InsurTech is poised to mature even more in 2022

Indian InsurTech had a watershed year in 2021 with US$ 800M in venture capital funding and establishing 2 new InsurTech unicorns in Acko and Digit. Globally US$14Bn was invested in InsurTechs which indicates the strong sentiment towards the industry. There are a slew of start-ups working on different problems in the Indian insurance industry. Insurance companies too are aggressively undergoing digital transformation. These investments along with continued investor interest will help mature the Indian insurance industry this year.

Here we discuss 7 themes that will be driving InsurTech in 2022.

Claims Tech – 95% of health insurance claims in South Africa are settled paperless, in India the percentage is less than 0.1%. This means there is a substantial opportunity to bring in tech to create better efficiencies in claims. Covid has accelerated paperless claims in India, and this can just be the push needed to bring in more technology including on the fraud prevention side. On the consumer side too, there have been investments into startups that are helping solve inefficiencies through better education and guidance of the claims process.

Health subscription models – Over the last couple of years, a few InsurTechs have been offering subscription-based health plans which has health insurance bundled into the plans. This has similarities just like a SAAS based model and has the potential to heavily drive health insurance penetration in India. Some also promote a completely paperless approach towards healthcare. Certain challenges persist around regulatory validity of such plans, but the players continue to operate and are thriving.

Embedded Insurance through APIs – Embedded insurance means bundling insurance at the time of sale of a product or a service. Using technology to bundle insurance offerings has the potential to create new value add in the ecosystem and create new distribution models. Travel insurance in particular has done very well in the last few years to leverage embedded insurance. Fintech in particular has seen a lot of insurance products embedded into their products including products such as job loss insurance, accident insurance etc.

Emergence of Digital Health ID – Digital Health ID is a collection of initiatives from the government that will make it seamless for an individual to access healthcare, exchange health records, and maintain a comprehensive medical history and profile. This has the possibility to revolutionize the healthcare space in India, especially health insurance. Insurance companies can potentially set premiums based on healthcare data of individuals. This has the potential to bring down the health insurance premiums in India. Once a wider launch of the digital health ID and more use cases are unlocked, insurance companies and InsurTechs will surely be leveraging this data to create customized products.

Usage Based Insurance – Insurance companies have started introducing usage-based insurance and one example of this is motor and cargo insurance based on usage patterns or telematics of the vehicle in use. Tracking is generally done through technology enabled devices or mobile phones. Data is then sent to the insurance companies to determine insurance premiums. The growth of IOT devices provides more scope for such usage-based insurance products in the future.

Holistic Health and Wellness Support – Insurance companies and other InsurTechs are betting big on providing a comprehensive healthcare suite to insured to manage the lifecycle of health insurance. Better healthcare lifestyle will lead to reduced claims incidence and thus insurance companies will tend to benefit in the long run. Therefore, insurers are increasingly creating a curated health and wellness digital offering through their platforms bundled along with core health insurance. This includes fitness tracking, access to health check-ups and doctor consultations.

Data Driven Underwriting – Insurance companies and startups are working towards leveraging data and adopting data analytics to create models that better underwrite risk. As these models are created, insurers can collect information beyond the normal demographics, claims history etc to better predict risks. This can potentially bring down insurance costs.

2022 will be the year when investments are set to provide results in transforming the insurance industry in India. Insurtech is at the cusp of disruptive growth, that Indian fintech witnessed over the last 5 years and follow it to become the global leaders in innovation.

Author: Anuj Parekh, Co-founder & CEO, HealthySure