The Indian InsurTech ecosystem is bustling with activity – partnerships, small-ticket product launches and venture capital funding across the board. I’ve always felt technology and insurance press in the West overlooks this nascent ecosystem in India, hence, I’ve taken it upon myself to share information along with my observations and view.
In the past, I’ve authored a summary on the IRDAI InsurTech report (September ’18), a 101 on InsurTech in India (February ’19) and an update on the proposed IRDAI sandbox (June ’19) – these publications set the scene for the discussion to follow.
Broadly, this publication will be split into four short sections with an emphasis on the latest news from the Indian InsurTech ecosystem:
- The present – embedded insurance
- The present – small ticket insurance
- The present – distribution
- The future – what should you expect?
The present – embedded insurance
“Think of embedded insurance as the ice or the straw that comes along with the glass containing your favourite beverage – you’re unlikely to care who manufactured the ice or the straw. Similarly, insurance will be increasingly embedded in transactional purchases.” – Michael Waitze in conversation with Dr Woody Mo, Founder of EbaoTech, on the Asia InsurTech podcast.
Embedded insurance is the idea of providing seamless insurance policy purchase at the time of availing a service or purchasing a product. Nigel Walsh, Partner at Deloitte Digital, has an excellent thesis on this subject. 
Embedded insurance is increasingly becoming popular with India’s neo-insurance carriers. Here are some examples of this phenomenon in India:
- Acko Insurance and Ola Cabs – This partnership to offer micro-trip insurance policies embedded in Ola rides is recording 20M monthly sales. 
- Digit Insurance and Flipkart – Flipkart customers can avail of mobile phone insurance with zero deductible at the time of mobile purchase. 
- Incumbent insurer HDFC Life and Telcom Airtel partnered to offer a $5500 term life insurance policy with Airtel’s $3.5 per month prepaid plan.  Hands down, my personal favourite – view the “premium” lost as CAC for up-selling in the future!
- Acko Insurance and Amazon – Another instance of mobile phone insurance ; recall, Amazon led Acko’s $12M Series B. 
There are other examples that I will avoid for conciseness, but, Acko Insurance is a trailblazer here. Acko recently partnered with OYO to offer complimentary guest insurance covering death, loss of baggage and emergency hospitalization. 
An important observation with regards to Acko Insurance and the motor insurance segment:
- In June, Acko acqui-hired car marketplace VLer Technology .
- This news oddly reminded me of Ping An’s investment into Autohome (a user-car marketplace in China) in June 2017. 
- Around the same time in June, Indian car marketplace CarDekho announced the launch of InsuranceDekho – it’s insurance venture. 
- At the same time, Digit Insurance has acquired more than 2% market share in the motor segment in India (and, rapidly growing).
These are “fun times” (AKA serious competition) in the motor insurance space in India. Perhaps Acko and CarDekho will push hard into the motor market with their respective embedded insurance propositions at the (digital) point of purchase.
A note for my Western audience – a recent change in motor insurance regulation in India (the ability to purchase a third-party liability and own-damage policy from two different insurers) could serve as a catalyst here. 
The present – small ticket insurance
The thesis behind small ticket insurance is two-fold:
- Smaller “hurdle” to insurance purchase – on the price front, affordability makes insurance accessible and from a customer perspective, relatability since such policies are connected to frequent occurrences (dengue is common in India), hence, there appears to be a tangible benefit. Toffee Insurance’s dengue insurance product is a great example.
- Education and upsell opportunity – you might agree with me when I say that customers, under the current insurance model, only understand the value of insurance when they claim. However, a customer cannot claim without being a customer! Allowing prospective customers to “sample” insurance increases awareness about products and consequently, by the Law of Large numbers, their benefits. Over time awareness may translate into traditional product purchase (up-sell opportunities emerge).
Image courtesy of Economics Times; article dated 19th August 2019; non-commercial re-use
The Indian audience here may remark this is oddly reminiscent of shampoo “sachets” – the purpose of which was to allow the general public to sample such products; hence, such policies are frequently referred to as “sachet insurance”.
Small ticket insurance policies are now being widely sold in India, I would expand list some examples I feel that the Economic Times, through the table provided above , has adequately summarized the landscape.
The present – distribution
From bancassurance 2.0 to digital channels, insurance companies and start-ups in India come up with the most innovative distribution mechanisms; the weird, wacky and wonderful –
Weird – You’ve heard of an ATM, but have you heard of an ATH (Any Time Health) machine? – My first thoughts on reading this.
- Bancassurance couldn’t get cooler (June) – Insurer Max Bupa and IDBI Bank inked a deal in June  that will see ATH machines from start-up YOLO Health; 3 minutes for a complete health assessment and quote – I loved it at my local IDBI Bank on my previous visit.
