For years, the Indian insurance market has primarily focussed on the one-size-fits-all approach. But the dawn of insurtech startups such as Acko, Coverfox, Toffee Insurance, Digit Insurance, Insure First among others is changing the dynamics of this industry. The insurance market in India is expected to grow to $280 Bn by FY2020 and the use of emerging technologies will drive the next phase of growth for this sector.
The Indian insurtech startups, as well as the bigger organisations, understand the massive opportunity offered by the young nation in the age bracket of 21 to 35 years. Here’s a snapshot:
Indian Insurance: A Huge Opportunity
- According to IBEF, overall insurance penetration in India was just 3.7% in 2017
- Currently, there are 24 life insurance companies and 39 non-life insurers in India
- The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue redesigned initial public offering guidelines for insurance companies in India, looking to divest equity through the IPO route.
- According to Inc42 Datalabs, 11 insurtech startups have raised $337.8 Mn between January 2018 and April 2019
- According to a 2018 IndiaInsure report, FY2019 will see the insurance industry touch INR 682K Cr
Recently, ecommerce unicorn Flipkart (acquired by Walmart) forayed into mobile insurance in partnership with Bajaj Allianz. Flipkart cofounder and former group CEO Binny Bansal recently backed Acko Insurance, while global counterparts such as AXA, Fairfax Financial, Standard Life are backing Indian insurtech startups, as well as Indian insurance companies.
Still, the Indian market lags far behind the global counterparts from Israel and China, in terms of opportunity, innovation, as well as the adoption of new technology.
In order to bridge this gap, Sapiens International, an Israel-based global provider of digital insurance solutions, is currently working with Indian insurtech startups as well as traditional insurance companies to tune the existing system into a truly digital experience.
“With a massive and almost entirely uninsured population, India is a promising dark horse on the insurtech horizon. But while initial market penetration may have been slow, insurtech revenues are on the rise and expected to hit over 1.1 Mn in the next year. India, with its large IT market and tech expertise, stands to benefit from advancements in insurtech but lacks a strong base on which to build,” said Surajit Basu, Vice President, Country Manager India at Sapiens International.
Sapiens Enters Indian Market
Sapiens entered India in 2015 with the acquisition of IBEXI Solutions, a provider of insurance business and technology solutions. The company was launched in 2001 by Surajit Basu, who took the position of Vice President, Country Manager India, at Sapiens International post-acquisition. Today, Sapiens India has a team of 900 operating from Bengaluru and Mumbai with clients like Acko in India.
Being in the insurance industry for more than 35 years now, Sapiens’ digital offerings include customer and agent portals, a digital hub with an API layer and digital studio, and an advanced analytics solution. Its team of over 2,500 globally operates through our fully-owned subsidiaries in North America, the United Kingdom, EMEA and the Asia Pacific.
In the coming years, the company is looking to cement its presence in the insurtech market in India and further increase its team size in the country.
Basu explained to Inc42 the company’s point of view on the available opportunity in the insurtech segment, the Indian government’s support and how Sapiens is looking to strengthen its position in a fast-growing market. Here are a few excerpts from our conversation with Basu.
Inc42: How has your journey been with Sapiens International in India so far?
Surajit Basu: There’s always a little uncertainty with mergers and acquisitions, especially from the side of the employees who are being acquired. But we have been extremely pleased by how smoothly the transition into Sapiens has been.
Sapiens has repeatedly demonstrated its commitment to growing its presence in India – the company has built one of its largest sites here in India, complete with R&D and a sales team, employing over 900 individuals on the ground. This commitment is a huge morale booster for the employees in India and helps us attract new recruits here.
Inc42: What are the primary business areas for Sapiens in India?
Surajit Basu: Sapiens offers our existing and potential customers in the APAC region the same opportunities for digital transformation that we offer to our customers in Europe and America.
Our employees in India work across our diverse product portfolio, including on our life, pension and annuity products; as well as our property and casualty offerings. India plays a huge role in the Sapiens digital division and is helping to drive innovation for the company.
Inc42: What were the challenges you faced in India when entering this market? Could you tell us about navigating from the non-tech to tech-first models in insurance?
Surajit Basu: It was a challenge to build the capability locally to deliver complex projects end-to-end. Of course, there was a natural adjustment period as the newly acquired Indian employees originally got up-to-speed on the innovative technology that powers Sapiens’ diverse product portfolio. But we got up-and-running in almost no-time.
