E-commerce battle spills into insurtech business

Digital platforms have taken to offering sachet insurance products with affordable premiums and are working with insurance partners to offer differentiated packages.

Flipkart, which ventured into insurance distribution in March, has started focusing heavily on life and health insurance, as it saw consumer demand for these policies increase against the backdrop of covid-19. With partner Aegon Life, Flipkart has also brought in ‘Life Insurance policy with covid-19 cover’, which not just provides a life cover, but also provides health cover with a lump-sum settlement of ₹5 lakh, in case of hospitalization due to covid. Annual premium starts from ₹129 for ₹1 lakh sum assured.

Having a composite distribution licence, which means it can tie up with three partners for all insurance segments, Flipkart has launched a semi-exclusive sachet insurance product providing ₹25,000 instant settlement, against a ₹155 annual premium.

“When it comes to our insurtech offering, we launched into the market with health and life cover and bumped up our priority for this segment," Ranjith Boyanapalli, senior vice-president and head-fintech and payments group at Flipkart.

Flipkart expects an uptick in demand for digital insurance products for age groups 35-50, with average insurance cover ranging between ₹10 -15 lakh and ₹1,200 as annual premium for these products. The company is also looking to bring in exclusive insurance products on its platform with policy coverage of ₹75 lakh and more.

Flipkart-owned PhonePe has also launched six insurance products, between April and July, including personal accident cover, cover against hospitalization as well as a coronavirus insurance policy.

“We have launched a slew of insurance products back-to-back in the covid-period and have seen a strong response from our users. Our products being contextual to the current situation have shown very strong traction as well," said Hemant Gala, vice-president, payments and financial services, PhonePe.

Insurance penetration in India continues to be under 4%, leaving a large market for digital firms to disrupt. According to a recent FICCI-PwC India survey, there is a rise in health insurance awareness and purchase as the Indian insurance industry is expected to be worth $280 billion in 2020 and increase by 12-15% annually over the next 3-5 years.

“Not many legacy firms have developed insurance products and purchasing flows, which were easy to sell online. E-commerce and digital players entering this category will look at focusing on long-term policies such as life insurance since it increases digital payment transaction volume and value for players, and invariably creates platform trust for other fintech offerings," said Bhavik Hathi, managing director, Alvarez and Marsal (India), a management consultancy.

PhonePe’s rival Paytm recently said it will be acquiring private sector general insurer Raheja QBE for ₹568 crore subject to regulatory approvals to fast-track the launch of its insurance operations in 24-30 months.

Through this acquisition, Paytm is looking to create general insurance products.

Amazon Pay, the payments arm of e-commerce giant Amazon India, is the latest entrant in the insurtech space, which in July partnered Acko General Insurance Ltd to offer insurance for two as well as four-wheelers.