August ITL Focus: Embedded Insurance

ITL FOCUS is a monthly initiative featuring topics related to innovation in risk management and insurance.

This month's focus is Embedded Insurance

embedded insurance


In "Billion Dollar Lessons," a book that Chunka Mui and I published in 2008 on the lessons to be learned from 2,500 corporate bankruptcies and major writedowns, we found that companies often kidded themselves about the benefits that would come from synergy. We argued that the only real synergy was, "Do you want fries with that?"

Embedded insurance basically asks a customer, "Do you want some insurance with that?", so I've warmed to the concept over the years. 

The benefits seem clear: Embedding insurance could allow for much lower distribution costs, letting insurers lower premiums, attract more customers and narrow the protection gap -- while giving insurers a massive new customer base.

So far, not much has happened. There is travel insurance and warranties, and bancassurance is popular in some parts of the world, but that's about it. 

I've begun to see naysayers argue that embedding insurance is really just a way of nagging people to buy products such as overpriced warranties. Some even contend embedded insurance is bad for insurers. The insurance has to be so simple, the argument goes, that it will be a commodity, and all the leverage in the relationship will go to the company selling the product or service that the insurance is embedded into. If an insurer balks, that company can just swap it out and swap in insurance from someone else.

The best thinking I've seen on how to get past the insurance-as-commodity problem and to jump start the embedded insurance idea comes from Chris Bassett, a senior director at Capgemini, who has written for ITL about the need to design insurance products and services from the ground up for embedded opportunities, rather than just shoehorn existing ones into a sales process at the point of purchase. 

In this month's interview, he lays out some intriguing ideas about how insurers can build long-term relationships based on the data that embedded insurance can generate and move past today's emphasis on quick, one-off sales.

The interview is well worth a read.


For this month’s interview, ITL Editor-in-Chief Paul Carroll talked with Chris Bassett, a senior director at Capgemini focused on strategy and innovation. Bassett has written for ITL about what he sees as a key distinction that many are missing. Most efforts on embedded insurance, he says, have focused on the point of sale – companies take existing insurance products and try to fit them into a retailer’s process right as a purchase is completed. Instead, Chris argues, insurers should think in terms of the “point of design.” In other words, they should start with a clean sheet of paper and design products and services that complement the products they are embedding into. He explains at length in the interview. 

Read the Full Interview

"The challenge is: How can we make insurance a natural part of an overall transaction? We shouldn’t just say there’s a pull at the point of sale that we can capitalize on. Embedded insurance shouldn’t just be a bolt-on. The idea behind the “point of design” approach is to find a way to weave the insurance into a purchase and make a meaningful connection. 

— Chris Bassett
Read the Full Interview



A New Approach to Embedded Insurance

The real opportunity requires introducing insurance at the point-of-design, rather than making it a bolt-on at the point-of-sale.

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Time to Raise Your Embedded Insurance Game

Executives are practically salivating when considering their share of the $70 billion U.S. embedded insurance opportunity.

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9 Keys for Embedded Insurance

Embedded insurance, partner distribution or B2B2C distribution can be highly effective. But it's not easy to get right.

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Embedded Insurance and the Gig Economy

Carriers can bundle products, enable direct mobile sales channel distribution and offer relevant, affordable and flexible coverage to the underserved market of gig workers.

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The Recipe for Embedded Insurance

With embedded distribution, the insurer recognizes that insurance is just one task in the customer’s "job" and makes the buying process easy.

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Is Embedded Insurance the Wrong Idea?

If we aren't careful, embedded insurance could wind up just being a way to pester customers to buy insurance they don't need.

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Insurance Thought Leadership

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Insurance Thought Leadership

Insurance Thought Leadership (ITL) delivers engaging, informative articles from our global network of thought leaders and decision makers. Their insights are transforming the insurance and risk management marketplace through knowledge sharing, big ideas on a wide variety of topics, and lessons learned through real-life applications of innovative technology.

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