Insurtech sector funding in India poised to surpass $1 billion within the following year, according to a new report.
In the ever-evolving landscape of the Indian insurance sector, a number of significant changes are underway. One key player in this transformation is Perfios, a global B2B SaaS firm that has been serving the banking, financial services, and insurance industry in 18 countries since its founding in 2008. Based in India, Perfios empowers over 1000 financial institutions, including banks and insurance companies.
Perfios plays a crucial role in shaping the origination, onboarding, decisioning, underwriting, and monitoring processes for these institutions, enabling them to operate at scale and speed. Every year, the company delivers an impressive 8.2 billion data points to its clients, facilitating faster decision-making and significantly accelerating access to credit and financial services for their customers.
The Indian insurance sector is undergoing a period of rapid modernization, as evidenced by reports such as 'Reimagining Insurance: India's Leap into the Future of Insurance.' This joint report, authored by Deloitte and the Confederation of Indian Industry (CII), presents a vision for the sector's modernization and identifies five key shifts: Insurer-led tech investments, journey-level digital transformation, public infrastructure and government support, dynamic distribution and data, and regulation.
One of the key challenges facing the Indian insurance sector is a low penetration rate. In FY24, insurance penetration in India dropped to 3.7%, with life insurance at just 2.7%, well below the global average of ~7%. However, the report identifies opportunities for growth, particularly in the areas of digital channels, insurtech, and government initiatives.
Digital channels are gaining traction in the Indian insurance sector, although traditional agent-led distribution remains dominant. Prasad Krishnamorthy, Head of Insurtech at Perfios, stated that digital sales represent only 0.67% of new life insurance business in India. However, it is projected that 80% of life insurance onboarding in India will be automated, and over 90% of retail non-life claims are expected to move toward real-time processing.
The Indian government is also taking steps to facilitate digital innovation in the insurance sector. Initiatives like NHCX (National Health Claims Exchange) and the upcoming Bima Sugam platform are being implemented to streamline processes and improve access to insurance services.
Perfios' platform powers 40% of cashless health claims, and its Insurance Operating System is enabling insurers to achieve up to 200% improvement in process efficiency and identify fraud, waste, and abuse. The company's work is particularly important in addressing the protection gap in India, which is enormous, especially in health, life, and micro-insurance categories.
The projected funding of around $1 billion in the Indian insurtech industry indicates a strong belief in its long-term potential. With the Digital Personal Data Protection Act (DPDPA) expected to reshape how insurers manage customer data and design consent-based experiences, the future of the Indian insurance sector looks bright and full of opportunities for innovation and growth.
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