Often described as one of the oldest businesses in existence, the insurance industry is facing a new challenge: reimagining the customer journey for the digital native generation. The rapidly evolving generation has clear expectations from the brands they associate with.
The depth of their understanding is evident in the way they interact with the brands directly on social media platforms. In this ever transparent world, the consumers have many avenues to share feedback with companies for unsatisfactory service and products, which now lowers their goodwill.
Technology plays a pivotal role in how a business conducts itself today. That’s especially the case in insurance where we don’t sell a physical product that someone can touch and feel. But instead, insurance sells a promise that we will be there in times of need. And technology enables insurance carriers to carry out that promise, even to our
The barriers to enrollment are many, and with so many complicated coverage options, convoluted eligibility requirements, and fine print to sort through, the insurance industry is in need of a makeover. Thankfully, the insurtech industry has arisen to do just that.
The year 2020 entered in history as one of the most disruptive years. The pandemic highlighted the importance of protection to many customers, which led to increased demand for insurance and policy servicing. The social distancing brought fierce competition into the digital space.
Insurers are under pressure like never before to accelerate the digitization of end-to-end customer journeys and internal processes while adopting tools that they might once have considered risky just to stay ahead. At the same time, industry-wide digitization is also opening the sector to a host of new private players. According to a study done by Oracle, there are six distinct trends that will impact Indian insurers in the near to medium term. These trends include disruption to traditional sales channels, adverse economic headwinds, the emergence of large ecosystems, regulatory tightening, stiff digital competition, and the rise of insurtechs.
There is an upside for the protection business. In the midst of uncertainty and sweeping changes, digital transformation is finally underway. To cope with disruption in the traditional customer journeys, foresighted insurers have deepened their digital presence, embarked on better digital customer experiences, and are optimizing their digital sales channels.
India is the second-largest insurance-technology market in Asia-Pacific and accounted for 35 per cent of the $3.66 billion insurtech-focused venture capital invested in the region, according to S&P Global Market Intelligence data. The data showed that at least 335 private insurtechs are operating in Asia-Pacific, with about 122 of them disclosing $3.66 billion in aggregate capital raised via private placement deals.
“China and India are collectively home to nearly half of private insurtech companies in the APAC region and attracted about 78 per cent of the investments,” a report by S&P Global Market Intelligence said.
The two markets will continue to corner the lion’s share of investor interest on account of their large and fast-growing insurance markets, it added.
The vast majority of people in India, the world’s second-most populous nation, don’t have health insurance coverage. A significant portion of the population that does have coverage gets it from their employers.
Plum, a young startup that is making it easier and more affordable for more firms in the nation to provide insurance coverage to their employees, has recently raised $15.6 million in its Series A funding to accelerate its growth.
Tiger Global led the new funding round, with participation from existing investors Sequoia Capital India’s Surge, Tanglin Venture Partners, Incubate Fund, and Gemba Capital. Kunal Shah (founder of Cred), Gaurav Munjal, Roman Saini and Hemesh Singh (founders of Unacademy), Lalit Keshre, Harsh Jain and Ishan Bansal (founders of Groww), Ramakant Sharma and Anuj Srivastava (founders of Livspace), and Douglas Feirstein (founder of Hired) also participated in the new round, which brings the one and a half-year-old startup’s to-date raise to $20.6 million.
Plum offers health insurance coverage on a B2B2C model. The startup partners with small businesses to provide health insurance coverage to all their employees (and their family members), charging as little as $1 a month for an employee.
“The startup has developed the insurance stack from scratch and partnered with insurers to include additional coverage on pre-existing conditions and dental,” said Abhishek Poddar, co-founder, and chief executive of Plum, in an interview with Entrepreneur India.
Like fintech firms, which partner with banks and NBFCs to provide credit to customers, online insurance startups maintain partnerships with insurers to provide health insurance coverage. Plum maintains partnerships with ICICI Lombard, Care Health, Star Health, and New India Assurance.
Poddar, who has worked at Google and McKinsey, said Plum is making it increasingly affordable and enticing for businesses to choose the startup as their partner. Most insurance firms and online aggregators in India today currently serve consumers. There are very few players that engage with businesses. Even among those that do, they tend to be costlier and not as flexible.
Plum offers its partnered client’s employees the option to top-up their health insurance coverage or extend it to additional members of the family. Unlike its competitors which require all the premiums to be paid annually, Plum gives its clients the ability to pay each month. Signing up an entire firm for Plum takes less than an hour.
Speed is a key differentiator for Plum. Small businesses have to typically spend months negotiating with other insurers. Bangalore-based Razorpay has also partnered with Plum to give the fintech startup’s clients a three-click, one-minute option to sign up for insurance coverage.
The startup plans to deploy the fresh capital to further expand its offerings, making its platform open to smaller businesses with teams as small as seven employees to sign up, shared Poddar. The startup plans to cover 10 million people in India with insurance by 2025, and eventually expand to international markets, he further shared.
India has an underpenetrated insurance market. Within the underpenetrated landscape, digital distribution through web aggregators today accounts for just 1 per cent of the industry, analysts at Bernstein wrote in a recent report.
Plum is seeing rapid adoption and is now used by over 650 companies of all sizes, including Twilio, Groww, Unacademy, CleverTap, UrbanLadder, smallcase, and Simpl.
“Being self-reliant will follow once we have more robust health systems, and the pandemic has put this in sharp focus. On our part, we are committed to a milestone of insuring 10 million lives by 2025 with a long-term vision of making healthcare accessible to all. Insurance is the safety net in an economy that allows entrepreneurs to take risks. Many would-be entrepreneurs stick to corporate jobs because of the risk of losing comprehensive health benefits for their families. We hope that insurtech innovations like accessible health insurance from Plum will spur potential startup founders and employees to tackle challenging problems and make India self-reliant,” he noted as India is now talking about becoming self-reliant.
Insufficient coverage of rising healthcare costs and the increased price of premiums due to pandemic-related hospitalizations and fatalities are a massive challenge that can affect the momentum. Due to the unusually high number of claims being made during the crisis, the pricing mechanisms used by insurers may tighten significantly and increase the costs of comprehensive health insurance plans.
Poddar believes that the economic downturn may result in cash flow challenges for many companies, reducing investments into their health insurance and benefits programs. During the first wave of the pandemic in 2020, many startups saw their employees suffer. Employees have also witnessed how expensive hospitalization is for COVID. However, the ferocity of the second wave and increased fatalities has triggered a spate of initiatives, including comprehensive COVID insurance packages. This has made the need for insurance real and urgent.
“We have grown at around 90 per cent month-over-month in the last two months since the COVID second wave started, against a 30 per cent month-over-month growth that we earlier had. Plum has insured over 80,000 lives since it started in March 2020,” he commented while stating his next trigger of growth.