By merging insurance with technology, this burgeoning sector promises to revitalise the traditional insurance sector
In the past decade, FinTech's revolutionary impact has been marked by the integration of cutting-edge technologies across various sectors. Thriving on innovation, these FinTech companies have disrupted traditional processes, raising billions in the process. Even with a funding slowdown, the sector managed to secure $1.3 billion in H1 2023.
Building on this momentum, Insurtech emerges as India's new digital frontier. Merging insurance with technology, this burgeoning sector promises to revitalise the traditional insurance. Its innovative solutions aim to enhance customer experiences, streamline operations, and increase insurance accessibility. Currently valued at US$ 20,667.5 million, Insurtech is projected to surge to an estimated 210,664.3 million by 2033, growing at a CAGR of over 26%. This remarkable growth trajectory positions Insurtech not just as a trend, but as a transformative force in India's digital economy.
Insurtech and its scope
Insurtech (made of two words: Insurance and Technology) refers to the use of technological innovations designed to squeeze out savings and efficiency from the current insurance industry model. It is not just limited to digitising the existing insurance framework; rather, it's a reimagining of insurance operations using cutting-edge technologies like AI, blockchain, and IoT to create more personalised, automated, and customer-centric services.
Insurtech in India represents a transformative force within the traditionally manual and paperwork-heavy insurance sector. Leveraging technological innovations, Indian Insurtech start-ups are streamlining policy management, claims processing, and risk assessment. This simplification makes insurance more accessible and user-friendly. There is still a large proportion of the population uninsured, for instance around 40 crore individuals do not have access to any health insurance. This significant presence of an uninsured population, coupled with growing digital adoption, positions Insurtech for substantial growth .
Success of the Fintech
The success of fintech companies and the rapid adoption of the services offered by these enterprises have laid the groundwork for the emergence and growth of Insurtech. The current trajectory of Insurtech which promises high growth rates and is also characterised by disruptive innovation and swift market penetration, is quite similar to how the Fintech sector has evolved in the past decade.
Investors are for Insurtech
Even though the comparison of numbers with the fintech sector would not be fair, it is critical to mention that Insurtech enterprises have raised more than $2.6 billion in the past five years. With exciting forecasts, it is rather a surety that VCs and investors would be more than happy to pour more money into a sector that has a forecasted CAGR of more than 25%. Here are some of the most critical reasons, besides the growth trends, that have enhanced investors’ interest in the sector:
Filling gaps in insurance
Traditional insurance models are often hindered by inefficiencies like lengthy claim processes and limited customer interaction. Insurtech addresses these gaps through technological solutions that streamline operations and enhance customer engagement. This ability to solve longstanding problems in insurance makes Insurtech a particularly attractive investment for those looking to fund ventures that combine innovation with practical, market-driven solutions.
Data-Driven Insights
The fundamental appeal of the sector is based on data analytics and AI. These technologies enable more accurate risk assessment, personalised policy offerings, and predictive analytics to anticipate future trends and customer needs. For VCs and investors, the efficiency and customer-centric nature of these data-driven solutions presents a compelling investment case.
(The writer is the founder, of Alwrite; views are personal)
