This is the hour of InsurTech

The efficiencies resulting from making insurance products and processes digital can be passed on to customers through more affordable premiums

In recent years, a large part of India’s digital revolution can be attributed to two major initiatives: India Stack and the Ayushmann Bharat Digital Mission (ABDM). The India Stack has provided tremendous impetus for the growth of the fintech ecosystem, by providing a solution to the key challenges of customer identity, data protection and dominance of physical cash. While the first two layers of the India Stack — Aadhaar and Unified Payments Interface (UPI) — have created a unified identity framework and revolutionised digital payments by enabling instantaneous money transfers through a simple phone click, the third layer consisting of the account aggregator framework is creating a secure consent-based data sharing framework to further accelerate financial inclusion.

On similar lines, the ABDM seeks to revolutionise the health care industry through multiple interoperable application programming interface (API) layers, such as a digital health ID, a health care professional registry, a health facility registry, and a personal health record. ABDM is focusing on making health care more accessible and affordable to the masses through digital highways.

While the India Stack and ABDM have focused on bridging the existing gap among different stakeholders in India’s financial and health care ecosystem, the needs of different stakeholders in the insurance value chain remain vastly underserved and unaddressed. If we look at the numbers, the insurance sector remains largely underpenetrated in India. Our insurance penetration was pegged at 4.2 per cent in FY21, with life insurance penetration at 3.2 per cent and non-life insurance penetration at one per cent.

The India InsurTech Stack should be developed on the lines of India Stack and ABDM, but with a focus on the insurance sector — building digital highways to promote innovation in the insurance sector and make insurance accessible to the masses. The India Insurtech Stack will help in transforming the insurance sector in India through use of technology and data.

The India InsurTech Stack would outline a set of defining principles, identify building blocks (i.e. digital systems), and define a set of technology and data standards and frameworks for the insurance industry. If these are adopted by the insurance industry, we will see a significant flywheel of transparency, efficiency, and standardisation.

Having a set of clearly identified digital building blocks can result in various insurance ecosystem players (such as insurers, startups, and intermediaries) being able to take advantage of its plug and play nature to scale their insurance operations digitally and efficiently. We can anticipate that new InsurTech startups will come up to support various building blocks, similar to the experience with the India Stack.

The India InsurTech Association has started work on the India InsurTech Stack through open collaboration of the Indian insurance ecosystem. Additionally, the India InsurTech Stack will plug into existing initiatives by the government and Insurance Regulatory Development Authority of India — such as India Stack and ABDM — to support the vision of a Digital India.

The goal of the India InsurTech Stack is to push the entire Indian insurance industry forward in a win-win setting, and to ultimately benefit policyholders. The India InsurTech Stack will support an environment of “ease of doing business” in the insurance market in India, thereby attracting both Indian and global players to innovate for new customer segments and to build new insurance products.

Additionally, by making existing insurance products and their supporting processes (such as claims, distribution, and underwriting) more digital, we can ensure higher customer-centricity and boost trust in insurance as a product. The efficiencies from such an initiative can be passed back to customers in terms of more affordable premiums, resulting in increased penetration across socio-economic segments. Ideally, we would love to see the India InsurTech Stack be implemented through the launch of a National Digital Insurance Mission in India.

The writer is co-founder, India InsurTech Association