Some markets carve out exemptions for platforms that sell insurance alongside their core product; others license every seller. Where the lines actually sit in the EU, the UK and Saudi Arabia.
The direct answer first: in most regulated markets, selling insurance is a licensed activity, and a platform that offers policies at checkout is distributing insurance — the fact that insurance is not its core business does not change that. What varies by jurisdiction is the escape routes: narrow exemptions for genuinely ancillary sales, structures that let an unlicensed firm sell under a licensed firm's responsibility, and infrastructure models where the licence sits in the stack rather than with the platform.
Getting this wrong is not a paperwork problem. Unlicensed distribution can void commissions, expose the platform to enforcement, and in some markets invalidate the customer's cover. So the useful question is not whether you can avoid regulation — you mostly cannot — but which lawful route fits your model.
Route one: the genuine exemption (EU)
The EU's Insurance Distribution Directive contains the best-known carve-out. Under Article 1(3), an ancillary insurance intermediary — a business whose principal activity is not insurance — can distribute without registration when all conditions hold:
- The insurance is complementary to the good or service the business supplies, covering breakdown, loss of or damage to the goods, non-use of the service, or damage to or loss of baggage and other risks linked to travel booked with that provider.
- The premium does not exceed EUR 600 a year on a pro rata basis — or EUR 200 per person where the insurance complements a service lasting three months or less.
Notice how narrow that is. It covers the electronics retailer selling device protection and the airline selling baggage cover. It does not cover motor, health, life, liability, or anything priced above pocket-money premiums. EIOPA's guidance adds that even exempted sales still carry duties: the insurer working through an exempt seller must ensure the customer's demands and needs are considered and basic product information is provided. Exemption from registration is not exemption from conduct.
Route two: borrowed permission (UK)
The UK takes a different approach: rather than exempting small sales, it lets an unlicensed firm act as an appointed representative of a licensed principal. The principal — an authorised insurer or intermediary — takes regulatory responsibility for the representative's distribution activity, trains and monitors it, and answers to the FCA for its conduct. The scope of what an appointed representative may do in insurance distribution is set out in the FCA's perimeter guidance.
This is the legal chassis under a large share of UK retail embedded insurance: the retailer or platform sells, the principal firm carries the regulatory weight. The trade-off is real oversight — principals are accountable for their representatives, and the regime has been tightening after years of supervisory concern about weak monitoring.
Route three: the licence lives in the infrastructure
The third route is the one most relevant to platforms in markets without an ancillary exemption: partner with an entity that already holds the distribution permissions, and design the journey so the regulated activity happens on the licensed side of the line. The platform surfaces the offer inside its product; quoting, policy issuance, disclosure and the regulated intermediation run through the licensed layer.
This is the model Saudi Arabia effectively requires. There is no general ancillary exemption in the Saudi framework: insurance intermediation is a licensed activity supervised by the Insurance Authority, and the practical route for a marketplace, bank or HR platform is to integrate with a licensed party rather than seek its own licence. It is the reason Yasmina holds IA approval as an embedded insurance platform — the approval covers the distribution layer, so partner platforms integrate one API instead of entering a licensing process.
How to work out your own position
- Name the activity precisely. Presenting a quote, recommending a product, concluding a contract, collecting premium — regulators define distribution by activities, and a referral link is treated differently from a full checkout.
- Map it to your market's perimeter. Does an ancillary exemption exist, and do you fit inside its product and premium limits — completely, not approximately?
- If no exemption fits, choose your licence source: your own authorisation, a principal relationship, or a licensed infrastructure partner.
- Check the surviving duties. Exempt or not, disclosure, demands-and-needs and complaint routes usually still apply to the sale.
- Document who does what. In every lawful structure, a regulator should be able to see which entity performed each regulated step.
Red flags that a structure will not survive scrutiny
- The platform quotes, binds and collects premium, and the licensed party appears only on the paperwork.
- Compensation is structured to disguise commission as marketing fees to avoid triggering intermediation rules.
- A single-market exemption is stretched across borders — an EU ancillary carve-out has no force in Riyadh.
- Nobody can say who handles a mis-selling complaint.
Jurisdictions differ more on this topic than almost any other in insurance, and rules move. This guide states the position in the frameworks cited below; it is general information, not legal advice on your structure.
Last reviewed: June 2026.