How the spread of smartphones could drive insurance penetration in India?

Updated: Jun 28


With a population of more than 1.3 billion, India represents an enormous market for the smartphone industry (Source: World Bank). Smartphones are already in the hands of 550 million Indians, and that number could swell to over 900 million by 2025 (Source: RedSeer). This bodes well for the insurance sector, as growing connectivity could provide the much-needed push for insurance penetration across the country.


With the number of smartphone users on the uptick, insurers and fintech companies are joining hands to create digital-forward distribution channels. This trend will certainly encourage insurance tech companies in India.

Embedded policies are bundled into the digital purchase flow for various goods and services. This makes policy purchases more convenient, and smartphone users can secure insurance coverage while shopping for other things. The seamless transaction process has the potential to drive insurance penetration in the coming years.


Insurance matters. Here’s why


Insurance is a necessary step in any financial plan. Unforeseen events, whether illness, disability, or death, can eat into a family’s savings in no time at all. Insurance acts as a financial cushion in these times of crisis.


When the insured event comes to pass, the coverage kicks into gear. Policyholders or their beneficiaries receive pay-outs to cover any expenses that arise because of the emergency situation. Common examples of insurance products include the following:

  • Life insurance pays the sum assured to beneficiaries of the policyholder after the latter’s demise.

  • Health insurance helps to cover the costs of hospitalization or other medical treatment of the insured persons.

  • Car insurance covers vehicle repair expenses as well as third-party liability costs following a collision.

  • Crop insurance offers financial support to farmers in case of crop loss due to weather events, price fluctuations, and other crises.

  • Asset insurance provides coverage for costs related to damage, theft, or replacement of the insured asset.


Coverage gaps in India


Insurance penetration is a valuable indicator of how the insurance sector is performing. The figure represents the percentage of insurance premiums to the gross domestic product (GDP). In 2020-21, insurance penetration in India rose to 4.2%. Although this is an improvement over the 3.76% penetration of 2019-20, the domestic insurance sector still has a long way to go (Source: IRDAI).


Let’s put this in perspective: Around 93% of the country’s workers are in the unorganized sector (Source: Ministry of Labour & Employment). They receive neither health insurance nor pension benefits from their employers. Better insurance penetration would help them get the risk protection that they need.


Of course, there are some bottlenecks here:

  • First up is the general lack of awareness about insurance. Many Indians are put off by high premiums or the lack of ‘returns’. Others consider themselves to be unassailable and therefore do not spend on insurance.

  • Those who do seek insurance coverage often struggle to choose the right policy. There are too many products to choose from and a lot of coverage-related fine print to assess. The traditional mode of insurance purchase is thus far from easy.

  • Buying a policy is harder still for the 65% of Indians who live in the villages (Source: World Bank). Insurance companies have many branches in bigger cities and have expanded to Tier 2 and Tier 3 cities as well. However, their lack of presence in the hinterland leaves rural India out of the insurance picture.


The power of embedded plans


Only about 5% of Indians have home insurance and 12% have health insurance as of 2021 (Source: The Hindu Business Line). Could embedded insurance help boost these numbers? It could, especially if supported by the increasing use of smartphones and better connectivity.


Digital insurance takes policies to where customers actually are—on their mobile phones. India’s mobile data consumption rate is currently the highest in the world, with the average user consuming 12GB per month (Source: Economic Times). So, as Indians tap away on their phones, embedded insurance offers turn up on their screens.


What might this look like? Suppose a consumer is shopping for a new smartphone online. As she chooses the model and proceeds to checkout, the eCommerce retailer offers an add-on insurance cover. The policy provides coverage for theft and damage to the new phone. She taps on the ‘Accept’ button and adds the policy premium to the bill. The consumer pays for the new phone and the new policy in a single, smooth transaction on the checkout page.


With digital insurance, accessibility issues dissolve away. Anybody with a smartphone can view and buy policy offers, regardless of geography. So even users in the hinterland can acquire coverage. Rural users who are shopping on their smartphones can buy digital insurance too. The development of vernacular apps could facilitate the buying process further.


With bundled insurance, people can acquire insurance coverage without setting down their phones. Moreover, they don’t have to buy an item that needs coverage. Digital insurance plans are also being integrated into maintenance-related purchases, such as online bookings for car servicing or house cleaning services.


Even better, digital insurance policies are targeted to the user’s needs. Artificial intelligence (AI) and data science enable sales platforms to push customized offers. As technological advancements are made, personalization could become even more granular. For example, Tesla already embeds insurance into the purchase of their cars. In some markets, Tesla owners make policy offers based on their real-time driving behaviour (Source: Tesla).


An embedded future for insurance


India’s internet economy could be worth USD 1 trillion by 2030 (Source: RedSeer). This is good news for any retailer or service provider that offers insuretech plans through its digital platforms. The online boom is likely to drive sales, including the sales of embedded policies, leading to healthy returns for embedded insurance partners.


Smartphone users may not be thinking about insurance on a given day. But if these users are transacting online, they may be open to buying add-on coverage at the point of sale. So, it makes great economic sense to plunge into the embedded insurance business. Given the minimal overheads and the absence of inventory, third-party businesses with a strong client base can increase their bottom line without too much effort.


Besides, bundled offers can be a valuable differentiator in a crowded market. All that customer data you have been collecting can finally be put to good use. The AI capabilities of embedded technology parse the data to create tailored policies. Such targeted offers have the potential to delight your users, enrich their digital experience, and earn their loyalty to your brand.


Raise your game with Turtlefin


If yours is already a digital-forward business, embedded insurance could help you grow. Partner with Turtlefin and you won’t need to worry about a thing! Our team takes over the logistics of building a new vertical for your business model. We provide the tools and resources to help you unlock the potential of embedded insurance.


Being an insuretech company, Turtlefin has comprehensive know-how regarding both insurance and technology. Our insurance API is versatile and can be quickly adapted to multiple sales platforms. Integrating these 10 lines of code into your smartphone app and other channels brings instant access to policies from over 30 insurers.


Turtlefin handles the API integration from end to end so that you are able to concentrate on daily operations. Our team takes control of the entire setup phase, and when that is done, we guide you through a live test. We help you navigate this new vertical even after everything is up and running. Our support team at TurtleFin sorts out any technical issues, ensuring that your customers enjoy a seamless experience every time, being India's best insuretech platform!


To know more about Turtlefin,




Summing up


As the number of Indian smartphone users continues to grow, players in the insurance space could unlock an as-yet-untapped market. Thanks to its ability to show up at the user’s point of need, digital insurance has the potential to fuel insurance sales through smartphone apps and other platforms. By bringing trusted third-party businesses into the insurance ecosystem, policy bundling widens the reach of insurers and creates more accessibility to insurance products. Thus, smartphone usage and embedded insurance technology could be instrumental in driving insurance penetration in a more connected future.


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