Transitioning from non-tech to the digital realm requires insurers to adapt, to change the processes. Sapiens works with insurers to redefine processes and to find system-based solutions.
Inc42: How has Sapiens embraced newer technology such as AI or blockchain or smart contracts?
Surajit Basu: Sapiens stays on the cutting-edge of new technology by investing heavily in research and development, collaborating frequently with our insuretech partners and constantly searching for new ones, and speaking often with our customers – and then including their feedback into our product roadmaps.
We connect third-party technology and insurtech solutions to our Sapiens PartnerHub from where we make their offerings available to insurers for their own use, and for the use of their customers.
With one simple connection to Sapiens PartnerHub, insurers can avail themselves of the widest range of up-to-date solutions in today’s insurtech marketplace. Our economies of scale enable us to make it easy for insurers to select from our constantly growing and updated offering of third-party solutions. Insurers can connect themselves and their customers to a range of third-party providers, including infrastructure, insurtech and more.
Sapiens plans to continue to grow our team in India, particularly in our digital division, to stay ahead of the technology curve and to continue to innovate and lead.
Inc42: How is Sapiens creating an edge in the Indian market? What are your plans ahead?
Surajit Basu: Sapiens has made it clear from the beginning that it was interested in establishing a real footprint in India to benefit from the tremendous expertise and innovation coming out of this country, as opposed to other global companies who come here solely for a less expensive workforce. Management has entrusted Indian personnel with leadership and key positions, which will continue to expand and grow in the near future.
We have already outgrown our offices here in India and we plan to move to a larger facility in the near future.
Inc42: Digital has impacted every segment and Insurtech is doing the same in insurance. How can Insurtech disrupt the traditional value chain?
Surajit Basu: By combining insurance solutions and services with auto and home sensors, medical devices and wearable technology, digital platforms, etc., insurers can become part of a strong ecosystem that magnifies their reach and appeal. Sapiens partners with a wide variety of leading insurtech companies to bring our customers innovative solutions and products that are seamlessly integrated with the platform’s infrastructure services, such as security, logging, monitoring and analytics.
Inc42: According to you, is India ready for an ‘insurtech’ revolution? How is it different from the West or Israel?
Surajit Basu: It’s important to make a distinction between the various areas that are affected by digitalization for insurers. The customer experience is definitely important but streamlining operations and obtaining crucial business intelligence insight is perhaps even more important – and the latter two don’t require widespread digital literacy in the region, just among key personnel for insurers.
The introduction of digital tools, such as an agent portal, for example, can empower agents to work faster and provide superior customer experience. Where digital literacy is still not widespread, insurers working with a vendor that offers modular solutions can go slowly, dipping their toes in the digital waters to solve specific customer-facing issues. This will help insurers better serve those in those areas who are more digitally advanced.
Inc42: How do you think the Indian government can help boost insurance tech in the country? What are some of the regulatory hurdles for your company and sector?
Surajit Basu: Opening up the insurance sector to private companies was an important milestone. Many regulatory changes have been enacted to support the digitalisation of insurance.
It would be great if the government provided more access to individual data in a secure way to enable insurers to validate and finetune the services.
We hope the government will continue its efforts to increase the reach and scope of public transformation so that people from rural areas have more access to tech centres in India. And allocating more money for education, particularly in the tech field, will lead to a brighter future and more innovation.
Inc42: According to you, how are new-age Insurtech startups changing the insurance landscape in India?
Surajit Basu: Perhaps unsurprisingly, the Indian market has produced some excellent insurtech companies, particularly in the areas of new products, customer service and chatbots. One of our clients focuses on “nano-insurance” for taxi rides and gadgets, offering products that are feasible only with the new technology. Insurtech [startups] are starting to offer common digital services, simplifying the insurance technology landscape and improving operations. Sapiens expects India-based insurtech companies to help further digitalize the industry.
Inc42: What are your thoughts on the government’s norms for data protection and storage of Indian user data within the Indian borders?
Surajit Basu: India, like almost all countries, is trying to balance the sometimes competing needs of protecting its citizens’ right to privacy and ensuring cybersecurity, while also wanting to provide an attractive environment for big, international businesses. This is a complicated area and the government seems to be earnestly trying to reconcile competing interests.