How to Insert image inline/embed in Outlook Web Access

• In Outlook Web Access click on Options then select 'See All Options...'

 

•  Under Settings option Select S/MIME  and click Download the S/MIME control   this will download the file owasmime.msi after installing this file you will be able to copy the image and do Ctrl+V (Paste) in the message body.
  Note : Strangely Right-click to paste option is greyed out, but Ctrl-V works.