India’s InsurTech set for $1bn funding surge as sector eyes digital shake-up, study shows

By Puja Sharma

-Building inclusive, tech-advanced, future-ready insurance models is a key priority
-The report highlights the rise of embedded insurance, the expanding role of AI and cloud-first architectures, and the changing skill set needs of the sector’s workforce.
– The industry will shift from a traditional agent-led model to a platform-driven, modular, and customer-first ecosystem.

India’s insurance industry is at a crucial turning point, poised for digital transformation. The sector is poised for disruption and growth, with total insurance premiums surpassing ₹11.19 trillion in FY24 and digital channels accounting for an increasing share of new policies.

A joint report titled “Reimagining Insurance: India’s Leap into the Future of Insurance,” released by FinTech and digital transformation advisory firm The Digital Fifth in collaboration with Perfios, India’s largest B2B SaaS TechFin, highlights these transformative trends. It also forecasts that private funding in the InsurTech industry is expected to exceed $1 billion in the next 12 months.

The report examines how insurers leverage technology to build agile, inclusive, and future-ready business models. It also highlights the shift from a traditional agent-led model to a platform-driven, modular, and customer-first ecosystem.

The report identifies five key shifts: Insurer-led tech investments, journey-level digital transformation, public infrastructure and government support, dynamic distribution and data, and regulation. It combines deep industry knowledge and insights from senior stakeholders across insurers, InsurTech investors, and technology enablers.

It maps the present and future of Indian insurance, framing key technology shifts, regulatory developments, and strategic imperatives.

“As this report highlights, India’s InsurTech sector is poised for significant growth, yet digital sales represent only 0.67% of new life insurance business,” said Prasad Krishnamorthy, Head of InsurTech at Perfios. “This gap underscores a tremendous opportunity. The Insurance Operating System at Perfios, which already powers 40% of cashless health claims, enables insurers to achieve up to a 200% improvement in process efficiency while also identifying fraud, wastage, and abuse. This report underscores the critical need for modernisation that encompasses technology, trust, speed, and personalisation, especially as we see a sharp rise in self-onboarding and DIY insurance journeys.” He added.

While India’s insurance sector is evolving rapidly, significant structural challenges continue to hold back its full potential. Insurance penetration dropped to 3.7% in FY24, with life insurance at just 2.7%—well below the global average of ~7% signalling an enormous protection gap, especially in health, life, and micro-insurance categories. Initiatives like the National Health Claims Exchange (NHCX) and the upcoming Bima Sugam platform are laying robust digital rails for insurance innovation. The Government and IRDAI are laying the groundwork for this innovation. The Digital Personal Data Protection Act (DPDPA) is expected to reshape how insurers manage customer data and design consent-based experiences.