The fintech industry has shown exponential growth during the pandemic year. Gone are the days when the “one size fits for all” theory used to work. Due to digitization, fintech startups are creating customer-centric products and services based on data analytics. Currently, the fintech industry has grown into different sub-sectors including Bank Tech, Insurtech, Investment Tech, Robo advisors, Alternative lending, etc.
As per the Inc42 report, fintech startups are the most funded among all during Q1 2021. And in that also, Insurtech has been the easy choice for investors.
Why Insurtech Sector is Surging?
In India, insurance penetration is minimal compared with global data. As per IRDAI annual report, only 3.69% of Indians showed interest in buying different insurance policies compared with the global average of 6% in 2019. The report also suggests that this is one of the lowest percentages when compared with other developing countries.
So, there is a huge scope of insurtech growth. The Covid era has badly hit the insurance industry due to the imbalance between more policy payout and less policy buying. The insurance sector received a high payout from the sectors including motor insurance, travel insurance, freight insurance, etc.
Currently, there is a possibility to balance supply and demand by introducing technology-based innovative products. That is why the growing insurance startups like Digit, PolicyBazaar, and others are offering customized products after including technology.
Indian Government is also pushing to distribute policies online and is also encouraging the web aggregator concept. Not only that, but India has also approved the Insurance amendment bill in Rajya Sabha in March 2021 to increase FDI from 49% to 74% in the insurance field. That will mark the entry of more global insurtech players in India and will strengthen the insurtech sector further.
Growth of Policy Bazaar and Digit Insurance
1. Policy Bazaar
Policy Bazaar is the largest online marketplace in India. Over its web portal, one can compare different policies, loans products, and credit cards. The startup has collaborated with insurance providers in India. These players promote their products and showcase the insurance features online to attract customers.
As per Policy Bazaar’s claim, its platform entertains over 100 million users every year and performs 10 lakhs transactions per month. Currently, it covers 32% of India’s life cover & retail health business collectively. With the latest funding round of $75 million in March led by Falcon Edge, It has raised $ 630 million to date, as per Tracxn research.
2. Digit Insurance
Digit Insurance is one of the rising insurtech startups in India. The company has introduced mobile-based insurance policy transactions. It mainly focuses on car, travel, mobile handsets, jewelry, and bicycle insurance. It aims to provide insurance policies based on a simple and transparent procedure.
Digit is an IRDA licensed internet-first general insurer launched by Fairfax Holdings and Kamesh Goyal, a former executive from Allianz. Fairfax holds a 45% stake in the company. Today, the company announced that it has raised $200 million from its existing and new investors, including Faering Capital and new investors Sequoia Capital India and IIFL Alternate Asset Managers.
Overall, the startup has raised $442 million to date. The current funding round skyrocketed Digit’s valuation to $3.5 billion from $1.9 billion previously.
Acko, Riskcovery, Turtlemint, BimaPe, BimaPlan, and Toffee Insurance are other emerging insurtech firms in the Indian fintech sector.
Insurtech industry in India, though at a nascent stage, is ripe for innovation and disruption. Due to the regulatory changes and the technology inclusion, the insurtech sector has become accessible for remote area people as well. More transparency and customization based on users’ demands have convinced more Indians to buy the different insurance products.
As per the Trancxn report, 142+ insurtech startups are currently active in India. In 2020, Insurtech funding surged to $287 million from $11 million in 2016.