Ian-Edward Stafrace, chief strategy officer at Atlas Insurance PCC, explains how risk managers can evolve into customer champions by unlocking revenue through captive cells while meeting regulatory requirements.

As regulators tighten requirements around customer fair value, Europe’s embedded-insurance market is projected to expand at a rapid 30–35 percent compound annual growth rate over the next five years. These two trends are converging into a unique opportunity for risk managers to drive both personal and corporate growth.

Today’s risk leaders are increasingly expected not just to protect the balance sheet, but to support the top line — all while meeting regulatory expectations, embracing digital agility, and focusing on customer centricity.

Captives, especially when structured as protected cells, are uniquely positioned to meet this moment. Risk managers can now take ownership of part of the profit and loss (P&L), increasing their strategic value.

Seamless, strategic, sticky

Embedded and affinity insurance are changing the way cover is delivered and experienced. This shift from “push” to “pull” is about more than just convenience — it is about relevance, timing, and trust. Embedded-insurance refers to cover offered within another non-insurance transaction. The product sits in the checkout flow, powered by application programming interface (API), so the buyer never leaves the flow. Customers purchase because the cover is instant, tailored, and in context.

Affinity insurance involves offering cover to a group’s defined community — usually its members, customers, or employees — under the trusted brand of that organisation. Most groups still act as distributors for third-party insurers, earning commissions but giving up control over pricing, claims, and, critically, customer perception.

A captive or cell with European Economic Area (EEA) passporting rights — and potentially UK branch access — can flip that model by retaining underwriting margins within the group. They gain full access to performance data and can align the cover with their brand’s tone, values, and service standards. The result is insurance that feels relevant, timely, and helpful — not intrusive. That is the “sticky” value that marketers prize: protection that feels like a natural extension of the product, enhancing loyalty while meeting compliance expectations.

The affinity playbook: from insight to income

Turning a captive into a customer-facing value engine starts with a mindset shift and a pragmatic roadmap. It begins with spotting the opportunity already present in most organisations — rich behavioural and transactional data. Friction points can highlight unmet insurance needs. For example, customers may benefit from cancellation cover, device protection, or extended warranties. Identifying where peace of mind would be welcome, and priced fairly, enables affinity leaders to use first-party data for tailored offers, significantly boosting take-up rates compared to generic campaigns.

Next comes piloting a product within your existing captive or protected cell. If the vehicle is based in the EU, you can avoid the expense and dependence on fronting insurers. If your captive sits outside the EU, you might consider partnering with an EU-based protected cell company (PCC) with an active core to incubate the business — allowing time to assess whether setting up a cell that reinsures back to the main captive is the right move.

The third step is embedding, rather than upselling. The goal is not to add another tick box at the end of the transaction, but to integrate the insurance into the heart of the customer journey. When insurance is offered as part of the core value proposition, not as an afterthought, it drives higher attachment rates than post-purchase emails. If done transparently and fairly, it boosts uptake without undermining trust.

Measuring fair value should begin early. Tracking key regulatory metrics — such as claims ratios, settlement times, complaint volumes, and customer feedback — is not mere compliance. These insights help refine pricing, improve the user journey, enhance net promoter scores (NPS), and provide tangible evidence of alignment with the Consumer Duty, introduced by the UK Financial Conduct Authority (FCA), and European Insurance and Occupational Pensions Authority (EIOPA) expectations.

Finally, if the product performs, the organisation can scale the offer or expand its distribution. Alternatively, it might be spun off into a standalone insurer when scale, investment, and governance requirements justify the move. Malta’s regulations now support a seamless transition from a cell to a full licence, though many opt to remain within the PCC framework to benefit from shared infrastructure and governance.

Fair value as a strategic lever

What was once viewed as a compliance hurdle is now becoming a measure of operational quality and brand credibility. Both the FCA and EIOPA have increased scrutiny around Consumer Duty and customer value.

They are asking hard questions: Are insurance products priced fairly? Do customers understand them? Are outcomes monitored and improved? Consumer Duty calls for a transparent and balanced pricing-to-benefits relationship, review of distribution costs, and continuous assessment of whether customers are truly receiving value.

EIOPA has likewise warned against low claims ratios, high commissions, and poorly designed products, which can damage the reputations of brands distributing them. With captive or cell ownership, organisations can align all critical elements — pricing, commissions, claims management, disclosures, and customer feedback — under one structure. Controlling both the underwriting and the customer experience removes the need to rely on third-party reports or service standards, and it reduces dependency on commission revenue. Risk managers and chief finance officers are now better placed than ever to show not only that their insurance offer is compliant, but that it strengthens customer engagement.

From commission to control

Many businesses already participate in embedded-insurance by reselling third-party policies and collecting a share of the premium. But regulators are becoming increasingly wary of commission models, particularly where there is limited connection between customer payments and delivered value. Owning the risk, through a captive or protected cell, changes the dynamic.

It allows organisations to retain underwriting profits rather than depending on commissions, control the end-to-end customer journey including product design and claims service, and align the insurance offer with the brand’s own values and service standards. It also grants access to data — including claims trends and behavioural insights — that third-party insurers are often reluctant to share. By underwriting and distributing the cover in-house, the organisation reduces the risk of misalignment with customer outcomes and gains more scope to optimise delivery and value.

Crucially, this shift does not require building an insurer from the ground up. Using a PCC model, especially one with direct access to the EEA and UK markets like Atlas Insurance PCC, allows organisations to take gradual, low-risk steps toward embedding insurance in their core offer — testing and refining along the way.

PCCs: the fast lane to embedded innovation

Although the UK government is progressing with plans to establish a dedicated regulatory framework for captives, such changes take time and are unlikely to offer rights to write admitted EEA risks or to support substantial third-party business in the short term. Organisations already have a practical alternative by setting up a cell within a Malta-based PCC that also operates a UK branch. This enables writing risks directly in both the UK and EEA, while benefitting from the shared licence, governance, and infrastructure of the host.

Each cell has ring-fenced assets and liabilities, ensuring protection from other cells and the core. At the same time, they share the regulatory permissions, oversight, and operational efficiency of the umbrella entity. This structure allows companies to launch insurance offerings with speed and control, without taking on the full burden of compliance, staffing, and capital.

It is already used by insurtechs trialling digital-native products, by consumer brands embedding protection into retail journeys, and by financial platforms offering credit or payment protection alongside their main services. With the right host, organisations can move quickly and iterate, drawing on shared expertise in actuarial modelling, governance, and regulatory reporting to meet both UK Consumer Duty and EU fair value requirements.

Rethinking the captive’s role

Embedded-insurance is accelerating just as regulators are demanding clearer evidence of value. Rather than a conflict, this presents a unique opportunity for captive managers and risk leaders.

A captive cell with EEA passporting — and ideally a UK branch — empowers risk teams to shift from a defensive role to a proactive growth strategy. By owning underwriting margins and using data to improve customer experience, they can ensure compliance and contribute meaningfully to business development.

This is the time for risk managers to step out from behind the scenes and take the lead in driving embedded innovation. With the right partner, structure, and mindset, captives can become engines of revenue, trust, and brand growth.