This is the third in a series of blogs on embedded insurance. You can read part 1 and part 2 here and here.

What’s the difference between embedded insurance and a warranty? Is there overlap between these kinds of products? 

Over the past number of decades, it has become quite commonplace – almost standard – for the purchase of many everyday items to be accompanied by a warranty. The interplay between this traditional service and the latest technological developments makes for fascinating study and offers meaningful insight. 

The wonder of warranties 

Although warranties are one of the oldest types of embedded insurance, they are currently undergoing an eye-catching evolution. Warranties work by protecting a purchase, for example white goods, appliances, gadgets or even cars, from breakdown or faults. This works by providing a replacement or repair within a specified timeframe. 

Warranties are usually provided by the manufacturer, nevertheless insurers offer ‘extended’ warranties that provide cover beyond the manufacturer’s warranty, often including additional services. 

Examples of these types of products are ELEMENT and Intec AG’s extended warranties for used cars, which insure against wear and tear beyond the original manufacturer’s coverage. Another example is Extend, a startup that offers product protection plans, in partnership with a number of retail brands, providing online shoppers with the opportunity to protect their new purchases with cover for damage, repairs and protection beyond the manufacturer’s warranty. 

Offering this type of cover at the point of sale – whether through digital or physical channels – when a customer is most concerned about protecting a new purchase, has taken place for many years. But now, embedded insurance is revolutionising the extended warranty market through faster, more relatable product offerings. 

Entering a golden era 

Buoying the evolution of the extended warranties marketplace is the increasing global consumption of electronic devices such as home appliances, computers and smartphones. 

In 2023, the consumer electronics market’s value has reached $1,103 billion and is expected to grow at a CAGR of 2.17% to 2027. Correspondingly, the global extended warranties market is valued in excess of $120 billion, with an expected CAGR of between 7% and 8.5% in the next decade. All with the benefit of a technology-powered embedded product – including instant warranty delivery upon purchase and faster claims settlement. 

With these new types of embedded warranty products, customers are being offered insurance products they can understand and relate to, providing instant protection for their purchases. This also means retailers get to delight and care for their customers with an attractive, service-enhanced insurance offering providing additional business revenue. 

The Final Word 

As technology continues to evolve, so too will new insurance products and new ways of creating and offering them. Embedded insurance is just the most recent obvious example. Sapiens is fully committed to remaining at the forefront of digital insurance transformation and collaborating with insurers to ensure they have the most advanced and relevant tools they need to stay ahead of the curve. 

This article contains excerpts from the Sapiens whitepaper, Embedded Insurance: Unlocking Un-tapped Potential. The whitepaper contains many more insights vital to understanding the current face of insurance, as well as its future. Read it here. 

  • blog
  • embedded insurance
  • EMEA
  • Property & Casualty
  • property and casualty
Patrick Nobbs

Patrick Nobbs Patrick Nobbs is regional marketing director for EMEA and APAC at insurance software provider Sapiens and had has several years experience in the financial services and technology sector.