India’s online insurance business is getting more crowded as more players are entering into this space. Mumbai-based Aegon Life Insurance, a digital insurance company, recently inked a deal with Alibaba-backed Paytm to use the latter’s platform for products distribution.
While more Indians are not accustomed to making purchases and payments on mobile, according to Vineet Arora, managing director and CEO, the tie-up is expected to help expand its customer reach and simplify customer on-boarding process.
In a parallel development, MobiKwik a payments fintech platform has applied for a corporate agency (composite) license with the Insurance Regulatory Development Authority (IRDA), the country’s insurance sector regulatory body, as the Sequoia-backed startup looks to offer full-fledged insurance policies like life, general and health insurance packages.
If successful in getting the composite license, MobiKwik will find itself in the bracket of companies like Paytm, PhonePe and Quikr who have been issued the IRDA license. It will also make it a complete provider of financial and wealth management products. Besides payments, MobiKwik also deals with mutual funds, and loans. Its rivals, Paytm and PhonePe are currently offering third party insurance products. MobiKwik took an initiative to amend its bye-laws and permit it to become an IRDA-licensed corporate agent that would allow it to sell insurance policies to its existing customers.
The insurance sector had been quite off-limits when it came to digitization owing to government regulation, manner of bookkeeping and the fact that many companies who wanted to enter the sector just did not have the capital to take the risk of insurance on to their balance sheets.
The situation has been changing with more and more fintech startups starting to use their technology prowess to digitize the insurance products selling process, exemplified by the Aegon and Paytm tie-up.
According to a May 2019 report by PwC and Assocham in 2018, India’s percentage of fintech users was at 57.9% giving it the second place worldwide on fintech adoption trailing behind China’s 83.5%. However, it was ahead of developed countries which had a percentage of 34.2. From January 2013 to October 2018, nearly 2,000 fintech companies have been founded in India. The overall transaction value in the Indian fintech market is estimated to gallop from USD 66.1 billion in 2019 to USD 137.8 billion in 2023, growing at a CAGR of 20.18%.