Page 147 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 135

The central government, too, has played a critical part in encouraging the adoption of insurance
through various policies and schemes, including the Pradhan Mantri Fasal Bima Yojana for crop insurance
and the Pradhan Mantri Jeevan Jyoti Bima Yojana for life insurance for the youth. Such social welfare
schemes have played an important role in serving the needy and unprivileged sections of society. The
Ayushman Bharat health insurance, for instance, has helped hundreds of millions of people get free
hospitalisation.

In 2021, the government raised the FDI limit in insurance, in both the life and non-life sectors, from
49 per cent to 74 per cent, and there are hopes that it will be lifted to 100 per cent sometime in the future.
If that happens, it will further boost the development of the insurance industry.

3. Digitalisation can Help in Bridging the Protection Gap and Driving Insurance
Penetration

Investments in insurtech have increased significantly in recent years with a view to making insurance
more accessible and affordable for customers. In 2021, Indian insurtech companies raised total equity
funding of USD 800 million, more than the funds raised in 2019 (USD 380 mn) and 2020 (USD 290 mn)
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combined. There is strong support for technology by the regulator as well as the Government of India.
Further, India has one of the highest smartphone and internet penetration in the world. India had about
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750 million smartphone users in 2021, which is expected to increase to 1 billion by 2026. This, combined
with data driven risk assessment capabilities, can help to increase insurance penetration.
Digital insurance start-ups are driving a new dynamic. Digital insurance start-ups are using technology
to break traditional barriers, e.g. complex products, limited consumer touchpoints and poor customer
service. The incumbents have also started to invest in digitalising business processes and partnering with
digital platforms to align with consumer needs.

Private-sector companies are increasingly concerned with societal challenges and are trying to create
positive societal and economic impact through re/insurance solutions. Their efforts are powered by the
latest technologies, which help in the development of a wide range of distinct, relevant products for
different customer segments, including MSMEs and all those who are underserved or unserved by
traditional insurance services. These products are made even more attractive by competitive pricing,
transparency, value-adds, and personalized services.

IRDAI has been a strong supporter of insurtech. In December 2022, the IRDAI removed the limited
validity period and increased the experimental period of the regulatory sandbox from six to up to 36
months. 30 Insurtech start-ups are expected to gain the most from these amendments. There are currently
more than 110 insurtech start-ups in India. Funding in Indian insurtech rose from USD 10 million in
2016 to USD 800 million in 2021, accounting for almost 6.0% of the total global funding in the sector
over the same period.

7 India’s InsurTech Moment: The growth story of less-talked sector, ET BFSI (indiatimes.com)
8 India to have 1 billion smartphone users by 2026: Deloitte report (business-standard.com)