By discovermarket  |  Updated 6 August 2026  |  9-minute read

What Is Embedded Insurance and How Does It Work?

Embedded insurance is insurance integrated into the purchase or use of another product or service. It allows customers to obtain relevant protection within a checkout, booking, subscription or digital platform instead of starting a separate insurance journey. The insurance is still provided by an insurer; what changes is where and how the customer accesses it.

A familiar example is travel insurance offered while booking a flight. Other examples include device protection at checkout, cancellation cover added to an event ticket, insurance connected to a loan, or protection activated for a specific trip or delivery. In each case, the insurance appears in the context of the risk it is intended to cover.

Embedded insurance is therefore primarily a distribution model, not a separate type of insurance. Travel, device, accident, income and other forms of coverage can all be distributed this way. Swiss Re describes embedded insurance as the real-time bundling and sale of insurance as part of another product or service, bringing protection to the customer at the point of sale. Swiss Re Institute: Going digital, embedded insurance

Why product relevance matters

Placing an insurance offer within a customer journey does not automatically make it useful. The coverage needs to address a risk the customer recognizes at that moment. If the risk feels remote or the value of the protection is unclear, even a simple purchase process may generate little demand.

A strong embedded proposition begins with the customer’s situation: what could go wrong, what financial effect it could have and whether the insurance provides a clear and relevant response. This connection between the underlying activity and the protection is what distinguishes a meaningful embedded offer from an unrelated add-on.

How does embedded insurance work?

An embedded insurance program connects a business’s customer journey with an insurer and the systems required to quote, issue and manage a policy. Although the exact arrangement varies by product and market, most programs follow six stages.

1. Identify the customer need

The process starts by finding a point in the customer journey where protection would be relevant. This might be when someone books a trip, buys a device, takes out a loan, purchases an event ticket or starts a delivery. The aim is to offer insurance when the related risk is clear, rather than expecting the customer to search for coverage separately.

2. Design and configure the product

The insurer defines the coverage, eligibility rules, pricing, limits, exclusions and claims conditions. The product can then be configured for the business offering it, including changes for a particular customer segment, brand, market, currency or distribution channel. Product design matters because a convenient journey cannot compensate for coverage that is unsuitable, difficult to understand or poorly priced.

3. Integrate it into the customer journey

The insurance is integrated into the relevant customer journey. In a digital setting, the business may connect it to a website, app or platform through an application programming interface (API), software development kit (SDK), widget or white-labeled microsite. The right method depends on the systems involved and the desired experience. European insurance supervisor EIOPA identifies APIs as an important part of automated insurance distribution through financial and non-financial platforms. EIOPA: Digitalisation in insurance

Connecting the systems can be one of the hardest parts of building a good embedded insurance program. Insurance systems support underwriting, policy administration, compliance and claims, while retail systems focus on products, payments and fulfillment. They must exchange accurate information while maintaining a consistent customer experience from the offer through servicing and claims.

Embedded insurance does not have to be entirely digital. It can form part of an assisted or manual process. At a physical checkout, for example, a staff member might ask whether the customer wants to add protection and arrange it through the retailer’s sales process. Its placement within the related customer journey, not a particular technology, is what makes the insurance embedded.

4. Generate the offer

When the customer reaches the relevant point, the platform sends the information needed to determine eligibility and pricing. A travel insurance quote might use the destination, travel dates and booking value, while device protection might use the type and purchase price of the device. Where regulations and customer consent allow, information from the main transaction can be reused so the customer does not have to enter the same details twice.

5. Issue the policy

Before accepting, the customer should receive clear information about the coverage, price, exclusions and applicable terms. If the offer is accepted, the insurer confirms the coverage and issues the policy. The premium may be collected separately or as part of the main transaction, and the policy documents can be delivered by email, through the business’s app or within the customer’s account.

6. Service the policy and manage claims

The journey continues after the sale. Customers may need to view their coverage, update information, cancel or renew the policy, or submit a claim. Digital workflows can connect the customer, business, insurer and service providers, while the insurer or appointed claims administrator assesses claims according to the policy terms. The offer at checkout may be the most visible part of embedded insurance, but servicing, communication, claims and reporting determine whether the program works across the full policy lifecycle.

What does this look like in practice?

Consider a customer booking a flight through a travel platform. After the customer selects a destination, travel dates and flight, the platform uses the relevant booking information to request an insurance quote. An optional offer appears before payment, allowing the customer to review the coverage, price and key exclusions without leaving the booking journey. If the customer accepts, the policy is issued, the premium is collected and the documents are delivered digitally.

