InsurTech forays in Health (India)
Indian InsurTechs are clamouring to grab a slice of the $6.97bn+ annual health insurance market (which is growing at 17% YoY)
Hello folks! Greetings to the 100+ of you who signed up in the past week - in this edition, we’re going to jump into the Health insurance market in India (from a start-up lens). But first, let’s look at some statistics regarding this fast growing market!
Examining regulatory filings between FY 18 and FY 20 reveals:
General insurance grew 12.11% YoY
Health insurance grew 17.01% YoY
Group health insurance grew 18.4% YoY
InsurTechs deal primarily in group health insurance business:
Their market category is the fastest growing insurance segment
Their overall market (i.e. Health insurance) is the largest insurance line of insurance business in India.*
If “macro” tailwinds (industry growth of 17% YoY) don’t impress you, let’s look at the “regulatory” tailwinds.
Let’s unpack the regulatory tailwinds:
Feasibility of the “land & expand” approach
With Covid-19 insurance mandatory (for employers) and the introduction of standardized Covid-19 insurance products, InsurTechs can adopt a “land & expand” approach - leading with a low ticket size compulsory product with an aim to upsell higher value comprehensive employee benefit solutions.
Feasibility of digital sales & wellness
With approvals for e-KYC and teleconsultation reimbursal (per policy conditions), InsurTechs have an opportunity to design end-to-end digital purchase journeys and better products (with lesser resistance from their underwriting partners to include digital treatments).
The elephant in the room is Covid-19 driven health insurance awareness
With only 34% of India covered by any form of health insurance, there is tremendous scope for growth (especially digital sales). [1]
Specifically in the group business segment, there are 70M MSMEs employing 180M [2] individuals; there is a ~ $77M per month market gap.
In short, there couldn’t be a better time to be an InsurTech focused on health insurance in India.
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Broadly, InsurTechs targeting the health market can be split into 3 verticals”
Payer-provider integration
Employee Health & Benefits
Technology led plays
Recent funding announcements & milestones
Disclosed fundraises this year:
Clinikk Healthcare crossed 300K enrolled members in its primary healthcare programme [5] in April 2020.
PlumHQ signed up 100 corporate clients in its first four months of operations
GOQii partnered with 4 insurance carriers to launch wearable-linked health insurance under the IRDAI InsurTech sandbox programme.
InsurTech opportunities within Health
On one hand, health insurance is fast growing (~17% YoY) and the InsurTechs have a clear business model (brokerage commissions are ~ 20% of revenues i.e. premiums). Furthermore, the integration of primary care (provider) and payer by some players provides a strong moat.
However, on the insurance front, they are competing against well capitalized neo-insurers such as Acko & Digit. For YTD FY ‘20,
Digit has written $10.36M in health insurance premiums (versus $0.93M in the comparable period last year!)
Acko has written $1.98M in health health premiums
However, with ~ $1bn p.a. of premiums to capture just on the SME-side of the market, there is clearly enough space for several companies to grow!
Furthermore, for the players looking to integrate the payer with provider, there is a ~$13bn opportunity in primary care (today’s market size which is likely to expand!) [6]
Closing thoughts
From an investor lens, the Indian health insurance market is primed for venture scale businesses to flourish. Hopefully, I have been able to highlight the regulatory & sectoral tailwinds that are driving growth in this segment!
If you enjoyed this piece, please feel free to leave a like, drop a comment or share this post! I look forward to your thoughts, comments & feedback.