Embedded insurance is currently the #1 priority on most insurers’ strategy agenda. With Root being a leader in embedded insurance, people often ask me, "What do you mean by embedded insurance?"

At Root, we work with insurance carriers and big brands to connect them and help get their insurance products to market quickly. We focus on digital, embedded, and personalised products and constantly work with different types of embedded insurance.

In simple terms, embedded insurance refers to insurance products that are bundled into non-insurance services or platforms (brands), making it easier for customers to obtain context-relevant coverage. We often interchangeably refer to embedded insurance as affinity-based distribution, partner-based distribution, or even simply white-label insurance.

To make it easier to reason about use cases, I’ve started simplifying it for myself into the following four categories of embedded insurance:

Type 1: Intrinsic insurance

Intrinsic insurance forms an integral part of a product or service, such as the warranty that comes with a new appliance or the liability insurance that comes with renting a car. In simple terms, this insurance is always included and can’t be turned off. In recent years, we have started seeing totally new products in this category, such as cover that pays out if your food delivery arrives late.

Type 2: Opt-out bundled insurance

This type of insurance is packaged into the onboarding sales journey of another product or service, but it's included by default. Customers need to deselect or opt-out if they don't want it as part of the offering. This insurance is often seen coupled into the onboarding journey of credit and loan applications.

Type 3: Opt-in bundled insurance

Similar to the previous type, this is when insurance is bundled into another product offering, but it's off by default. Customers are asked to opt-in if they want the cover. A common example of this is travel insurance offered by airlines where a checkbox can be ticked during checkout.

Type 4: Billboard insurance

This type of insurance is when a brand simply advertises the insurance inside their app or on their website, but does not couple it to an event or activity the customer is going through. A common example of this is when a banking app has a “marketplace”, and amongst items like cellular airtime or travel discounts, you find some insurance offerings. From a sales conversion point of view, this is the least effective method, but in most cases is the fastest way to get to market.

Stacking them up

Customer uptake and conversion reduces materially from Type 1 through Type 4, however, we found implementing the right user experience also plays a significant role in the uptake of policies. For example, a simple check-box during checkout has a much higher conversion rate than a banner ad that segues out to a separate tab in the browser for the user to complete. Intrinsic insurance, on the other hand, has a 100% uptake.

If you're looking to make insurance part of your current product offering or taking your insurance products digital and embedding them into partners' product offerings, please reach out to us!