Penetration of the insurance industry in India as of 2018 stood at just 3.7 per cent wherein life insurance segment penetrated to around 2.74 per cent but non-life insurance space stood at a much lower level of market penetration of just 0.97 per cent.
The under penetration of the insurance market in India offers an opportunity for everyone even if it’s outside the financial services sector — into something like e-commerce to become a super app of sorts. For instance, Walmart-owned e-commerce company Flipkart on Monday announced foray into the insurance segment by partnering with Aegon Life Insurance to offer life insurance cover ranging from Rs 1 lakh to Rs 40 lakh from March 2020 onwards, on its marketplace, without any medical tests or paperwork. This digital policy, with annual validity, has premiums starting from Rs 129 to Rs 5,512, as per the Flipkart app.
Both Amazon and Flipkart were reportedly planning to enter the insurance segment even before early last year. Flipkart’s foray into the insurance market comes around two weeks after Paytm announced acquiring the brokerage license for its subsidiary Paytm Insurance Broking Private Limited to sell life and non-life insurance products. However, Amazon is yet to step into this segment. As per Statista, penetration of insurance industry in India as of 2018 stood at just 3.7 per cent wherein life insurance segment penetrated to around 2.74 per cent but non-life insurance space stood at a much lower level of market penetration of just 0.97 per cent.
Importantly, Walmart’s fintech business PhonePe had also forayed into the insurance business in January this year by offering travel insurance to leisure and business travellers travelling abroad with a sum insured of up to $1 million. The insurance market size in India is like to be worth $280 billion by this year, as per IBEF.
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Flipkart, which sells almost every consumer product one could possibly think of, started flight booking services in 2018 followed by Amazon India in May last year. According to Flipkart, the company wants to replace “the notion that it (insurance) is expensive and cumbersome to buy, followed by issues around long and rigid tenures and mis-selling” with the digital policy offering. The age bracket for customers who might want to buy a policy from Flipkart is 18 – 65.
“We are committed to developing solutions that will help bridge the gap between India and Bharat, and we are confident that the easy-access insurance policy will be one of the catalysts to power this transition,” said Ranjith Boyanapalli, Head – Fintech and Payments Group at Flipkart in a statement. Aegon, on the other hand, will piggyback on Flipkart’s reach and growth in online shopping to expand its digital reach. “With more and more Indians getting used to purchasing online, selling insurance services has a huge scope and an e-commerce platform such as Flipkart has a unique appeal with customers. This partnership will help us expand the reach for our term insurance solutions Pan India,” said Satishwar Balakrishnan, CFO & Principal Officer, Aegon Life Insurance.