About Prerak Sethi
PrerakSethi is the CEO & Founder of RIA – an InsurTech company using technology & data to improve the health insurance experience for customers, leading to them living healthier and happier lives.
Prior to founding RIA, Prerak has 5+ years of experience in insurance distribution, set up one of India’s first websites for health insurance, and also co-authored a book on health insurance.
Prerak is also a Co-Founder of the India InsurTech Association (https://indiainsurtech.com/) and advisor to multiple InsurTech start-ups.
Outside of the insurance sector, Prerak has 10+ years of work experience in Analytics, eCommerce, and Consulting. He also has strong hands-on expertise in building online platforms, tech and data product management, customer acquisition and retention, and UI/UX.
Prerak is a BSE in Computer Engineering from the University of Michigan, Ann Arbor and MBA in Finance and Entrepreneurship from the Kellogg School of Management.
Q. Over the last few years Insurtech funding across the globe has witnessed sharp growth despite the pandemic. India too has witnessed entry of many InsurTech players. Can you highlight some of the funding trends here?
A. The Covid-19 pandemic has acted as a catalyst for the insurtech sector, with funding levels in Indian insurtechs increasing from $290 Million in 2020 to $800 Million in 2021, as per the IIA-BCG report on India Insurtech Landscape and Trends released in April 2022. In the last four years, we saw nearly 30 global Insurtech unicorns emerge. In India, we have three Insurtech unicorns – Acko, Digit and Policybazaar!
However, after years of growth in global funding, we are currently witnessing a downward trend in funding across sectors due to the rising inflation rates and challenging global economic conditions. This has impacted InsurTech too, with a downturn in funding numbers globally and in India. However, in the medium to long run, we feel India would remain relatively insulated given that the insurance and Insurtech sector are witnessing strong growth. A number of India InsurTech Association members have recently raised capital, such as MetaMorphoSys Technologies raised $3 Million in August, HealthAssure raised $6 Million in August, Zopper raised $75 Million in September, Coverself raised $4.8 Million in September, BimaKavach raised $2 Million in October, Lumiq raised $ 5.5 Million in November, BeatO raised $33 Million in November, and Insurance Samadhan raised $2 Million in December.
The positive outlook towards the Indian insurance sector is also being driven by the recent regulatory reforms being introduced by IRDAI. The slowdown in funding is expected to recover by late 2023.
Q. Insurance sector in India is poised to grow fast in coming years. Insurance Regulator has too envisioned doubling of penetration in next 5 years. According to you what role does Insurtech can play in the new insurance scenario?
A.The Indian insurance regulator, IRDAI, has undertaken a number of reforms to increase the insurance penetration in India from our current levels.
One such reform is to move most insurance products towards a use and file mechanism. This opens up the opportunity for insurance players to launch many insurance products rapidly. We expect that these insurance companies will partner with InsurTech companies to licence their technology platforms to support distribution, underwriting, and claims for new and unique products and coverages. If we look at health insurance for example, we see a trend where insurers are collaborating with InsurTechs and HealthTech companies to introduce wellness components into their products.
Similarly, IRDAI has made a large push for boosting distribution, by allowing corporate agents to partner with 9 insurance companies in a similar category. This will allow InsurTech Insurance Intermediaries to offer more insurance products to their customer base.
On similar lines, IRDAI’s rules permitting innovative products for Motor Insurance such as Pay As You Go and Pay As You Drive will require partnerships between Insurance companies and Insurtech players such as Kruzr, CarIQ, AutoWiz, etc. which provide Telematics solutions for these offerings.
Q. What are the International trends in Insurtech revolution across the Globe?
A. Global Insurtech trends vary across geographies and territories depending on local regulations and maturity of the local insurance industry. However, here are two global Insurtech trends which stand out:
Omni-channels: The new-age digital customer prefers having all offerings as part of a single seamless journey, instead of having multiple broken touchpoints. For both existing and new insurance players, a true omni-channel experience has become a pressing priority. Insurers are increasingly looking towards UX designers, data analytics companies and automation platforms to design engaging omni-channels for its customers. For example, in a single health insurance claim, the insurer has multiple touch-points with customers, several healthcare providers, and TPA. Being able to efficiently switch between different modes of communication and interaction while processing the claim is crucial to drive a high customer NPS score.
Health and Wellbeing: Insurers are focusing on going above and beyond the traditional coverage, and help their customers lead a better and healthy life by providing incentives for healthy lifestyle and holistic care management. This has become a major area of exploration for insurtechs. For instance, insurtechs are enabling insurers to offer personalised healthcare to policyholders, by offering new solutions such as value based care, telemedicine facilities, chatbots to assist customer 24*7, online pharmacy, wellness packages, wearable tech, etc.
Q. Please tell something about the Insurtech Association and its objectives.
A. The India InsurTech Association or IIA started as a conversation between Shwetank Verma, Subhajit Mandal, and me in August 2020. While InsurTech was a hot topic of conversation in the Indian insurance eco-system, there was no formal body driving interaction between start-ups, companies and professionals within the space. When we looked outside of India, we found that practically every other large country or region had an InsurTech association.
Hence, we started IIA as a not for profit which brings together the entire insurtech eco-system in India onto a single platform. In the 2 years since our inception, we have touched 180+ members. Our diverse member base includes startups, (re)insurers, insurance intermediaries, software companies, insurance focused IT services companies, and service providers.
