Can Embedded Insurance drive Insurance Penetration in India?


Although India ranks among the emerging hubs for insurance worldwide, insurance penetration within the country remains low. In 2020-21, India’s insurance penetration (measured as the ratio of premium to GDP) stood at just 4.2% (Source: IRDAI). This leaves an enormous protection gap between the amount of insurance needed and the amount actually purchased within the country.


What’s going wrong? To some extent, the low insurance penetration stems from a general lack of understanding about insurance and how it works. Many people cannot wrap their heads around the fact that insurance does not bring returns on investment. Others underestimate the financial risks of being uninsured, mistakenly assuming they can manage without insurance.


Better distribution through embedded insurance offers one way to correct this imbalance. Embedding policies in products and services at the point of sale expands insurance outreach. When policies are bundled in this way, they become more accessible to an underserved audience.


Insurance: A Financial Safeguard


An insurance policy acts as a financial cushion when bad things happen. Accidents, death, natural calamities, medical emergencies, theft—they all have financial impacts. While you cannot prevent the unexpected from happening, you can prepare for the financial fallout by purchasing insurance.


If the terrible event never comes to pass, your insurance policy may not pay you anything. On the other hand, if something bad does happen, being insured will help you or your family to recover faster. Here are some of the ways that insurance plans keep you financially protected.


  • Life insurance provides a pay-out that could cover the family’s daily costs, debt payments, and other expenses following the insured’s demise.

  • Health insurance covers a large chunk of hospitalization bills and other medical costs following a medical emergency.

  • Motor insurance may leave you with extra funds to repair or replace the insured vehicle after an accident.

  • Home insurance provides a pay-out to rebuild the insured home following damage or loss due to specified causes such as fire, flood, or burglary.

  • Travel insurance could reimburse you for flight cancellations and cover medical costs while you are travelling abroad.


Embedded Insurance Basics


Embedded insurance refers to the bundling of insurance policies with other products or services at the point of sale. The experience is similar to including an additional warranty to the bill while purchasing electronics. When customers agree to buy an embedded insurance plan, the premium cost gets added to their bill.


While buying flight tickets online, you may have encountered offers for add-on travel insurance at checkout. Those add-on plans are an early example of embedded insurance. Now, with digital transactions really taking off, embedded insurance is starting to crop up in other spaces as well.


Telemedicine consultations and online purchases of pharmaceuticals can be used to push health insurance products. Gadget sellers could embed electronic equipment insurance into their checkout process. And some payment apps are already offering bundled (and very affordable) life insurance to users. As embedded insurance spreads its wings, Indians could soon access policies while booking cabs, buying pet products, scheduling cleaning services, and more.


Greater digitization and connectivity will add a further boost. Smartphone penetration in India stood at 54% in 2020; by the year 2040, that figure could hit 96%! (Source: Statista) A rise in the number of connected devices along with the spread of bundled policies is expected to improve insurance penetration within the country in the coming years.


Embedded Plans: Insurance made accessible The biggest advantage of embedded insurance is improved distribution. Customers no longer have to think about insurance as a separate activity. Embedded technology brings the policy directly to the customer at the moment of purchase.


For example, suppose a user is buying a smartphone online. Just before checkout, the e-commerce platform could display a gadget insurance quote for the new device. This form of micro-insurance is typically very affordable, and the customer could be persuaded to come on board. The buyer thus takes a tiny step towards mitigating financial risk before the device can even be delivered.


Different insurance products could similarly be bundled into the e-commerce, health, and logistics segments, among others. This would create an enormous scope to not only introduce a comprehensive range of insurance products but also create personalized offers based on user behaviour.


The sheer convenience of it all could encourage Indian users to pick up insurance in a piecemeal way while making transactions. Policy bundling could drive insurance penetration by encouraging citizens to view insurance purchases as easy, quick, and logical. Unlike traditional insurance shopping, buying a bundled policy does not feel like a strain.


Policy Bundling and Opportunities for Business


The embedded finance sector in India is projected to grow by 46% annually from 2022 to 2029. During this period, sectoral revenues are likely to increase from USD 4,801.8 million in 2022 to an impressive USD 21,127.5 million in 2029 (Source: Research and Markets). Embedded insurance is expected to play a significant role here.


Insurers and intermediaries have an opportunity to tap into the large protection gap in the country by embedding smaller products into key segments. And by incorporating bundled plans into their operating model, even non-insurance businesses could add a new revenue stream with minimal effort. Their customers would be able to pick up policies during routine transactions, which would enhance the user experience as well as generate customer loyalty.


The number of smartphone users is expected to go from 748 million users in 2020 to over 1.5 billion in 2040 (Source: Statista). As more Indians shift to smartphones and digital transactions become even more commonplace, embedded insurance could make inroads into untapped markets. Businesses that add policy bundling to their catalogue will potentially have an opportunity to scale up in the coming years.


Special note should be made of businesses which cater to rural and suburban areas. These organizations are in a good position to profit from developments in insurtech. After all, even though rural India is home to some 70% of the population, insurance penetration within this segment is lagging (Source: Economic Times).


The adoption of embedded insurance by local businesses and digital platforms could bring insurance seamlessly into the hinterland. For example, if a farmer buys a tractor, the seller could offer tractor insurance as an add-on product. Should the farmer accept the offer, the tractor would be insured and the seller would earn a commission. Win-win!


With a better distribution, standard life, health, and motor policies are sure to make headway in rural India. There is also scope to provide more niche and targeted products like cattle insurance and crop insurance. Growing digital adoption in rural India will boost insurance penetration as well. In 2020 alone, rural India had 299 million internet users, registering user growth of 13% vis-à-vis the previous year (Source: Economic Times).


Drive Growth with Embedded Insurance


Contribute to greater insurance penetration in India and grow your business too! With TurtleFin as your insurtech partner, you won’t need to choose!


Turtlefin offers advanced digital tools and infrastructure to help you enter the world of embedded insurance. Ours is a plug-and-play approach: integrating the Turtlefin's API is a quick and hassle-free process, and there are no wait times to worry about.


Once set up and testing are complete, you can go live. Your customers can start viewing premium quotes and buying insurance within minutes! The TurtleFin API channels big data capabilities to offer personalized quotes to your customers, but you exercise full control over how their information can be used.


Our one-to-many model enables businesses to scale up quickly without substantial investments of time and money. By ensuring seamless integration, guidance, and all-round tech support, we help you navigate the embedded insurance space with ease.


When more businesses get involved, more Indians gain access to insurance plans, which means policy purchases are likely to rise. Sustained growth in insurance purchases will not only reduce the protection gap in India but also take insurance penetration in the country on to a healthy growth path. Embedded insurance holds the key to the future!



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