Updated: Aug 8
Insurance tech companies with SaaS capabilities are fuelling a transition in the insurance space. A fast-growing segment in terms of market opportunity, insurtech is growing at a CAGR of 57%. In the bargain, insurance tech outpaces investment and fintech SaaS (Source: Inc42). Such growth bodes well for online insurance businesses.
Driving forces for Insurtech in India
Developments in the world of tech have paved the ground for the emergence of insurtech. The coming leap in digital insurance is a direct result of these advances.
1. Widespread Digitization
Services like Aadhaar and the Unified Payments Interface (UPI) have made online payments accessible to more than one billion Indians. Anybody with a UPI-enabled phone can make and receive payments through their mobile device. It’s instant and convenient. Moreover, the ease of payment makes it easier for insurers to sell insurance online.
With Aadhaar and UPI as the digital backbone, SaaS companies are developing online financial service solutions for Indian enterprises. The immediate benefits are lower distribution costs and a wider reach. Consumers can still buy insurance from the websites and branch offices of insurers. But they can also pick up a policy while shopping on an eCommerce site or buying tickets to an event via a mobile app.
2. Smartphone Penetration
By 2026, India will have more than one billion smartphone users, up from 750 million in 2021. Driving the demand for smartphones is the rural market, which needs access to e-learning, e-health, and fintech apps (Source: Deloitte, Business Standard). These pocket devices have evolved from a means of staying in touch to a necessity for work, personal entertainment, and now even financial tasks.
For SaaS businesses, and especially insurtech companies, this presents a unique opportunity. Rather than design solutions targeting a specific market segment, these tech players can develop financial solutions that target a much wider population.
3. Low-Code software
Now that people are comfortable shopping online, the digital insurance market has expanded considerably. How are insurtechs helping? By offering low-code software such as application programming interfaces (APIs).
The insurance API is an essential tool in this scenario. Configurable to almost any digital insurance platform, the insurance API cuts down barriers to entry for incumbent insurers and new digital upstarts. The software is affordable and a quick solution for brands looking to service an underpenetrated market.
Key differentiators for insurance in India
Indian insurtech companies (and SaaS companies in general) have some inherent USPs. And they are playing a significant role in taking digital insurance to the next level.
Efficiency in Focus
SaaS enterprises in India work more cost-effectively than those in the United States, says one study. By the time they reach an annual recurring revenue (ARR) of USD 100 million, best-in-class US companies report a median sales efficiency of 35% to 40%. Meanwhile, their Indian counterparts report a sales efficiency of more than 150% (Source: Bessemer Venture Partners).
In short, Indian SaaS players get more bang for their buck. Many best-in-class enterprises attempt to raise capital when they are already on the growth path. Their capital-efficient ways keep costs low, which works to the advantage of partner businesses in the digital insurance sector.
Another differentiator for SaaS companies in India is their product-focused approach. Rather than wait for their hero product to turn a profit, many Indian SaaS players work simultaneously on two or three products. Some develop a suite of products, while others begin with one niche area before expanding to cover the entire domain.
Young businesses with multiple products create more value for customers. The product-first approach brings in essential revenue. Early-stage SaaS companies also get to tinker with their products so as to ensure a better fit. By the time they hit the venture capital market, their product (or product suite) is already at a near-final stage.
Insurance as a service is the future.
Insurtech growth has picked up speed, and investments are on an upswing. Twenty-two insurtech unicorns emerged on the world stage in 2021. In India, insurtech funding more than doubled during that same period (Source: BCG). And there are some trends worth watching:
New customer segments are emerging. MSMEs are expected to drive insurance growth. So is the rise of women as decision-makers in the household. By 2030, around 70% of insurance demand will likely come from Tier 2 cities and below.
Raising insurance penetration will continue to be a major focus for insurance businesses across the board. With insurance companies in the fray, distribution models will be re-examined.
Businesses that sell insurance online will need to optimize their customer journeys. Insurtech companies will play an important part in this effort.
Data and analytics will become core capabilities for any insurance platform. These technologies will ensure greater personalization and more seamless experiences for customers.
Why is Turtlefin the right insurtech partner for e-commerce businesses?
Digital insurance of the 2020s is poised to be a major disruptor for the industry. Even though digitization and smartphones have penetrated the length and breadth of India, distribution issues persist. Insurtech companies like TurtleFin help overcome those challenges and deliver policies where they are needed.
One solution is to embed insurance policies in the digital channels of non-insurance businesses. Travel e-commerce sites have been working on this model for years now. Users who buy a flight ticket can also buy a cheap travel insurance plan with the click of a button. Damage protection cover bundled with the purchase of electronics has also become standard fare on online shopping platforms.
Bundling insurance into the transaction journey for non-insurance items transforms any online channel into a digital insurance platform. If this business model appeals to you, Turtlefin can get you started. Our insurance API solutions can be adapted readily to your digital sales channels and systems. Since our tech experts take charge of the setup, API integration is speedy and hassle-free. While you focus on your core expertise, we focus on ours.
The Turtlefin API brings you a brand-new vertical without massive capital outgo. Your customers get instant access to insurance plans from over 30 leading insurers. And your business model gets an automated revenue stream.
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Insurtech companies like Turtlefin are at the heart of digital insurance today. High distribution costs have plagued legacy insurers and uninsured Indians for many years now. But all that is changing. As distribution is reimagined and digital channels continue to mature, insurtech will make policies more accessible than ever before.