“New Age Personalized Models Will Disrupt the Health Insurance Space,” Health News, ET HealthWorld
Amit RatanpalFounder and MD, BlinC Invest in an interaction with ETHealthworld’s Rashmi Mabiyan, shares that the COVID-19 pandemic has led health insurance to become a lucrative segment for investors and how innovation and new technologies are transforming the health insurance space .
From an investor’s perspective, how has the COVID pandemic impacted potential funding in the insurance segment and despite the low penetration of health and life products in India, that has led to the growth of funding in this space?
As we all know the insurance penetration in India has been quite low ranging between 4.2-4.3% with a population of over 140 crores, the Indian insurance market is worth around 115 billion dollars. Comparing similar statistics, the US insurance industry is worth a trillion dollars with a quarter of the population. As a result, there is substantial growth potential and insurance has been a very attractive investment sector for VCs and PEs over the past three years, especially since the onset of the pandemic. From 2020 to present, the insurance industry has received approximately $1.5 billion in funding. Most health-related insurtech companies secured capital during the 2021 pandemic. Indeed, due to COVID, more and more people realized the need for health insurance. When people started to focus on their well-being, they realized that insurance is a crucial part of their overall well-being, which includes not only getting in shape, but also ensuring protection. At the same time, insurance companies, wealth management companies and advisers have provided a lot of information and knowledge to individual clients and small and medium-sized businesses. Custom rates are available for the type of healthcare you receive, making it more desirable for every individual and SMB to participate in the insurance ecosystem.
Insurtech funding in India has doubled in the past two years, so what does the future footprint look like, or is it just a one-time phenomenon?
The insurance sector has experienced rapid expansion and a significant mismatch between supply and demand. Over the next few years, we expect the insurance industry to be worth between $300 billion and $400 billion, with growth coming from two sources. The first is product innovation, which will be supported by the Insurance Regulatory and Development Authority of India (IRDAI), which is introducing a sandbox and a number of other regulations, including the introduction of micro- insurance. Plus, you can get your own insurance license for a specific state, city, or product. Currently, there are about a few lakh agents in this industry, and we are seeing an increasing number of housewives and mutual fund dealers turning to different types of insurance. This creates a tremendous distribution opportunity, and we believe the combination of product and distribution will drive growth in the insurance industry.
For today’s consumers, convenience is a key need and around 57% of them are spending on time-saving products. How can an insurtech start-up employ to build customer loyalty?
When it comes to customer retention, I believe we’ve achieved and will almost replicate the trend we’ve seen in the United States, which is to offer personalized products. We can’t buy into the traditional cliché that a product is for everyone, because that’s next to impossible. For example, in a custom solution, they know I need marine insurance, they know how to organize it in the most cost-effective way, and they have deep knowledge of the ecosystem. When you buy a car, for example, you also get after-sales and other services, such as 24-hour repair and maintenance. We believe that this combined or embedded solution is the secret recipe for customer loyalty, as customers are aware that they are not only receiving insurance, but also ancillary services that will facilitate their day-to-day operations.
Going forward, how do you see technology being used to drive insurance business?
Technology will make the difference, as we have seen in particular with travel insurance, which can now be taken out in around 30 seconds when booking a plane or train ticket. Comparatively, we see similar trends in health insurance from earlier eras. In the past, if you wanted to purchase health insurance, you had to undergo a basic health checkup before your insurance policy could be issued. However, today at one of our companies (Vital) that we have invested in, you can purchase health insurance in less than 30 seconds by answering a few basic questions. Based on your profile, they will determine which insurance bracket you fall into and issue your policy accordingly. Therefore, technology will have a significant impact, and that is where the future will be.