The insurtech concept represents the commitment to innovation and development of new products and services within the insurance sector. It is seeing robust growth in India and also globally, according to a recent BCG report.
India has showcased a strong momentum in insurtech, and its funding has more than doubled in the last two years. The rapid growth has also resulted in the emergence of 22 insurtech unicorns in 2021 globally, according to a recent report jointly brought out by Boston Consulting Group (BCG) and India Insurtech Association (IIA).
According to the report, global funding in insurtechs has grown seven times in the last five years, and continued momentum even during Covid-19. Europe has shown the strongest momentum in insurtech funding.
“Funding in 2021 indicates sustained investor interest. It has propelled from $290 million in 2020 to $800-900 million in 2021; with the hope of insurtechs creating real business value. This has been especially true for general insurance and B2C focused insurtechs that continue to see strong funding. Even globally, insurtech funding has shown strong momentum,” the report said.
Jitesh Shah, managing director and partner, BCG India, says: “As the sector experiences unprecedented growth, it is critical to continue collaboration between insurers and insurtechs. It is also important for the industry to keep innovating to address important issues, such as deeper insurance penetration, and customer health and wellness, among others. To ensure that the sector experiences continued growth, there is a need for key enablers, such as the National Health Stack, regulatory sandbox, and Insurance Information Bureau.”
Here Are Five Key Themes That Are Playing Out In The Insurance Industry
Emergence of new customer segments: The Ministry of Micro, Small, and Medium Enterprises (MSMEs) continues to be the key growth engine for the insurance sector. Women are becoming key decision makers (54 per cent decisions by women), and Tier-II and below cities will contribute to 70 per cent of insurance consumption by 2030.
Importance of higher distribution penetration and reach: Insurance penetration for key products, such as health and life insurance continues to remain low in India vs global leaders (~3 per cent for life insurance, ~35 per cent for health insurance).
Criticality of enhanced customer experience: Customers are expecting a seamless experience as offered by tech disruptors for other key offerings. Insurers who are driving focus on customer experience are seeing lasting results.
Data and analytics as core capabilities: Digital, data and analytics can no longer be viewed as capabilities of the future. There are multiple use cases across the value chain to drive innovation and personalisation.
Further emphasis on health insurance through National Health Stack: The insurance industry is receiving strong thrust from the government. There is opportunity for the National Health Stack to become a global standard; similar to UPI.
According to the report, multiple insurers and insurtechs are coming up with innovative solutions addressing some of these key themes. Also, there is ample room for multiple collaborations, with scope for insurers to scale up investments in insurtechs and implement seamless processes to collaborate. There is also significant scope for further innovation in key problems, such as deepening penetration in Tier-II+ locations and across product lines, along with a higher focus on health insurance.
Lastly, insurers and insurtechs can work with regulatory bodies and government agencies to continue to strengthen some of the platforms for further experiments, the report further said.