In recent times, we have witnessed a rapid growth in Insurtech funding across the globe, reaching almost 7X in the last 5 years, with a continued momentum even amidst the global pandemic that slowed down most sectors. In 2021 alone, we witnessed the emergence of 22 Insurtech unicorns globally. In India, too, we witnessed a very strong momentum, with funding nearly doubling in the last two years driven by General Insurance and B2C-focused Insurtechs. We caught hold of Asif CH, Chief Technology Officer at Riskcovry, to understand their idea behind the company, opportunities in the sector, and the innovations that make it different from other insurtech companies.
- What is idea behind building Riskcovry?
Insurance is the financial service one buys with the hope of never to end up benefiting from it. No one ever hopes to go through any event, whose financial risk that s/he is hoping to protect from, by way of buying insurance against it, regardless of the fact that insurance never protects you from the distressing event ever occurring in the first place.
All you can protect yourself from is alleviating yourself from the financial overhead that occurs to recover from an unexpected financial loss due to a given adverse event — from hospitalisation to death, from loss of job to accidental damage to a mobile device – the use case to buy or distribute/sell insurance could vary, but at the end of the day, we can’t predict the future. So everyone needs insurance, but no one wants it.
To paraphrase Warren Buffet, the beauty/irony of insurance is that it can theoretically assume infinite risk. In other words, it is difficult to put a value on insurance from securing one from an expected risk from an unexpected event. This phenomenon, by definition, means that only someone who is aware of the expected risk associated with an unexpected event that may or may not happen, will see value in buying such a financial service.
This is not easy to understand for laymen; hence, insurance is a push-financial service product to sell/distribute, which means it has the scope to be mis-sold for malicious reasons. This is why insurance penetration at a national level for India, is among the least globally. Countries that are much smaller – geographically, demographically, and economically speaking, have higher insurance penetration rates than us.
We come with an egalitarian view that financial protection via insurance is everyone’s right and not something that is just accessible to the few.
So why is the insurance penetration so low? One word, trust.
There was a large trust gap to bridge owing to penetration and associated expenses, a lack of understanding & trust, and a gap in the claims process.
However, we have seen this play out in other fintech spaces like payments, where the likes of payment gateways and processors use APIs to provide a one-stop-shop service to any brand that wants to add payment flows into their digital channels. Our thought was – Why not take a similar approach for insurance distribution?
Basically, we wanted to empower companies to enable insurance to their customers and democratise insurance for the larger good. So, we coined an Insurance-in-a-Box concept in the insurtech infrastructure space that we created.
- India has witnessed a rise in insurtechs in the last couple of years. How do you differentiate yourself from others?
Through Riskcovry’s API-first, full-stack insurance distribution platform, we make way for an omnichannel distribution covering any use-cases- assisted, DIY or embedded and can serve 12+ industries. Our Insurance-in-a-Box model offers a flexible and customisable plug-and-play insurance distribution model with a typically 50% faster go-to-market rate.
Being insurer/product/channel/device/compliance-license agnostic allows businesses of any size to use our unified API and SaaS technology to enable insurance distribution business without the traditional overhead of building teams/tech/license/processes etc.
- What challenges and opportunities is the current insurtech sector facing?
Insurance is one of the oldest tools in the financial world for risk protection, and insurtechs are aiming to bring a digital revolution to the industry, forcing the existing players to uplevel their strategies and drive insurance penetration further in the market. While doing so, insurtechs do face certain challenges. Some of them are:
- There’s untold competition with the legacy tech giants in terms of their way of doing things, commercial structure and talent availability
- There’s no uniformity in the integration approach across insurers, with no standardised APIs for different insurers, making it difficult for distributors who want to offer multiple insurance products.
- Insurtechs aren’t recognized as an authorised channel to contribute to the insurance industry
- There is no access to a central data repository to utilise the ecosystem’s benefit. With such a repository, the whole ecosystem of all parties involved can benefit, such as insurers for underwriting ease, new product creation, claims process enablement, and recommendation of products to customers.
While recognizing challenges, there are also opportunities that come with a large scope for insurtechs:
- There’s untold competition with the legacy tech giants in terms of their way of doing things, commercial structure and talent availability
- There’s no uniformity in the integration approach across insurers, with no standardised APIs for different insurers, making it difficult for distributors who want to offer multiple insurance products.
- Insurtechs aren’t recognized as an authorised channel to contribute to the insurance industry
- There is no access to a central data repository to utilise the ecosystem’s benefit. With such a repository, the whole ecosystem of all parties involved can benefit, such as insurers for underwriting ease, new product creation, claims process enablement, and recommendation of products to customers.
- Embedded insurance has become the talk of the industry in the last couple of months. In your opinion, how is it changing India’s insurtech landscape?
Embedded insurance (EI) is the next big thing in insurance, and the industry is forecasted to skyrocket to $3 trillion in market value by 2030. It unlocks value for consumers, distributors and underwriters alike in different ways, creating the potential to drive deep insurance penetration rates in emerging markets like India. Embedded insurance is a remarkable tool for insurers to increase insurance penetration across rural or other underserviced regions in the country, thus helping narrow the protection gap.
Offering insurance coverage direct at the moment of purchase creates a seamless customer experience and puts the customers in control. For an industry known for complicated products, embedded insurance brings transparency.
EI as a business model sees very high volumes with relatively lower risk. A few factors can drive the penetration of EI in the current scenario for both distributors and insurers, namely, for distributors- deep integrations with insurers to enable claims and to service for better consumer experiences. On the other side, insurers piecemealing existing large insurance products into smaller sachets which can be embedded seamlessly and related insurance product innovation with the use-and-file approach.
- Do you have any international expansion plans?
Riskcovry expanded to the UAE market by partnering with Seed Group (UAE) earlier this year. We plan to replicate India’s success in UAE as we expand into other markets.
At 2.9%, the UAE has the highest insurance penetration among all Gulf Cooperation Council nations. Post Covid-19 outbreak, there has been an increased awareness of financial and health risks among consumers, resulting in increased demand for insurance-related products.
Our goal for UAE is to make insurance as ubiquitous as digital payments by powering digitization across the insurance value chain in the UAE. The guidance and networking opportunities provided by the Seed Group will surely play a pivotal role in our success in the Middle East.”
