Within five years of its presence in India, global ecommerce giant Amazon’s India unit has raised its value to $16 Bn with a nearly 31.5% share of the ecommerce market. The company, which is already exploring the booming digital payments industry in the country, is now eyeing the insurance sector too.
According to recent Registrar of Companies (RoC) filing, Amazon wants to start by selling life, health, and general insurance and is looking to carry out the business of soliciting, procuring and servicing insurance as a corporate agent.
Amazon is yet to seek approval from the Insurance Regulatory and Development Authority in this regard. A company spokesperson, in an emailed response to BloombergQuint, said that Amazon Pay is looking to “serve the needs of customers around insurance. Stay tuned in.”
At the same time, the company has announced Amazon Pay EMI for its ecommerce customers in India, mainly for those who do not possess credit cards or have the option to pay in instalments through debit cards.
For its lending business, the company has entered into a partnership with Bengaluru-based digital lending startup Capital Float. Amazon is launching easy EMI options for purchases on its ecommerce platform for select customers initially.
“Our aim is to target the next 70 Mn customers who are deprived of credit options while shopping on Amazon,” said Vikas Bansal, director, emerging payments, at Amazon Pay.
Bansal added that while the population of online shoppers in India is around 100 Mn, around 20 Mn have credit cards and 10 Mn use either financing options from non-banking financial banks or debit card EMIs. The target for Amazon Pay EMI is the other 70 Mn and the incremental additional customer base.
“The advantage that Amazon can bring is the huge customer base that we already have. Hence, customer acquisition cost will be lower and we can pass off better rates to good borrowers,” said Bansal.
Insurance Industry In India
At present, the insurance space in India is dominated by banks and government agencies such as LIC, GIC, etc. Also, a number of insurtech startups such as PolicyBazaar, CoverFox, Acko, among others, have come up in recent years. The sector has also witnessed interest from digital payments company Paytm.
According to the IBEF, insurance penetration in India is as low as 4% despite the Modi government’s efforts to spread awareness on the importance of insurance with its proposed Modicare and other government-backed policies.
The central government has increased the Foreign Direct Investment (FDI) limit in the insurance sector from 26% to 49% under the automatic route, which will further help attract investments in the sector.
However, currently, only 3% insurance is bought online in India in an $80 Bn market. This share is likely to grow given the rising access of consumers to online insurance services.
Meanwhile, the fintech sector in India continues to witness sustained growth. According to the Indian Tech Startup Funding H1 2018 report, fintech witnessed the highest funding in the first quarter.
According to Inc42 DataLabs Indian Startup Funding report 2017, the Indian fintech industry received $3.01 Bn across 111 deals in 2017.