- Wacky – Airtel Payments Bank and Bharti AXA (July) – Airtel will distribute a variant of Bharti AXA’s “Saral Jeevan Bima Yojana” at its 60000 banking points; this made me chuckle for no reason but interesting nonetheless! 
- Wonderful – inclusive insurance push by True Balance and ICICI Lombard General Insurance (August) now offer tiered (group) health insurance products focused on Tier II and Tier III Indian cities. 
There are numerous such partnerships emerging, I have highlighted a small selection; honourable mention goes to the partnership between by MobiKwik & Edelweiss Tokio Life. 
The future – what should you expect?
The most pressing question right now would be where is insurance headed in India. Lots of people will give you varying answers. Instead, I hope to share some of my observations to help inform your view of what lies ahead.
Reliance Industries’ 42nd AGM
Yes, you read that write, the recently held Reliance Industries’ 42nd AGM , in my opinion, may hold the key to where insurance (especially, motor) may be headed.
A key announcement by Mr Ambani is a proposed cross-country Narrow Band Internet of Things (NB-IoT) platform ; this platform is due to be launched as early as 1st January 2020. So, where does motor insurance come up here?
Earlier this month, in Thailand, insurer Thaivivat Insurance partnered with Advanced Info Service (AIS) to deploy the NB-IoT platform build by AIS  to offer on-demand insurance; early numbers suggest some users can save up to 40% in premiums. Could NB-IoT hold the key for telematics-based motor insurance or “smart home insurance” in India?
I’d love to hear your views on this matter. Further, Mr Ambani also announced that together with Microsoft Azure, start-ups can seek subsidized cloud infrastructure services by applying before 01/01/2020.
To add to the above, the angel tax issue highlighted previously is being actively managed/in the process of being resolved. There couldn’t be a better time to get your InsurTech start-up off the ground!
The Indian InsurTech ecosystem hasn’t seen mega-funding rounds (as yet). The most notable so far was Policybazaar’s $152M Series F  in May. However, there are early signs of large funding rounds in the coming months:
- GOQii is in the process of raising a $70M Series C to finance local growth and expansion into Japan . Recent announcements include investment by Bollywood icon Akshay Kumar and the ‘India Health Quiz’.
- Coverfox is expected to raise a $50M+ Series D financing  and recently secured $5.89M as part of an extended Series C financing ; perhaps, the rumoured Paytm acquisition won’t happen?
- Digit Insurance will be expanding into health insurance ; with its previous funding round in July 2018, I would expect some additional capital to be raised shortly.
In light of the expected large funding rounds, here’s some good news (for founders) – The Ministry of Corporate Affairs (MCA) has raised the cap on Differential Voting Rights (DVR) shares up to 74% of the post issue paid-up share capital versus 26% earlier. Further, the profitability clause for such an issue has been removed .
Any current or prospective founders within the Indian InsurTech ecosystem should carefully review this amendment in regulation. Further, such regulations may provide an impetus to raise venture capital; should we expect to see more (ambitious) mega-rounds?
Hopefully, I have been able to convince you that the Indian InsurTech ecosystem is thriving. In this publication, I’ve highlighted three present “trends” – embedded insurance, small ticket insurance & novel distribution mechanisms along with some of my observations regarding what could be the next big thing in InsurTech in India.
I have some questions for you:
- Which “trend” do you think is dominant? – Embedded insurance, small ticket insurance or distribution. And, why?
- What will impact motor insurance in India the most? – NB-IoT, embedded insurance in the motor segment (Acko, InsuranceDekho etc) or maybe, something else?
- Are there any other topics/areas within InsurTech in India that I have overlooked and should cover?
External resources and references
- Asia InsurTech podcast – past guests include Acko Insurance, Artivatic.ai and Leo Capital.
- Robert Collins – An authority on InsurTech and insurance in China; mentor at Ping An Cloud Accelerator. Rob and I frequently discuss InsurTech in Asia (frankly, I should rephrase as “I annoy Robert” but let’s pretend otherwise) with active participation from Patrick.
- Some open-source resources that I maintain: InsurTech in India [i], InsurTech VC funding spreadsheets [ii] and a comparison of the UK and Indian InsurTech ecosystem [iii].
This article does not constitute investment or any other form advice. The author bears no responsibility in the event of financial or other loss arising from actions taken by the reader or any related party based on information represented in this article. The author does have any financial interest in any firm mentioned in the article above; this article is produced for educational purposes.
For any further queries or complaints, kindly email me at email@example.com
A note from the author
I will be visiting India for a short trip beginning on the 30th of August; do reach out to me for a conversation if you’re interested/have an interest in the Indian InsurTech space – whether it’s as a current/prospective founder, investor or executive.
I’m keen to profile start-ups in the Indian InsurTech industry for my next article – I’ve reached out to Riskcovry, MetaMorphoSys and GoPlannr amongst others – do ping me; I enjoy listening to founder stories!