The Indian Insurtech segment—the business of providing technology for the insurance industry—is maturing as more categories of the industry are starting to attract funding and leverage technology, according to a report by PGA Labs.
Globally, more than 20 insurtech unicorns have emerged in the past three years. Root, Wefox, Hippo, Next Insurance, Lemonade, Waterdrop, and Unqork are the global unicorns, while Policybazaar, Digit Insurance, and Acko from India have entered this space.
Growing traction
In the Indian insurtech space, B2C business models and online-first insurers appear to be valued higher by investors due to higher operating leverage and the perception of greater proximity to customers. More than 140 insurtech start-ups are operating in India as per Tracxn.
The insurtech landscape in the country has seen the emergence of several players across the value chain. Traditionally, Indian insurtechs have focused on sales and distribution. However, new insurtechs are emerging across other parts of the value chain as well. There is growing traction in underwriting, claims technology, business analytics, and administration platforms as the insurtech sector starts to mature.
Watershed year
Funding for global and Indian insurtechs has grown rapidly, and 2021 proved to be a watershed year for the insurtech industry. Globally, funding to insurtechs has grown at a CAGR of 37 per cent during FY17–FY21, while funding to Indian insurtechs has grown at a CAGR of 34 per cent during the period, with 2021 witnessing strong momentum.
The report pointed out that insurance companies in India would need to leverage technology within the organisation and with customer interactions to unlock higher potential and efficiency.
The total insurance market in India is projected to grow from ₹8 lakh crore in FY21 to ₹33 lakh crore by FY31 at a CAGR of 14.9 per cent, aided by increasing penetration levels and government initiatives.
The total number of new insurance policies sold has increased from about 19.8 crore in FY18 to about 26.4 crore in FY21.
During FY21, about 67 per cent of the lives were covered under government-sponsored health insurance schemes, about 23 per cent of the lives were covered under group business, and the remaining 10 per cent of the lives were covered under individual policies issued by general and health insurers.