What’s the deal with embedded insurance?

Consumption is rising steadily, boosted by online marketplaces and online stores that allow consumers to get the products they want in an instant, with the mere click of a button. And the more stuff people have, the more stuff people want to protect. But how should they do it?

Traditional insurance policies aren’t built with consumers in mind — they’re basically one-size-fits-all and there’s a considerable amount of work (i.e. bureaucracy) involved in getting one. Insurance and tech companies have turned to embedded systems to switch things up. And that’s where embedded insurance comes into play.

With embedded insurance, consumers can get the perfect insurance for the product they’re buying as they’re buying it. It’s advantageous for everyone involved: the consumer, the insurance company and the retailer all get something out of embedded insurance.

We wouldn’t blame you for getting excited about the opportunities embedded insurance can bring. We’re pretty excited too! Embedded insurance is the talk of the town right now, in e-commerce and beyond.

Now let’s get to the bottom of why.

What is an embedded system?

Simply put, an embedded system is an additional system that is embedded in another initial system.

For the most part, embedded systems aren’t visible to the users of the initial system. Most users don’t even notice that the embedded system is there since they’re operating in the background doing things like data processing, system monitoring, or signal transmission.

In e-commerce, embedded systems are more visible though. Customers typically interact with them as they function as an important complement to the online store. Some examples of well-known ones are online payment services like PayPal or Klarna.

Sometimes entire e-commerce stores are nothing more than an embedded system. Many web agencies and their customers integrate existing store systems instead of programming the entire store ad hoc.

What is embedded insurance?

What is embedded insurance?
Warranty extension with one click

Embedded insurance follows the same logic, albeit with a different purpose. Embedded insurance is an insurance offering that complements the purchasing process.

It’s not a new phenomenon reserved for the digital sector. You may have even come across it yourself the last time you bought a car. Salespeople often offer additional products or services, including insurance offers, as add-ons to the car sale.

In simple terms, with embedded insurance, the retailer can offer insurance (like a warranty extension) directly to their customers at the point of sale through providers like Hakuna. The best part? The policy can be tailored to the product and the individual needs of the customer.

Embedded insurance is a B2B2C business model: the insurance from insurance companies is sold to consumers via retailers, either directly or indirectly (with an embedded insurance provider like Hakuna).

How do I sell embedded insurance?

Numerous e-commerce retailers have acquired a taste for embedded insurance, especially since technological advances make it easier than ever to provide your customers with this added value.

With Hakuna, it’s even easier: Retailers don’t need to be in direct contact with insurance companies to organize custom policies for all of the products they sell. Hakuna does all that for you, creating relevant and affordable policies for you to offer to your customers. One click is all it takes for customers to get the best insurance for their purchase.

Why embedded insurance?

The dealer, the buyer and the insurer benefit with Embedded Insurance
Everyone benefits: Retailers, their customers, and insurers

Embedded insurance is a win-win-win situation for insurance companies, retailers, and their customers, and Hakuna makes the whole process easier for everyone involved.

  • Retailers: You profit from the image enhancement that comes from embedded insurance, since it’s a trust signal that builds customer confidence in you and your products. So incorporate embedded insurance into your upselling strategy. Your conversion rate will thank you.
  • Customers: Customers get instant peace of mind. They get the protection they need right when they buy the product they want to protect. With no additional registration, no hold periods, and no red tape.
  • Insurance companies: Embedded insurance unlocks a new sales channel for insurance companies. Plus, customer acquisition costs are reduced to next to nothing, and the simplified process means more policies are taken out.

What are the different types of embedded insurance?

Linked embedding

Linked embedding (what we help you do at Hakuna) is when you use your sales platform as a direct sales channel for insurance. This means that the end customer is offered insurance (or a warranty extension) as an additional product during the sales process. Your customers perceive the insurance as added value (value- added service ) that is directly related to their purchase.

Related embedding

Related embedding occurs when the insurance offer is placed separate from the core sales process, usually in blogs or other articles.

For example, car dealers could publish a blog article titled “Why do I need liability insurance?” and add a direct link to purchase liability insurance somewhere in the body of the article. This allows you to offer a longer customer lifetime value (CLV) without having to offer insurance products prominently in the form of banner ads on your site.

Bundled embedding

Bundled embedding is pretty common in tourism. If we book a room in a hotel, for example, cancellation insurance is usually included in the price. Retailers – in this case, hoteliers – and the insurance company share their customers without giving them a choice in the matter. If the hotelier sells their product, the insurance company automatically sells theirs as well.

Here, relevance is key. The customer must see insurance as an indispensable part of the overall product.

Bundled embedding is also used in the automotive industry, as car dealers offer financing, servicing, and insurance in a single package.


Embedded insurance makes the hearts of tech companies, insurance companies and investors beat a little faster. The bottom line is that it’s a business that can be sold as a sustainable and powerful upselling strategy at the same time.

Thanks to providers like Hakuna, retailers can offer their customers immediate added value, consumers can buy products with confidence, and insurance companies can sell insurance products without active customer acquisition.

Want to take advantage of this win-win-win situation? Get in touch with us to talk about your options.

Leave a Reply

Your email address will not be published. Required fields are marked *