Insurtech Startups are Climbing Up but are We Ready for It?
The global insurtech market revenue was valued at $532 million in 2018
From banking to wealth management services, the finance sector is going through major disruption and the insurance industry is not immune to this. Insurance technology aka insurtech companies have edged up the game and moved beyond merely aggregating policies. They have started to innovate using technology such as IoT, the blockchain, artificial intelligence and are trying to break the complexity around the product.
According to a Research and Markets report, the global insurtech market revenue was valued at $532 million in 2018. It also predicts that the revenue is expected to reach $1,119 million by 2023, growing at a CAGR of 16.0 per cent between 2018-2023. The opportunity in India is tremendous. As per an IBEF report, gross premiums written in the country touched INR 5.53 trillion (USD 94.48 billion). However, the penetration levels in the country stood at 3.69 per cent in 2017. These numbers need to improve and insurtech companies have a huge role to play here.
Ratheesh Nair, Founder and CEO, Watch Your Health.Com says the insurtch ecosystem has generated over USD 2.3 billion dollars in funding last year globally and India is also on the path to enhance the contribution to the insurtech landscape. The only question is how soon?
"Over the years, consumption has increased by leaps and bounds with insurers all across the world eyeing the Indian insurance business. In spite of low penetration, insurtech players are developing innovative platforms and customize solutions which will disrupt the dynamics of the traditional system," he added.
Even celebrated Indian entrepreneurs like Binny Bansal have placed their bets in this segment. While announcing his investment in Acko General Insurance earlier this year, Bansal in a statement said, "Technology-led insurance is expected to play a significant role in the growth of the underpenetrated insurance sector in India."
While new-age businesses are developing new and disrupting models around the insurance products, traditional companies such as HDFC Ergo, IndiaFirst, etc have also buckled up and are innovating with new technologies. So, where does the opportunity lies?
Vivek Chaturvedi, Head of Marketing at Digit Insurance says the opportunity lies in the way a company sees its role in the consumer's life. "If we are just another insurance company, we won't make any difference to them. But if we find a pain point and resolve that, that's the opportunity," he added.
He also feels that technology can democratize access making it possible for people across geographies to buy your products. That again is a big opportunity, especially in India.
"With technology as our weapon that can aid in simplification, we feel the customer's experience becomes faster and easier. And with millennials leading a busy life, looking for quick solutions for everyday jobs to investments, we feel the opportunity is huge," he noted.
The Support System
While this opportunity might seem huge at the moment, for it to materialise there is a lot of work that needs to be done. The Digital India initiative played a major role in helping insurance companies, the stakeholders, government and the IRDA now need to look at other aspects of this business.
Take an example of access to data. Big data is believed to have a huge impact to the industry but access to important government records is currently unavailable for the industry or for that matter, a health record on an individual is all over the place. There is so needs to clarity on how this data could be stored and used while keeping privacy in mind.
Having said, the regulator has started to take one step at a time. The IRDA constituted a working group to examine "Innovations in insurance involving wearable / portable devices'. It has also recently floated a discussion paper on "Telematics' in motor insurance, which clearly meant there is an intent to understand the nature of this disruption.
Will it ring-fence or give a free hand to insurance companies – we have to wait and watch!