Embedded insurance is a type of insurance that is included as a part of another product or service. It has traditionally been used in industries where the product or service being sold is associated with a certain level of risk. More common examples would be would be the warranty-style program in telecommunications and onsumer electronics along with travel insurance sold alongside or within travel packages.
However, in recent years, there has been an increase in the use of embedded insurance in novel and innovative ways. Here are 4 examples of how embedded insurance is being used in new and creative ways:
- Wearable technology. Some companies that make wearable technology, such as fitness trackers and smartwatches, are starting to include embedded insurance as part of their products. For example, a company may offer embedded insurance that provides coverage for medical expenses if the user experiences a certain level of physical activity, such as running a certain distance or reaching a certain number of steps per day.
- On-demand services. Some on-demand service companies, such as ride-sharing and food delivery services, are starting to offer embedded insurance as part of their service packages. For example, a ride-sharing company may offer embedded insurance that provides coverage for passengers and drivers in the event of an accident.
- Online marketplaces. Some online marketplaces, such as e-commerce sites and peer-to-peer platforms, are starting to offer embedded insurance as part of their services. For example, an e-commerce site may offer embedded insurance that provides coverage for lost or damaged items during shipping.
- Home automation. Some companies that make home automation products, such as smart thermostats and security systems, are starting to include embedded insurance as part of their products. For example, a company may offer embedded insurance that provides coverage for damages caused by faulty home automation products, or for losses due to burglaries detected by a home security system.
Embedded insurance will continue to evolve and integrated in a variety of novel and innovative ways. It is no longer limited to traditional industries, and is being integrated into a wide range of products and services to provide added convenience and financial protection for customers.
When done right it provides protection without the friction traditionally associated with insurance. Distribution partners with data, including financial institutions, reward programs, retailers, and large consumer brands will have a plethora of opportunities to help their customers get the protectoin they need and in many cases are already purchasing - it's just a question of where and from who.