EMBEDDED INSURANCE. WHAT IS IT?
There is nothing new about the concept of embedding a feature, benefit, or product into the sale/purchase of another product or service. One of the simplest examples is earning “points” through your credit card, as a purchasing tool. The ‘point’ structure and system is a membership plan that you can access by being a cardholder. It is an embedded benefit. Insurance is also a category that is benefitting from a more streamlined digital transaction process. 
You might already know of embedded insurance with regards to your cell phone insurance plan. You didn’t have to shop around to get the best policy, it was just added to your bill with a simple opt-in subscription service. Many in business and the insurance industry define embedded insurance models, the future of the industry. (Referencing FinTech’s article positioning Embedded Insurance as a potential three trillion dollar industry)
Generally speaking, there are two different embedded insurance models to acknowledge:
- Non-Optional: Insurance that is included as a valuable part of a larger product or service. Think about purchase protection from your credit card company.
- Opt-In Optional: Insurance that is offered during the transaction phase of your purchased product or service. Think trip insurance or flight insurance.
The current hurdles keeping embedded insurance out of mainstream larger asset purchases are due to technological limitations.
Most insurance products ask for a bun of information from the insured party, which requires manual entry/processing. It isn’t as simple as waving your phone over the checkout processor. However, with the rapid advancement of digital signature technologies, APIs, and shared data sources, it is now more possible to automate the more significant parts of the underwriting process. This process is usually the one that causes the most friction, and with prefilled data and automation, we can begin to provide results that provide opportunities that consumers haven’t imagined yet.
- Some Companies are implementing it NOW, like Tesla offering or including insurance as part of your new vehicle purchase. Another point of difference modern event venues are offering is event insurance, and living in a post-Covid world, we can all see the benefit of having that coverage.
An unintended consequence of embedded insurance is the progressive closure of the protection gap. (The lack of access to insurance in a timely manner, and resulting expense of covering the uninsured)
Ultimately, embedding insurance not only makes being covered quick and easy it also makes it more affordable as a result.
Are you ready for insurance to be an opt-in click away?
