#9: Insurtech - Revolutionizing Insurance in India

Imagine a farmer in rural India quickly securing crop insurance through a mobile app.

Or a young professional getting health insurance tailored to their lifestyle through an AI-powered platform.

Or buying life insurance for a short 5-day trekking extravaganza. Or something like buying an insurance for your gadgets, vehicles etc.

This is the future that insurtech promises.

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Insurance penetration in India is relatively low, with only about 3.7% of the population having some form of insurance coverage.

This includes massive amounts of market-linked investment plans sold as insurance policies (ULIPs).

This presents a significant opportunity for insurtech to bridge the gap and cater to the diverse needs of India's vast population.

And by leveraging technology, insurtechs can do wonders in making insurance more inclusive, affordable, and personalized.

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First, let’s track some key events.

The insurtech landscape in India has seen rapid growth, driven by advancements in digital technology, changing consumer behaviour, and regulatory support.

From traditional agents and paper-based processes, the industry is moving towards digital platforms and automated solutions.

But, major advancements of the last 10 years have laid the base for a future full of growth.

• 2015: The emergence of digital insurance platforms like PolicyBazaar and Coverfox marked the beginning of the insurtech revolution in India.
• 2017: The introduction of data analytics and AI in underwriting and claims processing started enhancing efficiency and accuracy.
• 2020: The COVID-19 pandemic accelerated the adoption of digital insurance solutions, as people sought safer and more convenient ways to purchase and manage their policies.
• 2023: The integration of blockchain and IoT technologies, and the compulsary dematerialisation of insurance policies began to further streamline processes and improve transparency in the insurance sector.

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But, what’s the opportunity?

As of 2024, India’s insurtech space is being led by numerous startups and established companies offering innovative solutions.

And the momentum is likely to drive the markets driven by increasing digital adoption and a growing awareness of the importance of insurance.

What’s also helping is the rise of competition. For instance, five years ago insurtech primarily meant Policybazaar.com .

But now, Paytm , PhonePe , Upstox and all sorts of fintechs have forayed into insurtech space, driving penetration among their massive user bases.

Then, there is also our portfolio company- Healthysure :)

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However, the following areas however come out as hottest to us:

1. Digital-first insurance companies, redefining how insurance policies are sold, processed and maintained with much lower cost of operations than the traditional peers. Like Digit Insurance and Acko

2. Platforms which use AI and data analytics to provide personalized insurance products and improve risk assessment and fraud detection. Like Toffee Insurance

3. Players which are building in blockchain and IoT products to enhance transparency and efficiency in the insurance industry. Like Zopper

And combining it all together, IRDAI is also coming out with BIMA Sugam which will further drive the market expansion.

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To understand the potential of India's insurtech sector, let's compare it with China and the US.

The US has a well-established insurtech market, with significant investments and a mature ecosystem. China is also a leader, driven by tech giants like Ping An and ZhongAn. India, while still emerging, has a vast untapped market with a growing appetite for digital solutions.

What helped the US and China attain high digital adoption rates in insurance was high awareness of why insurance is important, and consumer readiness (high penetration of internet, smartphones etc).

In that light, if one thinks about it, over the last 5-7 years, India has done an amazing work towards getting the consumer ready. Where more work needs to happen is building awareness, without which trust in insurance as a need will not happen.

And this is where a lot of action is also happening, in line with the Govt’s goal of “Insurance for All” by 2047.

If things play out as intended, the industry is ripe for an exponential boom!

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Conclusion

Insurtech is poised to revolutionize the insurance industry in India, making it more accessible, affordable, and personalized.

For private market participants, the opportunities are vast, from developing digital platforms and AI-driven solutions to exploring blockchain and IoT applications.

What do you think? Share your thoughts in the comments below!

Best,

Anuradha Aggrawal

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PS: We at Dexter Ventures ($50k-$500k early-stage investments) and Dexter Capital Advisors (advise $3MM-$100MM) are always eager to work with like-minded founders, angels and other members of the PE/VC/Family Office ecosystem.

Do reach out to us at [email protected] keeping [email protected] in CC if there is anything we can help you with :)