Tech enabling innovation across insurance sector: India InsurTech founder – BusinessToday
Insurtech is a word derived from the combination of insurance and technology. These start-ups leverage technology to bring efficiencies in the insurance industry by reimagining and redesigning products. Prerak Sethi, co-founder of India InsurTech Association (IIA), a not-for-profit industry organisation which builds collaboration between start-ups and other insurance industry participants, tells Business Today how the insurance industry is growing in India by leveraging the tech ecosystem.
BT: What is driving growth in the Indian insurtech space?
Prerak Sethi: The reasons for surge in insurtechs can be attributed to the fact that segments such as life, health, property and crop are underpenetrated. Moreover, customer preferences are continuously evolving with growing digital adoption and acceptance of new innovative product constructs. Technology advancements such as IoT, Big data analytics, etc. are enabling innovation across the insurance value chain. Regulators and government bodies are also actively supporting innovation through enablers such as the regulatory sandbox. COVID-19 has further accelerated the evolution with higher digital adoption by customers, channel partners and insurers.
Insurtech evolution is also indicated in the funding levels across the globe. Global funding in insurtechs has grown from about $2 billion in 2016 to $6 billion in 2020. In India too, albeit with a smaller base, funding has seen an increase from a modest base of $11 million in 2016 to $287 million in 2020. The funding trend has continued with Riskcovry raising $5 million in March 2021, Onsurity raising $16 million in August 2021, and Pazcare raising around $3.5 million. Globally 9 insurtech unicorns have emerged with Policybazaar, Digit, and Acko from India entering this exclusive club.
BT: How are insurtechs changing the landscape of the insurance industry?
Prerak Sethi: Insurance industry is adopting technologies such as Automation, Big Data, AI/ML, Blockchain, etc. to drive excellence across the value chain in areas such as personalized product design, digitally enabled salesforce, proactive risk management. IRDAI, the Indian insurance regulator, has also played an active role in supporting innovation in the industry by introducing a regulatory sandbox for the insurance sector.
With the evolving landscape, we see innovation on four broad dimensions:
Product innovation for addressing niche segments, contextual and new age needs: This includes increasing penetration and addressing unmet demands through innovative constructs such as bite-sized products, parametric insurance, etc. while moving from risk protection to risk prevention.
Services and solutions beyond insurance and aiding the emergence of ecosystems: This includes providing more holistic offerings to customers and extending specific capabilities and solutions to other industry participants.
Data-driven innovation across the value chain: This includes building a rich data repository and driving insights to target new segments and build sharper underwriting and pricing capabilities.
Use of technology to enhance customer, channel partner and employee experience: This includes reimagining processes across customer and channel partner onboarding, customer servicing, claims, renewals etc.
BT: How are insurtechs helping policyholders?
Prerak Sethi: The increasing innovation in the insurtech sector is focused on providing benefits to policyholders. Some of the benefits are product innovation for addressing niche segments, contextual and new age needs, customised insurance solutions, timely resolution of claims, servicing and grievances, issuance of policy digitally without the requirement of physical touch-points, embedded insurance solutions, cashless hospitalization in hospitals, hassle less and faster claim settlement.
BT: What kind of services are insurtechs currently providing in India?
Prerak Sethi: If you really think about insurtechs, you can divide them into four broad categories:
In the first category, we have companies that build tech+data solutions to help enable the entire insurance value chain across product development, pricing + UW, policy administration, claims, and customer servicing. For example, eBao, Metamorphosys, Nvest Solutions, Exegesis, etc.
The second category of insurtech companies are more focused on directly touching the customer using digital channels, but also usually have a strong tech+data dna. Here we have the insurance aggregators and comparison websites, and digital eco-system and digital health players such as Plum, Onsurity, Toffee, Riscovry, etc.
The third category is of enablers. This is the category you see at the bottom. Here we have industry organisations such as India InsurTech Association (IIA), service providers such as Transunion Cibil, and active investors in InsurTech such as Leo Capital.
The fourth category is the large global managed services consulting companies with a focus on the insurance sector. These are companies like Xceedance, EXL, C2L Biz, etc.