Embedded insurance providers are raising capital globally to scale and grow their businesses

Globally, insurtech firms are using breakthrough technologies such as machine learning, artificial intelligence, big data, and APIs to provide consumers with fast and seamless insurance coverage through embedded insurance. A lot of innovation has taken place in the embedded insurance segment over the last two years, especially in countries like India, which is one of the most under-penetrated insurance markets around the world.

Despite being the fifth largest economy, the total insurance premium is significantly lesser compared to other markets globally. According to a report from the Insurance Regulatory and Development Authority of India (IRDAI), life insurance penetration is about 3.2% in the country. This shows that the insurance sector has the potential to outpace other industries just because of its sheer market growth potential.

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Looking to tap into this potential growth, many innovative domestic and global firms have launched their embedded insurance services in India over the last few years. These providers are now raising funding rounds to further scale and growth their business. For instance,

  • In September 2022, Zopper, an India-based embedded insurtech firm, announced that the firm had raised US$75 million in its Series C funding round, which was led by Creaegis and included participation from ICICI Venture, Blume Ventures, and Bessemer Venture Partners. The firm is planning to use the capital to further build its BaaS platform, drive inorganic growth, and seek international expansion opportunities. The firm assists B2B and B2C companies to offer insurance products and is projecting a high-growth rate over the next three to four years. 

Around the world, startups in the embedded insurance space have experienced growing traction. Consequently, insurtech firms are attracting venture capital and private equity funding globally.

  • In November 2022, Cover Genius, the United States-based embedded insurance provider and global leader in the segment, announced that the firm had raised US$70 million in its Series D funding round, which was led by Dawn Capital and included participation from King River Capital, GSquared, and Atlas Merchant Capital. The firm is planning to use the funding round to further accelerate the growth of its embedded insurance business globally. 

After building its presence in over 60 countries, the firm is now targeting to drive the next phase of growth with US$70 million capital. Over the years, Cover Genius has launched a wide range of insurance products for partners across different industry verticals. From the world's largest airlines to travel companies, logistics firms, fintech, banks, retailers, and many more, have partnered with Cover Genius to offer embedded insurance services globally. In India, Cover Genius has forged alliances with ridesharing app Ola to offer insurance policies to both riders and drivers. In Southeast Asia, the firm entered into a collaboration with e-commerce marketplace Shopee to offer protection for products purchased on the platform.

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With the market size for the embedded insurance industry growing around the world, even early-stage startups are attracting funding from venture capital and private equity firms. For instance,

  • In October 2022, Neat, a France-based embedded insurance provider, announced that the firm had raised €10 million in a seed funding round, which was led by Octopus Ventures and included participation from Founders Future, Mundi Ventures, and New Alpha. The firm is also planning to use the capital to further scale its business operations and expand globally.
  • In September 2022, a Germany-based embedded insurance provider announced that the firm had raised €4 million in a seed funding round, which was led by Earlybird and included participation from Visionaries Club, SumUp, and Klarna Founders, among others. The firm is planning to use the capital to further boost its product development capabilities. Hakuna has partnered with online retailers, thereby embedding insurance products into the customer checkout journey. 

In Australia, where the embedded insurance market is largely dominated by Cover Genius, new and innovative startups are emerging out of stealth and raising a funding round, thereby driving the competitive landscape in the market.

  • In December 2022, Butter Insurance announced that the firm had raised US$1.3 million in a pre-seed funding round, which included participation from Flying Fox VC, FB10X adVentures, Quokka Ventures, and Startmate. The firm entered into a strategic collaboration with Australian Payment Plus. Notably, Australian Payment Plus brings three of the major domestic payment providers together. These include BPAY Group, eftpos Australia, and NPP Australia. Under the partnership, Butter Insurance will embed insurance solutions within the Australian payment system. 

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The demand for embedded insurance products has also surged in the pet industry over the last few years, and firms are experiencing high growth in the segment. To further accelerate their growth, pet-focused embedded insurance providers are also raising funding rounds globally.

  • In December 2022, Odie Pet Insurance, a United States-based full-service pet health insurance firm that also offers embedded insurance services, announced that the firm had raised US$3 million in a funding round, which was led by RedBird Capital Partners. The firm is planning to use the capital to further build its technology and platform. With the demand in the segment growing, PayNXT360 expects the firm to record strong growth from the short to medium-term perspective. 

With insurtech firms helping businesses integrate the right type of insurance products into the customer journey, embedded insurance providers can reach more people who need the coverage, who otherwise might have been left out of the needed protection. This has been one of the major factors that have driven sales figures for insurance providers. Consequently, PayNXT360 expects the embedded insurance business model to thrive over the next three to four years, while driving the insurance penetration rate higher in under-penetrated markets, such as India. 

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