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“We should be pursuing embedded insurance”, according to Michael J. McCord from the MicroInsurance Centre at Milliman. It has the potential to lower distribution costs, reduce adverse selection and moral hazard, and reduce premiums when attached to existing transactions. An industry stalwart, Michael started with voluntary microinsurance until 70% of his clients had bought the cover. Only then did he make the product mandatory and halve the price: “Embedded came after we’d proven there was real value”. His thoughts throughout this piece preface how embedded insurance has developed over time.
| “We cannot keep doing door‑to‑door sales. Embedded is where we need to go, but only if we’re really offering value, not just hiding insurance inside other products.” |
Embedded insurance is traditionally sold to customers at the point of them buying goods or services. The insurance is usually relevant to the purchase they are about to make. Tailored cover is integrated with a business’s core offering to help customers make a confident decision by reducing the risk at the time of purchase. For instance, as people buy tickets for flights, trains, buses or concerts, travel or cancellation insurance is often offered as customers complete their purchases. They need not leave their purchase journey to carry out additional research or to separately buy insurance. Personalised protection is offered to customers at a competitive rate, when and where they need it.
The concept itself is not novel: insurance was packaged with loans from the middle of the 20th century onwards, giving rise to credit-life cover. Early microinsurance was embedded as part of a package of bundled products. For instance, health or life cover was hard-bundled (i.e., mandatorily embedded) with mobile airtime top-ups when the first mobile-enabled microinsurance services emerged a decade ago. Customers received a minimum level of cover, known as “freemium”, which they could upgrade for a fee. Customers had no choice on the initial cover, as the insurance cost was either baked into transaction fees or covered by the distributor. In addition, no context was applied: everyone could buy the same product.
| “Free or fully subsidised insurance often disappears in people’s minds – it’s part of the tangibility problem. If clients don’t see or feel it, they won’t value it, and they won’t use it.” |
While hard bundling did lead to greater insurance uptake, it didn’t necessarily result in greater use of insurance or an appreciation of its benefits. Many customers are believed not to have known that they had insurance coverage or how it worked. In addition, payment for premium upgrades was problematic in some markets. In Zambia, value-added tax and excise duties levied on airtime top-ups led to revenue leakage. As a result, underwriters received lower premiums. Mobile money was touted as a way to collect premiums and upgrade fees. But the lack of recurring payments in key markets – due to regulation – diminished potential for growth.
Embedded differs in several ways. The insurance cover is supposed to be relevant to the transaction and to the potential risk the customer may face. For instance, if a farmer takes out a loan, the corresponding cover should provide a safety net if they are unable to repay it due to illness, accident, or death, or losses of investments in crops or livestock. Importantly, when applied fairly, embedded insurance can introduce choice: customers can either opt in or opt out of buying the cover at the point of sale. Which options providers offer their customers is often dependent on regulation. For instance, the Philippines only permits opt-in as a means of consumer protection.
Which markets are seeing greater use of embedded insurance?
While embedded insurance is widely available in high-income markets, it has seen rapid rollout in several low and middle-income countries. This has been aided by the growing use and availability of technology to the mass market. Major fintechs and online platforms in Latin America, South Asia and Southeast Asia have been prominent in offering bite-sized insurance products. Some are sold as standalone options to an increasingly digital-savvy target market. At the same time, insurance products are routinely added to everyday transactions. Hailing a ride in Bangkok? You could be prompted to add delay cover for traffic jams or flash floods.
| “Somebody has to be the client’s advocate in embedded insurance, and it really should be the distributor – if I’m embedding cover in my product, it’s in my interest to make sure it actually works for my customers.” |
Given how quickly tech adoption has grown in Asia, it is fitting that GCash – a fintech in the Philippines – offers a good example of how to embed insurance with everyday transactions. Through its dedicated insurance arm, GInsure, it offers several types of cover that are naturally included in some of GCash’s most popular transactions, such as online shopping cover and scam protection (Figure 1). The insurance service has proven popular among its customers. As of 2025, the service had nearly 15 million users and had issued over 50 million policies. While some products were initially offered on an opt-out basis, regulatory changes have prompted these to be offered on an opt-in basis.
Figure 1: Summary of GCash’s embedded insurance products
| Product name | Description | Premium |
| Online Shopping Protect | Protection against damage, theft, non-delivery or misrepresentation for items bought online. | USD 0.60 per transaction. |
| Bill Protect | Bill payment cover for 30 days in case of accidental death or permanent disablement. | <1% of the bill payment value. |
| Express Send Scam Insurance | Cover against scams, cyber-hacking and unauthorised transactions for 30 days. | USD 0.50 per month. |
Source: GCash
Similar to GCash, Nubank, a Latin American fintech founded in Brazil, shows that fintechs could be an ideal match for embedded insurance. Together with established insurers and reinsurers, two policies were launched: Nubank Vida, a life insurance product; and Nubank Celular Seguro, which covers mobile phones. Both were embedded with cards. By 2024, Nubank had two million active policies in Brazil. Over one million were for the Nubank Vida life product alone. For over half of Nubank’s customers, these products represented their first-ever life or device insurance policies.
| “Low‑income people will pay a bit more if they clearly see value; if they don’t, they’ll try to pay as little as possible – embedded insurance doesn’t change that basic truth.” |
Embedded insurance has taken off faster in some emerging markets than others. There are several reasons for this, notwithstanding the difference in tech adoption: differences in digital rails, greater networking effects potential, and the fit between insurance and people’s lived financial behaviours. High use of digital payments (including mobile money), e-commerce platforms and ride-hailing apps offer many natural integration points. Simple, event-driven cover, such as for trips, deliveries, concerts and digital loans, can be added to transactions with low friction. This allows greater conversion while keeping distribution costs low.
Quick, transparent claim payouts and enabling regulation have also helped embedded models grow in some markets. Embedded insurance works well where regulators are open to new channels while remaining firm on conduct. This includes ensuring clarity on what constitutes customer consent, fair value and opt-out limits. Where customers buy insurance they did not choose, or where claim handling is slow or poor, customers and supervisors may express reluctance about the cover. This can quickly erode a product’s value and viability, even if the user journey works well.
By contrast, markets where regulations are misaligned with the model are typically where embedded insurance has struggled to take off. Some regulatory frameworks have not made it possible for insurance to be bundled seamlessly or at low cost. Sometimes, there are necessary reasons for this. Consumer protection concerns, strict rules on who can sell insurance and static KYC or commission requirements can affect approvals as well as model design. However, these can be fixed through regulatory changes. In addition, existing insurers may be constrained by legacy systems. Limited API capabilities may hamper the integration effort needed to embed simple and cheap products into third‑party journeys.
“Embedded came after we’d proven there was real value”
The story of embedded insurance offers a lesson in the gap between promise and reality. For some inclusive insurance providers, it serves as a supposed holy grail; for others, it has yet to deliver the huge growth in insurance uptake that many expected. In Asia and Latin America, there are several notable examples of insurance being embedded into daily use cases. These cases, as well as others, show that insurance providers are continuing to look to increase adoption at scale. Embedding insurance that is truly valuable to clients and provides benefits to the distributor can be a major part of scaling up.