The online insurance market in India is experiencing a significant transformation, driven by the increasing penetration of the internet and a growing comfort with online transactions among consumers. According to the recent Mordor Intelligence Report, the gross written premiums in the online insurance sector are projected to grow from USD 49.5 billion in 2024 to USD 76.59 billion by 2029, reflecting a compound annual growth rate (CAGR) of 9.12% during the forecast period. This remarkable growth is a testament to the shifting consumer behavior and the rapid digitalization of the insurance industry in India.
The rise of internet usage in India has had a profound impact on various sectors, including insurance. With more people engaging in online activities, there is an increasing trend of purchasing insurance policies through digital channels. Online insurance platforms offer several advantages that contribute to their growing popularity. These include the convenience of accessing policies from anywhere, a wide range of policy options, and the ability to compare different products easily.
The COVID-19 pandemic has further accelerated this shift towards digital operations. Lockdowns and social distancing measures forced insurance companies to rely heavily on their digital infrastructure to sell policies and process claims. This transition not only ensured business continuity but also heightened public awareness about the importance of insurance, particularly health insurance. Consequently, there has been a notable increase in health insurance sales post-pandemic.
The expanding number of internet users in India is a crucial factor driving the growth of the online insurance market. With a broader reach, insurance companies can connect with a larger audience and offer tailored services to meet individual needs, enhancing customer satisfaction and loyalty. The proliferation of internet users makes insurance more accessible and convenient, especially in a country where a significant portion of the population remains uninsured.
This growing digital presence has also opened opportunities for start-ups and established insurers to leverage technology and expand their market reach nationwide. The online insurance sector has attracted significant interest from investors, as it represents an untapped market with substantial growth potential.
Online insurance startups in India have emerged as a crucial player in the financial ecosystem. Companies such as PolicyBazaar, Coverfox, Acko, Digit Insurance, and Toffee Insurance have gained significant traction by offering a wide range of insurance products including health, life, motor, and travel insurance. These platforms use advanced technologies like artificial intelligence (AI), machine learning (ML), and big data analytics to streamline the insurance process from purchase to claim settlement.
Founded in 2008, PolicyBazaar is one of the pioneers in the online insurance aggregation space. The platform allows users to compare and buy insurance policies, providing transparency and ease of access. Launched in 2017, Acko is an insurtech company offering digital-first services. It has revolutionized the motor insurance segment with its zero-paperwork, instant policy issuance, and swift claim settlements. Founded in 2016, Digit Insurance focuses on simplifying insurance products and claims processes. It offers a range of insurance policies, including health, motor, travel, and home insurance. This platform provides a seamless experience for users to compare, buy, and manage insurance policies. It leverages technology to ensure customer satisfaction and operational efficiency. Specializing in niche micro-insurance products, Toffee Insurance targets specific customer needs with tailored policies for gadgets, bicycles, fitness, and more.
Health insurance stands out as the largest segment in the online insurance market in India. Several factors contribute to this dominance, including increasing awareness about the importance of health coverage, rising healthcare costs, and competitive pricing offered by online platforms. These platforms provide a variety of health insurance products, allowing consumers to select policies that best suit their needs and budgets.
Government initiatives also play a crucial role in promoting health insurance. Programs like the ‘Ayushman Bharat PMJAY SEHAT’ scheme, fully financed by the government, offer comprehensive health coverage and hospitalization services across public and private hospitals. Such schemes have significantly boosted the adoption of health insurance among the Indian population.
The online insurance market in India is moderately fragmented, with numerous players competing for market share. Key players in the market include United India Insurance Company Limited, Bajaj Allianz General Insurance Co., Life Insurance Corporation of India, Max Life Insurance Company, and The New India Assurance Co. Ltd. These companies leverage digital platforms to provide a seamless and efficient way for customers to purchase and manage their insurance policies.
In August 2023, Axis Bank announced its intention to acquire the 7% stake in Max Life Insurance. Currently, Axis Bank, Axis Securities, and Axis Capital collectively hold a significant 12.02 % stake in Max Life. With the acquisition of the additional 7% stake, the total holdings of Axis Entities in Max Life will increase to slightly over 19.02%.
In October 2022, Exide Life Insurance Co. merged with HDFC Life Insurance Co., wherein it concluded the merger of Exide Life, marking the completion of the first-ever merger and acquisition (M&A) transaction in the Indian life insurance sector.
The future of the online insurance market in India looks promising, with continued growth expected over the coming years. As internet penetration deepens and more consumers become comfortable with online transactions, the demand for online insurance products is likely to surge. Innovations in digital technology, such as artificial intelligence and blockchain, will further enhance the efficiency and security of online insurance platforms, making them even more attractive to consumers.
Moreover, the ongoing efforts by the government and industry stakeholders to promote digital literacy and financial inclusion will play a crucial role in driving the growth of the online insurance market. By educating consumers about the benefits of insurance and the ease of accessing policies online, these initiatives will help bridge the gap between the uninsured population and available insurance products.
The online insurance market in India is on a robust growth trajectory, driven by increasing internet usage, digital transformation, and heightened consumer awareness. With a projected market size of USD 76.59 billion by 2029, the sector presents significant opportunities for insurers and investors alike. As digital platforms become more sophisticated and accessible, and as government initiatives continue to promote insurance adoption, the online insurance market is poised to play a pivotal role in the broader landscape of financial services in India. Startups in this space are not only democratizing access to insurance but are also setting new standards for customer service and operational efficiency. Over the next five years, the synergy of technological advancements, supportive regulatory frameworks, and growing consumer awareness is expected to propel these startups to new heights, making insurance more inclusive and accessible for all Indians.
