The worldwide lockdown due to Covid-19 fueled digital adaptation in India and increased the penetration of Insurtech amongst Indians exponentially. People realised the importance of insurance and digitisation, and Insurtech became the best of both worlds. You can find out here how Insuretech is booming in India.
Insuretech partnerships have been on the rise in the insurance industry. As a result, players in the industry are trying to figure out how and where to thrive within emerging ecosystems while crafting their product strategies.
With policyholder expectations evolving after the outbreak, budding Insure tech has leveraged investor capital to build a reliable data and analytics foundation.
How Does Embedded Insurance Contribute to the Rise of Insurtech?
Businesses and customers both benefit from embedded insurance, which offers numerous benefits. Business owners can easily cross-sell insurance to their customers, unfurling new revenue streams. Additionally, it improves the value offering of their products.
Providing this value-addition makes it more likely that customers will remain loyal and their business will be retained. Moreover, new customers can be acquired in this way.
Customers also benefit from lower premiums on customised insurance plans when they are most in need. On top of that, the end-to-end digital method makes onboarding easy and paperless, and the policy is issued instantly.
What is Embedded Insurance?
In embedded insurance, insurance is bundled and sold with a product or service at the point of sale. In addition to the transaction cost, this insurance may be an add-on (like a warranty) or cost a relatively small fee.
A key benefit of this issuance process is the ease and affordability of embedded insurance, as well as the access insurers, have to largely unattended and untapped markets.
Insurtech & Indian Market Analysis
India ranks as the second largest Insurtech market in the Asia-Pacific (APAC) region, contributing 35 per cent of the total market share. According to the government website, InvestIndia, the APAC region has a total investment of around USD 3.66 billion in the Insurtech market. It has become inevitable for new-age policyholders stressed by the pandemic to switch to BigTechs and innovative Insuretechs, according to a survey conducted by Capgemini Research Institute.
World Insurtech Research & Emerging Unicorns
The 2021 World Insurtech Research states that conventional insurance companies would only survive based on claims, underwriting and product development. However, the majority of policyholders will be keener on Insurtechs and Bigtechs. Strong momentum has developed in Insurtech in India in the last two years, with its funding more than doubling.
The industry's fast-paced growth also led to the emergence of 22 Insurtech unicorns in 2021, according to a report published by Boston Consulting Group (BCG) and the India Insurtech Association (IIA).
Opportunities Offered By Insurtech
According to the report, global investment in Insurtechs has grown sevenfold over the last five years. However, Insurtech funding has shown the greatest momentum in Europe. By 2025, India's Insurtech industry will offer a $339 billion market opportunity with a 57% CAGR, according to Inc42's State Of Indian Fintech Report Q2 2022.
The compound return on investment for Insurtech is set to be 57% between 2021 and 2025.2021 was a great year for insurtech startups, raising a total of $822 million.
Importance of Health Insurance
In the wake of the pandemic, health insurance has become a necessity. As a result, families had to dip into their savings to pay for hospital bills and to manage other healthcare expenses. In India, group health insurance has been transformed due to this realisation and the focus on mental health.
Today, organisations are conscious of ensuring their employees' overall well-being, and health insurance aren't enough on its own. Personalised fitness offerings, regular check-ups, and mental-health counselling will make up the starter package of employee well-being in 2022.
India Insurtech Assosciation Report
According to a report by the India Insurtech Association (IIA), insurtech funding has increased from $11 million in 2016 to $287 million in 2020. Turtlefin raised $120 million in April 2022. It is estimated that nearly 60% of all consumers prefer to purchase their insurance through digital channels, the report added.
The dominance of Insurtech is expected to continue post-COVID-19, with urban consumers contributing a 10% increase.
Benefits of Collaboration Between Insurers and Insurtechs
Legacy technology, data systems, isolated data, and complex internal processes challenge many conventional insurers. Some of these hurdles can be surmounted by InsurTechs with their technology-first approach.
InsurTechs can improve Insurance companies' offerings through collaboration with customers and real-life experiences on the ground. Having the scale of an insurer also makes it easier for an InsurTech to scale up and market quickly.
Furthermore, such a partnership would enable both parties to access a wider range of financial and organisational resources to enhance synergies and create unique service value propositions.
Scope of the Insurance Market in India
According to a 2020-2021 report by GlobalData and IRDAI, the insurance market in India is projected to reach USD 150.6 billion, and insurance related to utility will reach USD 41.8 billion in terms of total written premiums by 2026. Digital innovation will enable embedded insurance to reimagine the insurance sector through digital innovation, creating new revenue sources and tapping into untapped consumer segments.
Insurers can collaborate with regulatory agencies to strengthen certain platforms for further experimentation. Insurance companies should start working with Insurance technologies and follow in the footprints of new-age Insurtech, disrupting the insurance world with their innovations and ease-of-use platforms. Rapid digitisation of the entire insurance network needs to be improved by insurers' constant search for cost-effective services. Additionally, they need help prioritising processes that can be streamlined or automated. A better customer experience can be achieved through a personalised approach, adopting new technologies and Insurtech capabilities.