Indian insurtech start-ups are crowding the space with embedded products to serve the underexploited market

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In India, overall insurance penetration (premiums as a percentage of GDP) is still remain low, The insurance penetration was little more than 4 percent in FY21, indicating a significant untapped market. Therefore, insurtech players are expanding their reach of insurance products through embedding policies, along with other services through digital platforms to capture market share in the country. Since consumers are moving away from the traditional mode of distribution, instead byte sized insurance products are gaining popularity; hence these tech platforms are seeing strong growth in the Indian market. For instance,

• In February 2022, Noida-based embedded insurtech start-up, Zopper, had reached a milestone of US$100 million in annualized insurance premium. Zopper, which forayed into this space in 2018, built its application programming interface (API) platform to enable both parties to collaborate and introduce innovative insurance policies to attract customers. In other words, the company aims to redefine the design and distribution of insurance policies, making the products most appealing to the customers.

Zopper had worked with various companies across sectors such as financial services, e-commerce, and consumer products, to cross-sell their product given their sizable customer base. Consequently, the insurtech firm would enable these companies to bundle the insurance products along with their product or service.

For instance, Zopper had worked with a bank where more than half of its customers come under the senior citizen category. Accordingly, it strategized to develop a combination of insurance products related to health, covering diseases such as cancer and COVID-19. Also, it had created a unique insurance product for a neobank whose maximum customers fall in the Gen Z category, the insurance product being screen protection of their smartphones.

Tiger Global and Blume Ventures-backed Zopper, which has engaged with customers such as Amazon, Ola, Cars24, Xiaomi, Croma, Titan Eye Plus, and many more, is expected to see significant growth in the high performing embedded finance market. Moreover, Zopper, which is present in 1,200 cities, has already expanded its business in Nepal and Bangladesh and intends to enter the overseas markets. Currently, it is also doing some pilot projects in Malaysia, Indonesia, and Vietnam before foraying in these countries.

The advent of technology, fuelled by smartphone penetration, has helped new age insurtech companies to reach out to more customers. Hence, more players are seen entering the Indian market with embedded insurance products. For instance,

• Riskcovry is another growing insurtech start-up that provides a one-stop platform for omnichannel distribution (customized, embedded) for any business across any insurance product & insurer category (health, general, life). To date, Riskcovry has issued more than 5 lakh policies and also raised US$5.3 million, led by Omidyar Network India, in March 2021.

The rising popularity of these start-ups can be attributed to the COVID-19 pandemic together with the digitization of every sector, including insurance. Most importantly, the entire insurance value chain has undergone some degree of digitization which has further provided the impetus to the embedded insurance market. Consequently, automation and digitization, particularly in product underwriting and distribution, have provided momentum to the market. This market has the potential to penetrate insurance in rural and underserved areas significantly and, therefore, is expected to bring substantial growth for these start-ups over the next three to four years in India.

To know more and gain a deeper understanding of the embedded finance industry in India, click here.