Top Trends in InsurTech in India

The year 2020 was revolutionary for the insurtech sector. As the Covid pandemic raged worldwide, inquiries for health insurance rose by 30-40%. Insurance, which was predominantly sold offline, had to adapt quickly. This led to rapid digital adoption, fundamentally transforming the insurance industry forever.

The insurtech space has been growing steadily since the dot-com era, but 2020 was a defining moment. Now, as we move forward, let’s explore the top 5 trends shaping the InsurTech space in India.

Top 5 InsurTech Trends in India You Should Know About

1) Higher Insurance Penetration

Despite being around for decades, insurance penetration in India remains low at just 3.69%.

• Most major insurance offices are located in just 8-9 major cities.

• Rural India lacks access to quality and affordable insurance.

Digitization is bridging this gap.

• In 2020, the Covid pandemic forced insurance companies online.

• Now, users can pay premiums via digital wallets, customize plans, and file claims online.

As we move into 2021 and beyond, digitization will play a key role in increasing insurance adoption.

2) Change in Insurance Distribution Models

Traditionally, insurance was sold separately from goods & services. Now, affinity insurance is gaining traction.

• Affinity insurance is when insurance comes bundled with a product or service.

• Many FMCG products are now selling micro-insurance policies.

Additionally, Point of Sale (POS) models are becoming popular in rural & urban areas.

The IRDA is opening new insurance channels, including:

• Medical Assistance (MA)

• POS Insurance

• MISP (Motor Insurance Service Provider)

These new distribution channels make insurance more accessible and affordable.

3) Data-Driven Insurance

The insurance industry has always been data-driven, but big data & analytics are now redefining risk assessment.

Insurers now collect data from:

• Social media activity

• IoT devices (wearables, sensors, etc.)

• Financial transactions (credit & debit reports)

This data helps insurance companies customize policies, accurately calculate risk, and offer better pricing.

• In 2021, many insurers are shifting towards "on-demand" & "usage-based" models.

• Premiums are now directly linked to individual risk—lower-risk customers pay lower premiums, while high-risk customers pay more.

4) Undisputable Claims with IoT & Smart Data

The Internet of Things (IoT) is changing how claims are handled.

• Smart devices (watches, sensors, assistants) are tracking user behavior.

• Insurers use real-time data to predict and mitigate risks.

The IoT insurance market is expected to grow at 40% CAGR from 2021-2026, reaching $40+ billion.

IoT allows insurance companies to:

• Minimize preventable losses

• Predict & monitor user behavior

• Reduce fraud & false claims

A study by Forbes found that:

• IoT reduces customer premiums by 25%

• Claims for insurers reduce by nearly 30%

This is one of the biggest trends in InsurTech right now.

5) Blockchain & Smart Contracts for Secure Claims

Security & privacy are growing concerns in InsurTech.

• Traditional insurance claims are often subjective—the insurer decides whether to approve or deny them.

• Blockchain & smart contracts bring parametric insurance—a fairer, automated system.

How does parametric insurance work?

• If a pre-defined condition (like an earthquake, flood, or economic event) occurs, the claim is automatically triggered.

• No manual review is needed, ensuring fair & fast payouts.

• Tamper-proof data ensures no fraud or bias in claims.

The blockchain insurance market is expected to grow by 57% CAGR between 2021-2026.

This technology could completely change how claims are processed worldwide.

Conclusion

India’s insurance distribution model is rapidly evolving.

• Digitization is making insurance more accessible.

• New distribution models like POS & affinity insurance are emerging.

• Data analytics & IoT are driving smarter pricing & better claims handling.

• Blockchain & smart contracts are redefining trust & security in insurance.

Now is the time for insurance companies to embrace these trends and offer faster, more secure, and improved policies.

Key Takeaways:

• Higher insurance penetration

• New insurance distribution models

• Data-driven insurance models

• IoT-powered claims handling

• Blockchain for secure & automated insurance

The future of insurance in India is bright, and these trends will shape its next decade.