If you’ve ever heard of embedded insurance, you might already know it’s when insurance coverage is automatically included in products or services.

Think about buying a plane ticket and getting travel insurance bundled in. It’s simple, convenient, and saves you from having to go through the process of shopping for insurance separately.

But Insurance-as-a-Service (IaaS) takes this concept and runs with it.

Instead of just including a pre-made insurance policy with a product, IaaS allows companies to offer customized insurance solutions as a full service. Businesses don’t just tack on insurance—they can integrate the whole insurance process into their platform, from buying coverage to managing claims.

Let’s dive into how IaaS works, the different models out there, and what makes it desirable for both businesses and customers.

What is Insurance-as-a-Service (IaaS)?

So, embedded insurance is one way to think about how IaaS works.

However, Insurance-as-a-Service is much broader as it allows businesses to offer a whole range of insurance services in a flexible and cost-effective way. This allows them to launch a new insurance program or expand on an existing one.

Rather than just tacking on a policy here and there, IaaS offers companies the ability to integrate entire insurance services into their own platforms or products. It’s like turning insurance into a plug-and-play feature for any business.

For example, instead of companies like Specialized and VanMoof just selling you a bike and offering insurance as an afterthought, with IaaS, those same companies could actually offer you insurance options, manage your claims, and keep track of your coverage—all through their own platform.

It’s insurance that’s built into the experience, rather than an add-on.

IaaS models in action

Now, how does this work in practice? There are several different Insurance-as-a-Service models, each with its own take on the concept.

1. White-label insurance:

Here, businesses offer insurance products under their own brand name, even though the actual insurance is provided by a third-party carrier. This is popular in industries like travel and retail.

Example: Shopify offers its merchants the option to add shipping insurance to their products, but the coverage itself is provided by insurance partners.

2. API-driven insurance:

With this model, companies use insurance providers’ APIs to connect directly to their systems. This allows them to offer custom policies to their customers in real time.

Example: Trōv, a big player in on-demand insurance, allows users to switch coverage on and off for specific items through their app.

3. Full-stack insurance providers:

These are companies that own the entire insurance process, from offering the policies to handling the claims.

NEXT Insurance is a great example here. They don’t just sell you a policy—they also process your claims directly, cutting out the middleman.

Benefits of IaaS

There are plenty of reasons why Insurance-as-a-Service is a win-win for both businesses and customers:

• Convenience for consumers: IaaS makes insurance easy to access and less of a headache. You don’t need to jump through hoops or spend time shopping around. The insurance is already there when you need it.
• Seamless integration: For businesses, insurance can be a smooth part of their existing offerings. It adds value without feeling intrusive or overly complicated.
• Customization: With IaaS, companies can tailor insurance to fit their customers’ needs perfectly. This leads to a much better customer experience because the insurance feels relevant to the product or service.
• Increased trust: When companies offer insurance through their own platform, it builds a sense of trust and loyalty. Customers are more likely to stick around when they feel like they’re getting a complete service.

Closing thoughts

What’s also worth mentioning is the technological integration that connects these businesses and their insurance partners. This is where Insurance APIs come into play. Insurance APIs, true to their name, enable communication between the business processes and infrastructures of both insurance companies and their partners.

Insurance-as-a-Service takes the concept of embedded insurance and makes it smarter, more flexible, and ultimately more useful. With companies like Shopify, Trōv, and others leading the way, it’s clear that IaaS is here to stay, offering a win-win for businesses and consumers alike.

So, the next time you’re shopping for something big, you might find that the insurance is not just an add-on—it’s part of the whole package. Other times, it could be insurance, just masquerading as something else entirely.