In India, the InsureTech environment is still in its infancy. In comparison to the worldwide average of 6.5%, present insurance penetration in India is relatively low, with 2.76% for life insurance policies and 0.93% for non-life insurance plans.
The present InsureTech industry in India is controlled by a handful of new-age insurers such as Digit, Toffee, SecureNow, and Acko; primarily due to their capacity to recruit and retain millennials. The major difficulty confronting the InsureTech category remains ‘lack of client trust,’. Industry participants have discovered it to be a difficult job thus far.
Market Segments in the Insurtech Industry
Aggregators and Policy Management platforms:
These businesses provide digital services that allow consumers to research, compare, and locate low-cost premiums from many carriers. These businesses also let consumers manage insurance as well as finance premium amounts from a single site.
Online First Insurance platforms:
These insurance firms provide their unique insurance products including life, property, casualty (P&C), as well as health and medical premiums through their internet platforms.
Internet of Things (IoT):
Businesses employ connected device (IoT) technology including wearables and sensors to discover and analyze consumer risk. This technology is currently widely utilized in the automobile insurance sector, as part of the usage-based and telematic insurance scheme. This enables insurance firms to monitor and retain driving-related information. Custom insurance options for house and life insurance are also available from the company.
Software and White Label Application Programming Interface (API) platforms:
These firms provide software solutions to existing insurance businesses and brokerage organizations. This includes. risk evaluation, underwriting, fraud identification, regulation, policy management, advertising, sales, chatbots, as well as CRM (customer relationship management) technologies are among the services they offer.
InsureTech Funding Breakdown
The Medici India Insurtech report provides a detailed breakdown of the 445 million dollar investment in Insurtech.
Around 48.50% of the fund is received by the Aggregators and Policy Management platforms. Online First Insurance platforms receive around 41.50%. Preventive Insurance and Telematic platforms (IoT) receive 9.60% and the rest goes to Software and White-label APIs.
Read: Group Health Insurance
InsurTech Developments in the Marketplace
Models of Preventive Insurance:
InsurTech companies are researching methods to harness the most of rich data and insights and accelerate the transformation from a reactionary to proactively preventative strategy, equipped with AI/ML skills, predictive statistics, and data acquired via IOT-driven linked devices.
Preventive insurance coverage is gaining popularity across the value chain, from healthcare to home, equipment, transit, and vehicles.
For Example Carnot Technologies, Niramai, and Kruz
Embedded Insurance Concept:
New online insurers have begun to sell insurance coverage to clients as part of their product purchase or service. This point-of-sale insurance strategy allows online insurance to reach the enormous customer base of digital service providers as well as eCommerce aggregators.
Online Insurance Advisors:
Customers may analyze and purchase insurance policies from both new digital insurers and classic insurance providers using the aggregator platforms. Since 2013, when a restriction on online aggregators was established, the number of licensed aggregators has increased significantly.
Small-ticket insurance, sometimes known as ‘sachet insurance,’ is becoming increasingly popular among Indians. These insurance programs cost less than 10 INR, thus making it possible for individuals to obtain insurance coverage worth millions of rupees. Startups are offering such bite-sized insurance packages.
For Example Toffee Insurance, IRCTC, and Pradhan Mantri Bima Yojana.
Fresh Business Models
Emerging business models like ‘microinsurance on demand’, are transforming the insurance sector by shifting away from complicated long-term insurance policies and toward short-term insurance policies based on time, consumption, and activity. This tendency comes from a concentration on narrow segments.
For Example Toffee Insurance
Better Risk Management
AI insurance firms use sophisticated technologies such as Big Data to use an information-driven, risk-scoring methodology. This allows them to execute better risk coverage choices across all divisions of operation, including life and medical, retirement preparation, industrial, and investment.
For Example Health Vector, i3 Systems
The use of chatbots for online engagement is growing rapidly in the business. Even insurance companies may use chatbots to improve customer experience by deploying distribution, claims, as well as customer support. General customer support queries, tailored product recommendations, queries from agents and brokers, direct-to-consumer sales, claims, and other activities are all assisted by chatbots.
For Example: Ask Arvi
Insurance Infrastructure APIs:
A forward-thinking and rapidly expanding infrastructure API service provider in India is positioned to establish a sector for ‘insurance coverage as a service’ firms. These infrastructure API companies can help insurance businesses and platform economy participants with product creation and distribution through online channels.
For Example Riskcovry
Unicorns in the Indian InsureTech Market
Having 2 Insurtech unicorns, India is on par with China but falls short of the United States, which has 6 Insurtech unicorns.
Policy Bazaar: The firm was founded in 2008 and earned the spot of a unicorn in 2018. They announced intentions for an IPO (initial public offering) in 2021 to generate 500 million USD, with a target valuation of 3.5 billion USD.
Digit Insurance: The firm was established in 2016, acquired the spot of a unicorn in 2021, and became India’s first unicorn in the year, with a net value of 1.9 billion USD.
With changing consumer tastes and the increased relevance of digital solutions, the insurance industry is experiencing a revolution. With the use of automation, smartphone applications, advanced statistics, artificial intelligence, and Internet of Things (IoT) capabilities, digital insurance firms can provide higher levels of client satisfaction while employing a smaller staff. However, these lean firms with broader insurance coverage are also most expected to acquire importance in the upcoming insurance ecosystem.
Big internet companies are competing to develop digital insurance intermediates. For instance, AmazonPay has started selling insurance goods in India, whereas worldwide known companies like Google and Apple have shown interest in insurance recently. Furthermore, start-ups that are able to support incumbents and major companies in completing the digital transformation are likely to succeed.