What Is Embedded Insurance? (Plus: How It Works)

Embedded insurance is a huge revenue growth opportunity - but for businesses outside the insurance industry, it’s not always clear what embedded insurance actually means. We’ll go over what embedded insurance is, how it works, and why it matters for your business. 

Embedded Insurance Definition

“Embedded insurance” gets its name from being embedded into an existing purchasing experience, allowing customers to buy insurance digitally without requiring them to go elsewhere to complete the transaction. 

This is part of a growing trend of “embedded finance,” wherein customers are able to buy, sell, access credit, and interact with their bank through the platforms of non-financial companies. If you’ve ever ordered something from an app and paid for it without leaving the app experience, you’ve used embedded finance.

How Does Embedded Insurance Work?

Embedded insurance has a similar function and addresses many of the inconveniences that a consumer might face in a more traditional insurance-buying process. Typically, buying traditional insurance includes numerous disjointed, repetitive steps, such as navigating multiple websites, submitting documents multiple times, and even offline components, like calling an agent or faxing in forms. 

In contrast, embedded insurance is available to buy when and where the customer needs it - usually when they’re making a related purchase. Rather than having to bounce between separate providers or experiences, embedded insurance allows customers to easily provide their information, get a quote, and receive their policy right from the website or app of the business they’re already transacting with. This ultimately makes the insurance purchase easier for both the business and the customer.