Understand How Embedded Insurance Works in America
Embedded insurance is a model that offers protection integrated into products and services, in an automated and almost invisible way for the consumer.
Integration is no longer limited to extended warranties on electronics or travel insurance; the current scenario is much more sophisticated.
The technological infrastructure supporting Embedded Insurance 2.0 is capable of delivering personalized, efficient, and real-time solutions.
The Role of Artificial Intelligence (AI)
Artificial intelligence is one of the most relevant technologies supporting embedded insurance. Analyzing consumer behavioral data during the purchasing process can be highly beneficial.
For instance, when buying an electric car, AI can automatically assess risk factors such as average mileage, driving region, and driving habits.
Automating policy pricing adjusts insurance costs in real time, eliminating the need for complex calculations.
Claims management can also become more efficient using intelligent chatbots and image analysis to assess damages.
Additionally, AI has been fundamental in reducing fraud by identifying suspicious behavior patterns that could go unnoticed in manual processes.
Big Data and Predictive Analytics
Embedded insurance relies on large volumes of data to be effective, coming from various sources such as e-commerce, mobility apps, IoT devices, and even health wearables.
Big data allows insurers to segment consumers accurately, offering coverage only when needed.
It also enables the creation of predictive models to anticipate risks and personalize offers.
This analytical layer is crucial to transform insurance from a static product into a dynamic service, fully adapted to the consumer’s lifestyle.
APIs and Digital Integration
The structural foundation of Embedded Insurance is formed by APIs (Application Programming Interfaces).
They allow insurers, marketplaces, and digital platforms to connect seamlessly, without friction for the end user.
For example, a customer renting a car through the Turo app can access personalized insurance coverage immediately, without leaving the platform.
In e-commerce platforms like Amazon or Best Buy, the API connects the insurer to the checkout, offering extended warranties for electronics with a single click.
In the U.S., this model is often called Insurance-as-a-Service (IaaS), as APIs transform coverage into a plug-and-play service available across any digital ecosystem.
Blockchain and Smart Contracts
Another important technological pillar is blockchain, especially regarding transparency and automation.
Through smart contracts, insurance policies can be programmed to activate or pay automatically under certain conditions.
For instance, in U.S. flights, insurers already use smart contracts that automatically trigger reimbursements in case of delays exceeding a set number of hours, without requiring the passenger to file a claim.
This mechanism reduces administrative costs, increases consumer trust, and accelerates the claims process.
IoT and Connected Devices
The Internet of Things (IoT) further strengthens embedded insurance. In America, there are already cars with telematics sensors that transmit speed, braking, and route data, enabling on-demand insurance adjustments.
Health wearables, which monitor heart rate, sleep, and physical activity, help to price health plans in a personalized manner.
Home sensors that detect water leaks, smoke, or intrusions automatically trigger home protection coverage.
These devices not only provide real-time data but also allow insurance to be proactively activated, even before the consumer notices an issue.
Cloud Computing and Scalability
All of this infrastructure is only possible thanks to cloud computing, which ensures scalability and large-scale processing.
In the U.S., major insurtechs use cloud solutions to:
- Process millions of transactions simultaneously.
- Store sensitive data with high security standards.
- Create flexible environments to test new products and pricing models.
The cloud is also fundamental for connecting multiple players within the same digital ecosystem.
Technological and Regulatory Challenges
Despite its potential, embedded insurance in the U.S. still faces challenges, such as standardizing APIs across platforms with different architectures.
Data protection must comply with laws like the CCPA and other state regulations, requiring adaptations to the policy issuance model.
Technology is advancing rapidly, but the industry must ensure compliance without compromising the user experience.
The Next Step for Embedded Insurance in the U.S.
The next phase for embedded insurance in America is even deeper integration with financial and non-financial ecosystems.
It is expected that insurance will be offered automatically alongside digital wallets, subscription services, and even on metaverse platforms.