Some of our objectives are:
- Facilitate partnerships between startups and the broader insurance industry such as insurers, reinsurers, service providers, and investors
- Help Indian InsurTech companies to access global markets
- Connect InsurTechstartups with insurance industry experts, not just from within India but also from outside India
- Publish and promote thought leadership
- Promote initiatives which use technology to increase the insurance penetration across different socio-economic segments of India in a more equitable way.
Q. How has been the journey of Insurtechs in India so far? Which are the key segments/areas in the insurance Industry where Insurtechcompanies are focusing the most.
A. Prior to 2019, the Indian InsurTech scenario was dominated by distribution focused InsurTechs, which are now some of the largest insurance intermediary players today – for instance Policybazaar and Policyboss. However, in the last 2 years, we’ve seen a number of new InsurTech companies come up in India in other areas such as Embedded Insurance, Employee Benefits, Claims Consulting, etc, which have led to higher insurance adoption and better customer experience.
Employee Benefit startups are making employee healthcare benefits accessible through tech-based platforms which simplify purchase and servicing of policies, provide employers with claims and analytics dashboards, and provide access to digital health services for holistic employee health management. InsurTechs are also focussing on offering embedded insurance solutions for gadgets, cars, healthcare purchases, etc. Some InsurTech players are working on building insurance infrastructure pipes and APIs, which can connect digital ecosystem companies with insurers, while providing support on compliance, marketing, operations etc.
The growth in the number of InsurTech companies has also resulted in attracting excellent talent from data science, technology, UI/UX, and Product Management into the Indian insurance industry. In the next couple of years we can expect more Indian InsurTechs to become world-class SaaS and analytics companies.
Q. Do you think Insurtech will help to significantly change the underwriting and claims experience and make the customer journey more pleasant?
A. Currently, insurance as an industry lags other consumer facing industries when it comes to providing a digitally driven customer experience. This is more true in areas such as underwriting and claims, which have not been digitised to the same extent as distribution.
InsurTechs can enable insurers with technology platforms in underwriting and claims which enable higher process automation resulting in faster processing, improved accuracy of decision making, and reduce human error.
Some of the solutions being built by Insurtech players include data platforms to leverage the vast amount of data points being generated today. Examples of new data pipelines which can be used for underwriting include wearable devices such as smartwatches, IoT enabled devices, connected cars etc. Insurtech companies have already started bringing together these data points for enabling faster and more accurate decision making for underwriters.
Similarly, it is expected that insurance companies will build deeper partnerships with Insurtech players for using these data points for automating adjudication of claims, faster claims processing, fraud detection etc.
In India, we’re also seeing a set of customer-facing InsurTechs coming up in claims, such as Claimfriendy and Insurance Samadhan, which have developed tech platforms for managing claims on behalf of customers.
Q. What is the expected market you envision for Insurtechs in India?
A. The insurtech sector in India is poised for a boom in the next couple of years. According to a recent RedSeer report, the Indian Insurtech market stands at $2 Billion as of 2021, and is slated to grow to $13 Billion by FY2026.
Indian customers are now digital and are rapidly researching and purchasing more products online, including insurance, thanks to a high proliferation of smart-phones and cheap internet. Hence, we expect that the role of Indian InsurTechs will become even more prominent in the years to come, as the insurance industry addresses the growing needs of the new-age digital customers.
Any new entrant in the Indian Insurtech market has a lot of exciting growth to look forward to in the coming years! A few areas for new founders and early stage companies can be:
- Look for under-penetrated risk pools – There are still large risk pools in India which are under-served, for example Home Insurance, Property coverage for SMEs, Cyber Insurance, Parametric Crop Insurance, etc. InsurTechs can build specialised technology platforms in these areas to differentiate themselves.
- Enable digital distribution to all parts of India – India is a large and diverse country. InsurTechs should build platforms to focus on digital distribution across specific regions or communities in India – the focus on specific customer segments should be built on deep understanding of the their customer’s income levels, access to digital goods and services, local community practices, vernacular languages, level of insurance awareness, and local insurance risks.
- Collaboration with Insurers – Insurers are increasingly relying on insurtechs to increase their digital capabilities. The Insurers are forming “digital” teams and also partnering with Insurtechs to drive digitization on the front end and back end. Insurtechs should start with strong use cases which enable them to build partnerships with Insurers. Once there is a strong partnership with insurers, InsurTechs can continue to expand their offerings to adjacent areas.
Q. Globally, 20+ Insurtech unicorns have emerged in the past three years. What is the potential of Indian companies to join the bandwagon?
A. In the next three years we expect another 5-6 Indian Insurtech unicorns to emerge.
In the domestic market, we have already seen distribution focused Insurtechs raising Series C and Series D capital in the last couple of years, such as TurtleMint, RenewBuy, and InsuranceDekho.
Similarly, India is now producing excellent InsurTech companies who are building Enterprise Tech, SaaS, and Analytics companies for the global insurance community. Some of these companies are global leaders in the use of data, data science, and AI/ML in insurance. These companies have the potential to become some of the largest InsurTech companies in the world and we can expect at least a couple of them to become unicorns in the next 3-4 years.
Q. Would you like to highlight any other development in the segment?
A. In 2023, our industry has access to unparalleled data – the kind of sources, the volume, the real time availability of data is a game-changer. Presently, a lot of the global innovation in InsurTech is coming from the availability of data and its use in areas such as underwriting, risk management, and predicting losses. The ability to capture and analyse data from different sensors and sources in near real time opens the door to more proactive risk management and claim prevention models.
There is still significant room for new InsurTechs to build companies around the explosion of data and its use in the insurance industry.