If a covered event later occurs, the customer follows the available claims journey to submit the required information. The insurer then assesses the claim and communicates the outcome. To the customer, the experience can feel like one connected journey, even though several organizations and systems are working together behind the scenes.

Who is involved?

An embedded insurance program usually brings together a distribution partner, an insurer and a technology provider. The distribution partner, such as a bank, retailer, marketplace, telco, mobility platform or software provider, owns the primary customer relationship and provides the channel in which the insurance appears. The insurer underwrites the policy, carries the insurance risk, sets the policy conditions and pays valid claims.

The technology provider connects the customer-facing business with the insurer and other participants. Its systems may support product configuration, quoting, policy issuance, premium collection, policy administration, claims workflows and reporting. Brokers or other authorized insurance intermediaries may also help design the program, secure insurance capacity and meet distribution requirements. The responsibilities of each participant depend on the product, market and regulatory arrangement, and should be agreed before launch.

What forms can embedded insurance take?

The most familiar model is an optional add-on, such as cancellation protection offered while buying a ticket. Insurance can also be included within another product, account or subscription, with its cost incorporated into the overall price. Premium payment cards and subscription plans sometimes use this bundled approach.

Other programs provide usage-based or on-demand coverage that is activated for a particular trip, delivery, rental period or work assignment. Parametric insurance can also be embedded. For example, weather protection linked to an agricultural loan may pay a predefined amount when an agreed rainfall threshold is reached. In that case, “parametric” describes how the policy responds to an event, while “embedded” describes how the policy is distributed.

How is it different from traditional insurance distribution?

In traditional distribution, insurance is usually the main product the customer is seeking. The journey often begins with an insurer, agent, broker or comparison platform and requires a separate application. In an embedded model, insurance supports another purchase or activity and appears through the business that already serves the customer. Relevant information from the main transaction may be used to make the process shorter and more contextual.

This does not remove the need for underwriting, informed consent, suitable product design, clear information or regulatory compliance. Embedded insurance changes the distribution experience, not the fundamental responsibilities associated with insurance.

What are the potential benefits?

For customers, embedded insurance can make relevant protection easier to find and purchase, with fewer forms and no need to move to an unfamiliar channel. Distribution partners can add protection to their existing products, provide additional customer value and develop a new source of revenue. Insurers can reach new customer segments through partners that already have an established relationship and relevant transaction context.

These benefits are not automatic. A successful program needs a genuine customer need, clear and balanced communication, and well-defined responsibilities across the entire insurance lifecycle. Businesses and insurers also need to monitor take-up, cancellations, claims, complaints and other performance indicators so they can improve the product and journey over time.

What risks should businesses consider?

Convenience should not come at the expense of customer understanding. A poorly designed journey can lead customers to buy coverage they do not need, duplicate insurance they already have, misunderstand important exclusions or struggle to identify who is responsible for support and claims. The Netherlands Authority for the Financial Markets notes that embedded insurance can offer convenience but may also create risks of overinsurance, underinsurance and unsuitable choices. It recommends careful product design, clear information and appropriate distribution arrangements. AFM: Safeguarding customer interests in embedded insurance

Licensing, distribution, product governance, data protection and disclosure requirements vary by jurisdiction. Any business considering embedded insurance should establish the responsibilities that apply to its product and market before launch.

Frequently asked questions

Is embedded insurance a type of insurance?

No. It is primarily a way of distributing insurance. Many types of coverage, including travel, device, accident and income protection, can be offered through an embedded model.

Who underwrites embedded insurance?

A licensed insurer normally underwrites the policy, carries the insurance risk and pays valid claims. Other participants may provide the customer channel, technology or authorized distribution services.

Is embedded insurance always optional?

No. It may be an optional add-on, included within another product or activated for a particular activity. The structure, disclosure and consent requirements depend on the product and applicable regulations.

Does embedded insurance require an API?

Not always. A program may use APIs, SDKs, widgets or white-labeled microsites. APIs are commonly used when real-time systems need to exchange information for eligibility, quoting, policy issuance or status updates.

How are claims handled?

Claims are assessed according to the policy terms and the insurer’s processes. Customers may be able to submit and track a claim through the platform where they obtained the coverage, while the insurer or appointed claims administrator remains responsible for the assessment.

About discovermarket

discovermarket provides technology infrastructure that connects businesses, insurers and other insurance ecosystem participants. Its modular, API-driven platform supports product configuration, digital distribution, policy administration, claims workflows and reporting across different products and markets.

discovermarket is a technology provider and does not underwrite or sell insurance. Insurance products are underwritten and distributed by the insurers and authorized intermediaries responsible for each program.

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