Amit Ratanpal, Founder and MD, BLinC Invest in an interaction with ETHealthworld’s Rashmi Mabiyan shares that COVID-19 pandemic has led health insurance to become a lucrative segment for investors and how innovation and new technologies are transforming the healthcare insurance space.
From an investor’s perspective, how has the COVID pandemic impacted prospective funding in the insurance segment and despite the low penetration of health and life products in India, what has led to the growth of funding in this space?
As we all know, India’s insurance penetration has been quite low, ranging between 4.2-4.3 per cent with a population of over 140 crores, India’s insurance market is worth approximately $115 billion. Comparing similar statistics, the insurance industry in the United States is a trillion dollars with a quarter of the population. As a result, there is a substantial growth potential, and insurance has been a highly attractive investment industry for VCs and PEs during the last three years, notably since the beginning of the pandemic. From the year 2020 until the present, the insurance industry has received about $1.5 billion in funding. Most of the health-related insurtech firms have obtained capital during the pandemic of 2021. This is because, due to COVID, more and more people became aware of the necessity for health insurance. As people began focusing on their well-being, they realised that insurance is a crucial part of their overall well-being, which includes not only getting fit but also ensuring that there is protection. At the same time, insurance companies, wealth management firms, and advisors have been providing a great deal of insight and knowledge to both individual customers and small and medium-sized businesses. Customized rates are available for the sort of healthcare you get, making it more desirable for every person and SME to participate in the insurance ecosystem.
Insurtech funding in India has doubled in the last two years, so what do the future footprints look like, or is it just a one-time phenomenon?
The insurance industry has seen rapid expansion and a significant demand-supply mismatch. In the next few years, we expect the insurance sector to be worth between $300 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. Additionally, you can obtain your own insurance licence for a specific state, city, or product. As of now, there are approximately a few lakh agents in this sector, and we’re noticing that an increasing number of housewives and mutual fund distributors are moving towards different types of insurance. This is creating a tremendous distribution opportunity, and we believe that the combination of product and distribution will lead to growth in the insurance sector.
For consumers of today, convenience is a key need and about 57 per cent are spending on time-saving products. How insurtech start-up can employ to boost customer loyalty?
Regarding customer loyalty, I believe that we’ve realised and are almost going to replicate the trend that we’ve observed in the United States, which is to offer customised products. We cannot adhere to the traditional cliché that a product is intended for everyone, as this is practically impossible. For instance in a customised solution, they are aware that I require maritime insurance, they know how to arrange it in the most cost-effective manner, and they have a deep understanding of the ecosystem. When you purchase a car, for instance, you also receive after-sales services and other services, such as 24-hour repair and maintenance. We feel that this combined or embedded solution is the secret sauce for customer loyalty, because 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 the use of technology in boosting insurance businesses?
Technology will make a difference, as we’ve seen notably with travel insurance, which can now be purchased in approximately 30 seconds while booking air or train tickets. Comparatively, we observe similar trends in health insurance compared to earlier times. In the past, if you wanted to buy health insurance, you had to undergo a basic checkup before your insurance policy could be issued. However, today, at one of our companies (Vital) in which we have made an investment, you can buy health insurance in less than 30 seconds by answering some basic questions. Based on your profile, they’ll determine which insurance bracket you fall into, and they’ll issue your policy accordingly. Consequently, technology will have a significant impact, and this is where the future will be.