The Indian InsurTech market has grown considerably over the last few years, especially with a steep 2x funding growth in the last two years.
Funding to Indian insurtechs has grown at a Compound annual growth rate (CAGR) of 34% from FY17-20, taking off in 2021, stated a recent report by PGA Labs.
In 2021, Indian insurtech companies raised a total of US$800 million in equity funding. This is more than 2019 (US$380 million) and 2020 (US$290 million) funding sums combined.
Tracking the Insurtech ecosystem landscape, the report also highlighted that the global insurtechs also witnessed a CAGR of 37% in fundraise during that time period with 2021 proving to be a watershed year.
Legacy insurers have started paying much more attention to newcomers and they’ve become a big funder. Somehow, they have recognised that teaming up with technology firms can be a game-changer.
Globally, 20+ Insurtech unicorns have emerged in the past three years. Root, Wefox, Hippo, Next insurance, Lemonade, Waterdrop and Unqork are among the global unicorns.
The list also comprises Indian unicorns such as Acko, PolicyBazaar (publicly listed) and Digit Insurance (to IPO in 2023).There are currently over 142 Insurtech startups operating in the country, as per Tracxn.
While InsurTech fundraising has been fast paced across Asia in recent years, innovators in China and India appear to be moving beyond a supporting role and confront the region’s industry incumbents, said a report by S&P Global Market Intelligence.
Most funding in case of Indian Insurtechs has hitherto been for sales & distribution players, however product development is starting to gain traction.
A couple of years back, the insurtech was an ‘underdog’ in the sector, but it is coming up with a bang from support of the legacy players as well as the interests of new players.
B2C business models with higher revenue
When it comes to revenue generation, the PGA Labs report said that B2C business models are valued higher by investors due to higher operating leverage and perception of higher proximity to customers.
During the past few years, the revenue of established B2C marketplaces has exceeded the agents-based marketplaces revenue.
Leading InsurTechs in terms of growth and funding
PolicyBazaar has the highest funding followed by GoDigit and Acko during FY17-21. The year 2021 saw the maximum capital inflow, with Acko and Digit raising $225 Mn and $200 Mn, respectively, making it to the top funding deals of the year.
In case of growth rate, GoDigit exhibited the highest CAGR followed by Navi and Acko, the report added.
It further highlighted that Turtlemint has the largest funding among the B2B2C marketplace during FY17-21, while InsuranceDekho has the highest growth rate, followed by Turtlemint.
Other key insurtech companies in India eyeing a significant market share include Paytm Insurance, ENSUREDIT, Onsurity, Plum, Riskcovry, RenewBuy among others..
Importance in the Indian FinTech space
The Indian fintech market is one of the fastest-growing globally, estimated to reach $1.3 trillion by 2025, growing at a CAGR of 31%.
Among its key sub-sectors, lending tech is likely to account for 47%, or $616 Billion, followed by insurtech at 26% ($339 Bn) and digital payments at 16% ($208 Bn), stated a report by Inc42’s while adding that India’s Insurtech sector offers a $339 Bn Market opportunity.
The key growth factors driving insurtech companies in India include the rising insurance awareness across Tier 2 cities and beyond, widespread use of women-specific insurance products, and better SME participation.Consumer inclination, improved reach & technology blend, emergence of the national health stack which has helped improve the penetration into the insurance sector, are among other key factors, it added.Moving forward, the industry is set to grow even more, on the back of supportive initiatives and rising demand among new customer segments, according to a new report by the Boston Consulting Group and the India Insurtech Association.
