The Indian insurance technology (insurtech) industry has hit a landmark moment, and its aggregate valuations have increased to over $15.8 billion. The ecosystem is strong and growing at a high rate, with the presence of more than 150 active players that are collectively transforming the insurance industry of the country. This disruptive development is not only a tribute to capital influx but a strategic change with the active involvement and extension of Artificial Intelligence (AI) and Generative AI (GenAI). A report by the India InsurTech Association (IIA) in collaboration with Boston Consulting Group (BCG) establishes that the next chapter of this sector is not marked by uncontrolled growth, but the search for sustainable and profitable operating models, with AI being the key catalyst.

Funding details and the Health insurtech segment

The Indian insurtech industry is large and financially robust. Their collective valuation of the above 150 active players is well above the $15.8 billion mark. The aggregated revenues of the sector exceeded $0.9 billion in 2024, and it is a striking tenfold growth compared to the year 2019.

This increase has created a very valuable market of mature players. This ecosystem now has two unicorns, or businesses valued at more than $1 billion. In addition to these leading companies, eight business players have valuations worth between $100 million and $1 billion, and over 45 companies have valuations worth more than $1 million. These statistics highlight how mature the sector is and how important the sector is in terms of innovation in the overall financial technology industry in India.

Although the sector is expanding in general, 2024 saw a major decline in the insurtech funding across the entire world, with the numbers falling to $4.1 billion. This pattern reflected a broader correction in the fintech sector. The Indian market was not an exception, as it was also mirroring these global trends as a pointer to a change of investor attention. A renewed focus is now made on supporting those businesses that can show a clear and viable route to profitability and scale, rather than growth-at-any-cost strategies.

The Health insurtech segment became dominant in the Indian context over this time of funding correction. The top five deals of the year were held by health insurtechs, who received more than 70% of the overall capital. This proves how important such companies are becoming in terms of innovation, better access to insurance, and enhanced efficiency throughout the Indian healthcare value chain. The dynamic in the regions has seen the Asia-Pacific (APAC) region, including India, losing share with Europe, the Middle East, and Africa (EMEA) benefiting.

The Managing Director and Partner of BCG, Vivek Mandhata, said, “The funding reset signals a move toward sustainable, scalable business models. Investors are prioritizing Insurtechs that can deliver long-term value and profitability.”

Quotation Source: CNBC TV18  

GenAI opportunity and industry adoption

Generative AI has become the next major force that will shape the insurance business in the most fundamental way, and it has immense potential to revolutionize the industry. GenAI can transform the insurance value chain, including its most important aspects of distribution and claims, as well as the customer touchpoints, such as marketing or servicing.

The main goal is to increase accuracy, customer experience, and operational efficiency by huge margins. The application of artificial intelligence and GenAI is a bewildering upside of $4 billion in the insurance sector of India. To achieve this important value, it is recommended that organizations take the crucial step of moving beyond pilot programs and integrating the use of AI at a large scale into their operations.

The BCG and IIA report identifies three imperatives for the insurance organizations in order to effectively exploit the $4 billion profit pool. Organizations should not distribute resources over many small projects but should consolidate on two to three high-value pools where AI can generate the highest output.

To establish a resilient foundation, there is a need to invest in high-quality data, as this forms an essential component of training and implementation of effective AI models. The utilization of both conventional AI and generative models should be strategically balanced to ensure that the company incurs its costs effectively and achieves the value realized.

The intelligent technology development has swiftly shifted to GenAI over conventional AI, and is currently taking a step forward to Agentic AI. The insurance industry has become a world leader in the use of this technology and comes only second to the world after the technology industry itself.

GenAI use cases cut across the complete operating model of an insurer, including such essential segments of the company as sales and distribution, underwriting, claims processing, policy servicing, and renewals. Insurers already deploying GenAI are already reporting major effects in these functions, such as 15-20% agent productivity, 10-20% underwriting efficiency, 20-30% lower service costs, and 3-7% efficiency in claims payout.

The central innovators of the ecosystem are insurtechs, whose role is central to this change. They are currently co-innovating with existing insurers and productizing AI modules in distribution, underwriting, claims, servicing, and renewals, thus driving the industry towards a faster digital transformation.

Conclusion

The insurtech Indian market is at a crossroads, as the cumulative valuations surpassed $15.8 billion, and the revenues increased tenfold since 2019. The stagnation of international investment has strengthened the need for change to the concept of sustainable and profitable operating models instead of just focusing on high growth volumes. The intersection between the mature, capital-intensive ecosystem and the potential of AI and GenAI is a huge competitive profit opportunity of $4 billion.