Insurance market in India to reach $222 billion by FY26: Redseer

(Representative Image)

Consultancy firm Redseer Strategy Consultants in a report stated that India's insurance business is poised to grow significantly, led by a growing middle class and increased digital penetration.

According to the report, the insurance market will reach a size of close to $222 billion by FY26. And, it is mentioned that as of 2022, the overall insurance market stands at $131 billion.

New online distribution models such as B2C, B2B, and B2B2C are essential growth drivers, with B2C gaining substantial traction, the report added.

The report specifically mentioned that several InsurTech models have arisen as InsurTech businesses innovate across the insurance value chain. It also noted some of the models that have emerged in the space. They are:

1. Business-to-consumer (B2C) models (which included B2C brokers)
2. Business-to-business-to-consumer (B2B2C) models (which include PoSP agents & consolidators, and embedded insurance)
3. Business-to-business models (which include group insurance)

The B2C model appears to have a considerable advantage, it said, owing to claims risk in this model being substantially lower than in the other two models due to direct consumer interaction.

Revealing some of the B2C models' offers, the report stated there are features like end-to-end digital experience via technological applications, app-based claims support, proactive conversions via contact centres, and visibility to various quotes.

As of this year( FY22), the report looked at category-by-category digital insurance penetration and found that life insurance accounted for nearly three-quarters of the market, with a TAM of 66.5 billion dollars, followed by motor insurance at 10 billion dollars, and retail health insurance at 4.7 billion dollars.

Stringent motor regulations and a policy shift towards making India a digital economy have boosted motor digital insurance gross premiums in India, the report said.

According to the Redseer survey, digital insurance is used by 14% of the population in the United States and 6% in China. In India, digital insurance penetration is only 2%, indicating a tremendous possibility for growth in the coming years.