India sees a strong momentum along with others in growth of insurtech funding: Report

Insurtech funding in India has more than doubled in the last two years, from $290 million 2020 to $800 million in 2021 line with rapid funding in the insurtech sector globally, according to a report by Boston Consulting Group (BCG) & India Insurtech Association (IIA).

There has been strong momentum in funding in Insurtech across the globe as global funding in insurtechs has grown seven times in the last five years from $2.5 billion in 2017 to $14 billion in 2021 with growth continuing even during the pandemic period.

Also, there has been a steady rise in no of insurtech unicorns with over 20 Unicorns in 2021, 14 in the US, 4 in the UK, 2 each in India (Acko & Digit Insurance ) & France, one each in Austria, Israel & Mexico, said the report titled “The India Insurtech Landscape and Trends Report”. 

Insurtechs in India are well-positioned to cater to the nuanced needs of customers and are at the cusp of exponential growth. “We are highly optimistic about the Indian Insurtech landscape in the next few years. The sustained funding levels over last couple of years has helped launch multiple insurtech start-ups, which is key for innovation. Enablers such as India Stack, insurance information bureau and the regulatory sandbox have provided a strong platform for innovation in insurance value chain,” said Subhajit Mandal, Co-Founder of India Insurtech Association.

Insurtechs in India are well-positioned to cater to the nuanced needs of customers and are at the cusp of exponential growth.

Key themes

There are five key themes that are playing out in the insurance industry and they include emergence of new customer segments, importance of higher distribution and penetration, criticality of enhanced customer experience, data and analytics as core capabilities and further emphasis on health insurance through the National Health Stack.

The report pointed out that SME, women and Tier-2 locations are emerging as key customer segments. Affordable healthcare for employees of small and medium enterprises remains an unaddressed segment. There is an opportunity to provide holistic health and wellness and enable SMEs to improve employee retention. Also, thrust for employer /Group insurance for large number of emerging SMEs by customising offerings focussed at providing affordable solutions.

“As the sector experiences unprecedented growth, it is critical to continue collaboration between insurers and insurtechs. It is also important for the industry to keep innovating to address important issues such as deeper insurance penetration, customer health and wellness, etc. To ensure that the sector experiences continued growth, there is a need for key enablers such as the National Health Stack, regulatory sandbox and Insurance Information Bureau,” said Jitesh Shah, MD & Partner BCG Asia Pacific Lead, Operations in Financial Institutions at BCG.

Innovation & transformation

Regulators and government bodies have also been supporting innovation and transformation in the insurance industry. IRDAI has played an active role in supporting innovation in the industry.

The recent regulatory sandbox is a crucial milestone in this regard and saw participation by more than 22 insurers who submitted more than 170 proposals. Further impetus has been provided by the launch of National Health Stack. Insurers and insurtechs can work with regulatory bodies and government agencies to continue to strengthen some of these platforms for further experiments.

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