Embedded Insurance

Insurtech covers technology used to improve how insurance is bought and used. Embedded insurance has a narrower scope: how coverage is offered inside another business's service. A digital insurer can sell directly through a separate app, while an established insurer can distribute coverage through an embedded arrangement.

The embedded offer can be optional, included in the price of the main product or provided as a customer benefit. The distribution model does not establish whether a policy is suitable for a particular buyer. That assessment depends on the coverage and the customer's needs.

Travel cover during a flight booking and device cover during a phone purchase are examples of embedded insurance. The offer appears alongside an activity or item that creates an identifiable risk. Buying the device and taking out the policy remain different decisions, even when both happen in the same checkout.

Banks can also include insurance in a product's benefits. Chubb describes travel cover and purchase protection attached to credit cards. A cardholder still needs to check the policy's eligibility conditions and any requirements for activating cover. A benefit being included in a banking product does not mean every purchase or trip is insured.

An embedded insurance platform connects the customer-facing service to the insurer's systems. Chubb Studio has APIs for pricing, policy issuance, document delivery and servicing. These are separate steps in the insurance process. A price request returns an offer; issuing a policy records the coverage that the customer has actually bought.

The technical design should keep the accepted quote and the applicable document version available to support teams. Test what happens when a payment succeeds but policy issuance fails, or when a customer changes the underlying purchase. Customers need a clear answer about whether coverage exists. A functioning integration should also provide a route for correcting policy details and requesting cancellation.

The insurer carries the contractual insurance risk. A retailer or software platform can provide the customer relationship and the distribution interface without becoming an insurer. In Germany, insurance undertakings based in the country need permission from the supervisory authority under section 8 VAG (in German) before starting business.

An ancillary insurance intermediary has insurance distribution as a secondary activity. The European Commission requires a sufficient factual and temporal connection between the coverage and the good or service the intermediary provides. Life and liability coverage have additional conditions in this definition. Calling a product embedded insurance does not resolve the distributor's regulatory status; the actual activities and policy terms need assessment.

The EU Insurance Distribution Directive requires distributors to identify the customer's demands and needs and propose a consistent contract. Product information must be understandable before the agreement is concluded. Those duties apply to a short online purchase flow as well as to a longer conversation with an intermediary.

For non-life cover, the insurance product information document summarizes coverage, exclusions and the contract's duration. The document also explains payment and termination. A product team should make those details easy to find before acceptance, including any deductible and limits relevant to the offer. A concise interface can still give customers time to understand the insurance they are buying.

Article 24 of the Insurance Distribution Directive addresses packaged sales. When insurance is ancillary to another good or service, distributors generally must allow the customer to buy that good or service separately. Exceptions cover specified investment services, mortgage credit and payment accounts. EIOPA also confirms that cooperation with a non-insurance seller does not remove cross-selling duties.

German credit protection insurance has a further restriction. Under section 7a(5) VVG (in German), a policyholder can give the contract declaration for insurance linked to a general consumer loan no earlier than one week after concluding the loan. A contract concluded in breach of that rule is void. Product teams therefore cannot assume every insurance offer belongs in the original checkout.

The claims process is part of the integration. Chubb Studio lets distribution partners submit a first notification of loss and check a claim's status. The customer-facing service should explain where a claim goes and which insurer assesses it. A confirmation that the platform has received a message is different from an insurer accepting the claim.

Insurance benefits depend on the contract and the assessment of the insured event. In Germany, section 14 VVG sets when monetary benefits become due (in German), including rules for an advance payment when necessary investigations remain unfinished. A useful service design keeps the claim reference available and shows a contact route when the digital process does not answer the customer's question.