Effects

Are competitors actually foreclosed?

Justification

Are restrictions genuinely necessary for security, consumer protection, or regulatory compliance?

18. Appropriate Remedies

Potential remedies include:

prohibition of discriminatory access;

mandatory interoperability;

API access requirements;

data-portability obligations;

restrictions on self-preferencing;

transparency of ranking;

limits on exclusivity;

separation of platform and insurer functions;

non-discrimination obligations;

monitoring of algorithmic recommendations.

However, remedies must be proportionate.

Forcing complete openness may create:

cybersecurity risks;

privacy risks;

fraud risks;

operational instability.

The objective should therefore be competitive neutrality without undermining legitimate insurance regulation.

19. Six Major Principles from the Case Law

The case law supports six particularly important principles.

1. Infrastructure control matters

Commercial Solvents and Slovak Telekom demonstrate that control over economically significant infrastructure can generate foreclosure concerns.

2. Indispensability must be established carefully

Bronner prevents every commercially desirable platform from automatically becoming an essential facility.

3. Technological interoperability can be competition-relevant

Microsoft demonstrates the importance of access to technological interfaces.

4. Interface design can influence competition

Google Shopping illustrates how control over visibility and ranking can affect competitive opportunities.

5. Discrimination must be assessed through competitive effects

MEO demonstrates the importance of determining whether differential treatment actually disadvantages competitors.

6. Market power must be evaluated in economic context

United Brands provides the broader framework for understanding dominance and the economic relationship between undertakings.

20. Conclusion

Embedded insurance ecosystems transform insurance from a standalone financial product into an integrated component of a broader transaction platform.

This creates substantial efficiencies:

simpler purchasing;

lower distribution costs;

automatic coverage;

better risk assessment;

personalised insurance;

faster claims processing.

But the same integration can create transaction-level dependency.

When one undertaking controls the transaction interface, customer relationship, data, APIs, payment infrastructure, and insurance distribution, it may acquire significant power over competing insurers.

The most important competition concerns are therefore:

self-preferencing + data advantage + interoperability restrictions + exclusivity + tying + ranking discrimination + switching costs.

The key legal insight from United Brands, Commercial Solvents, Bronner, IMS Health, Microsoft, Google Shopping, Slovak Telekom, and MEO is that competition law must look beyond formal contractual access and examine whether the architecture of the transaction gives one undertaking the practical ability to control competitive opportunities.

Ultimately, embedded insurance should not be evaluated merely as an innovative distribution model. It should also be examined as a potential digital infrastructure ecosystem in which control over each individual transaction can translate into substantial market power over the insurance market itself.